chapte Administr: at procedures
1 Chapter 15: Administrative Procedures
ADMINISTRATIVE PROCEDURES Role of the Irs Audits of tax returns Requests for rulings Due dates Failure-to-file/pay-penalties Estimated taxes Severe penalties
2 ADMINISTRATIVE PROCEDURES Role of the IRS Audits of tax returns Requests for rulings Due dates Failure-to-file/pay-penalties Estimated taxes Severe penalties Statute of limitations
Role of the Irs (1of2) Enforcement of tax laws Collection of taxes due Interpretation of Internal Revenue Code
3 Role of the IRS (1 of 2) Enforcement of tax laws Collection of taxes due Interpretation of Internal Revenue Code
Role of the Irs Organization of the IRS(2 of 2) Commissioner Deputy Comm Chief counci Nat'l office Staff Agency-Wide Appeals Opearting CIO Nat'l Taxpayer Shared Services Type title here Divisions Type title here Advocate Wage Invest SMall Bus& Large &Mid-size Ta Income Self-Employed Business Exem 4
4 Role of the IRS Organization of the IRS(2 of 2) Chief Council Nat'l Office Staff Agency-Wide Shared Services Appeals Type title here Wage & Invest. Income SMall Bus & Self-Employed Large & Mid-size Business Tax Exempt Opearting Divisions CIO Type title here Nat'l Taxpayer Advocate Commissioner/ Deputy Comm
Audits of tax returns (1of2) 1997 statistics of returns audited Individual returns: 0.99% C corporations: 2.09% Individuals w/>$100K income: 1.66% Corps w/ assets >$250M: 38.6% Returns selected for audit by discriminant function other means
5 Audits of Tax Returns (1 of 2) 1997 statistics of returns audited – Individual returns: 0.99% –C corporations: 2.09% – Individuals w/ > $100K income: 1.66% –Corps w/ assets > $250M: 38.6% Returns selected for audit by discriminant function & other means
Audits of tax returns (2of2) Types of audits Correspondence audit Office audit Field audit Appeals process Burden of proof 6
6 Audits of Tax Returns (2 of 2) Types of audits –Correspondence audit –Office audit –Field audit Appeals process Burden of proof
Appeals Process If taxpayer disagrees w/ findings, IRS sends thirty-day letter -Taxpayer has 30 days to request a conference w/ appeals officer If no agreement reached, IRS issues ninety-day letter Taxpayer has 90 days to file petition W/ Tax Court
7 Appeals Process If taxpayer disagrees w/ findings, IRS sends thirty-day letter –Taxpayer has 30 days to request a conference w/ appeals officer If no agreement reached, IRS issues ninety-day letter –Taxpayer has 90 days to file petition w/ Tax Court
Burden of proof In civil court cases burden of proof on factual matters shifts to Irs if taxpayer does following Introduces credible evidence Complies w/ recordkeeping substantiation requirements of Irc Cooperates w/ reasonable requests Qualifies as a natural person or legal person w/ net worth < $7 million 8
8 Burden of Proof In civil court cases burden of proof on factual matters shifts to IRS if taxpayer does following: – Introduces “credible evidence” –Complies w/ recordkeeping & substantiation requirements of IRC –Cooperates w/ reasonable requests –Qualifies as a natural person or legal person w/ net worth $7 million
Requests for Rulings Allows taxpayer to learn how IRS will treat a particular transaction before the transaction is completed Request made in writing IRS has option whether or not to respond 9
9 Requests for Rulings Allows taxpayer to learn how IRS will treat a particular transaction before the transaction is completed Request made in writing IRS has option whether or not to respond
Due Dates Returns for individuals. fiduciaries and partnerships are due on or before fifteenth day of fourth month following year-end of entity EXtensions for filing deadline available, but tax must be paid by original due date to avoid penalties 10
10 Due Dates Returns for individuals, fiduciaries and partnerships are due on or before fifteenth day of fourth month following year-end of entity Extensions for filing deadline available, but tax must be paid by original due date to avoid penalties