NSA Members Grapple with Issues Addressed by the Proposed Practitioner Bill of Rights

Tax audit on April 15? IRS agents insulting accountants? Based on the stories we heard from members, the NSA’s Tax Practitioner Bill of Rights is sorely needed.

The NSA has proposed a Tax Practitioner Bill of Rights, to help practitioners dealing with problems arising from the IRS’ handling of various issues. We reached out to NSA members with a survey, and followed up to see what stories they had around the topics covered by the Bill of Rights.

Here is a roundup of what we heard back.

Audits

NSA’s First Vice President Brian Thompson dealt with perhaps the worst appointment time for an audit: April 15th.

“During the 2015 filing season, one of my business clients brought me a notice from the IRS which indicated they were being audited,” he said.  “After reviewing the notice, I saw that the appointment date for the audit was surprisingly set for April 15th.”   He then called the auditor to obviously try and reschedule the audit until after the tax filing deadline.

“I was greatly disappointed to find out from the auditor during the call that this audit set for April 15th could not be rescheduled,” he said.  “After I got over the jaw-dropping surprise after hearing the news, of course I expressed my surprise and displeasure that the IRS could not be more flexible, especially given the date chosen for this audit.  After all, who in their right mind chooses April 15th for an audit?”

He found out later when the auditor showed up in his office on April 15th, that the reason it could not be postponed to a more convenient time was that it was a training audit.  “It turns out that the reason was that the auditor in training was coming from out-of-state and had very strict travel days,” he said.  “The audit did in fact take place on April 15th at my office as planned, however, after the auditors had toured my client’s business,” he said.  “Generally I would be at my client’s business to accompany the auditor on the tour.  However, in this case, I simply didn’t have the time because of the need to deal with extensions for a host of other clients which also had to be done on April 15th. “

Meanwhile, Jeff Krieger, of Jefferson City, Missouri, EA, ABA, ATA, ATP, said that he had an audit during last tax season “that is just now wrapping up.”  Another problem he encountered was that there was “no POA [Power of Attorney] on file, but we have proof that it went to the IRS.”

“Audits should not be allowed during tax season,” said Krieger.  “Because of the hours we have to work in order to meet the IRS deadlines, I did not answer an auditor’s 10-day request, so I had to have a conference call with both of his supervisors, which took time out of my already hectic schedule to tell them why I couldn’t meet his requirements,” he said.  “It seems it is OK for us to wait on the IRS, but when they ask for information, we are commanded how, when and where,” he added. It needs to be equal on both sides of the fence, he said.

As for the POA, “this is the favorite response from anybody with whom you make contact with the IRS about your clients,” he said.  “They tell us they do not have the form 2848, which we have proof of them receiving it, but it hasn’t been put into the system.”  However, he added, the funny thing is that “sometimes they do what we ask them to as POA, but [they] send a letter to our client that they have no record of the Power of Attorney.

“I have been preparing taxes and doing Accounting for 36 years, and the IRS is a complete joke at this time,” he added.  He said he has clients who have not received refunds for their 2014 returns, unanswered communications, and “all kinds of examples of the nonsense that takes place on a daily basis.”

The best one from last year, he said, was during the audit he previously mentioned, the IRS auditor faxed him someone else’s audit information, with very detailed information. “I haven’t shared that with him, as we are still finalizing that audit, which will be a year old in December.”  In this instance, Krieger got a 10-day demand notice, “but we are still waiting on the auditor to finish his job.”

Ninety-Day Letter Received the Day Before Her Audit

For Jan Telesky, of Telesky Financial Services in San Jose, CA, the audit was for herself. She explains, “I received an audit letter for myself covering two years.  The audit was scheduled for mid-February.  They would not reschedule.  I received the 90-day letter just the day before my scheduled audit.”

She says she ended up filing pro se in tax court.  “The audit was on fringe benefits.  I have always paid the medical and dental insurance for my staff.”  Anyway, audit results were a “no change” [the returns stood as filed], she said.  “They could have looked up my record to see how may hundreds of returns I file by April 15.  There was no way I had the time to go to an audit, much less prepare for one,” she said.

She further explained, “By April 15, I personally have prepared around 400 returns including individuals, corporations, trusts, LLCs, LLPs, partnerships.  Most of my individuals have rentals, businesses, stock sales, etc.  That means I have no life and no time for anything other than tax prep.”

This was the only audit she has had during tax season, and they were auditing two years on her own return.  “The IRS could have checked to see how many returns I filed and would know I had no time but they didn’t care,” she said.

Communication

Meanwhile, Bill Nemeth, EA, of Atlanta, Georgia, has had problems with communication with the IRS.

“I have several clients under full Form 2848 POA,” he explains.  “When they have balances due, I get a copy of the CP14 Letter showing the tax liability.  I do NOT get copies of the CP14H which is the liability for the Shared Responsibility Payment.”  He said he just called into the IRS PPS Line to discover that his client has a Shared Responsibility Liability for 2014 (that he knew nothing about) as well as a Shared Responsibility Liability for the recently filed 2015.

“The Shared Responsibility liabilities do not show up on the IRS Account Transcripts,” he said.  “Fundamentally, the current IRS system has taken away my ability to assist the taxpayer through the confusion of the ACA.” He added that he just spent an hour on hold to talk to a PPS assister who informed him of the 2014 and 2015 Shared Responsibility Liabilities.  “The taxpayer has the means to pay these amounts immediately but looks to me to advise him when to pay.  All this is complicated by the fact that the taxpayer has an ID Theft Flag on his 2013 return (I just requested the ID Theft Flag be removed because it sounds like my client called the IRS in a confused state and created the ID Theft Situation in the first place).”

Nemeth explains that his standard policy is to have an active 8821 (Information only) or 2848 (IRS Power of Attorney) on every one of his clients with the box checked to have the IRS send him a copy of all IRS correspondence.

“With the IRS form in place (8821 or 2848), I create a ‘virtual partnership’ with each of my clients and monitor their IRS accounts.  I get copies of all their IRS letters (except those relating to the ACA – think CP14H and ID Theft).  We have reported the issue of no CP14H to Nina Olson, Taxpayer Advocate.”

He gives one simple example:  “I filed taxpayer’s 2014 return and he had a tax balance due, as well as a penalty for no health insurance.  I work with him to pay off his tax bill.  The Health Insurance penalty is a separate liability and I have no way of knowing he has an outstanding obligation except to call the IRS PPS with my authority in place (8821 or 2848).”

Refunds

For Lori Owens, of Celina, Texas, the problem was one of refunds. She said she had three clients this year that did not receive their refunds.  They also did not receive any correspondence to why they had not received them, she said.  All were electronically filed prior to April 15, “and none receiving refunds until end of September.” She said it took “hours on the phone on hold and being shifted around to find out they needed no additional info, but that they couldn’t even read the return correctly, with the correct code being used from the beginning.  Incredibly frustrating.”

She added that she still has two clients that have not received their refunds.  “One was electronically filed on April 13th, and we received the acceptance notification right away,” she said.  “The other was filed the first part of April, and that client still has not seen anything on their refund either.”  The other was filed the middle of March, and it took until late September before he received his refund.

“In all cases I have spent hours on hold and being transferred from one agent to another,” she said.  “In the end, on the last one I had to tell the agent what he was looking at and that they were reading the return incorrectly.  After bringing it to their attention they finally agreed with the way the return was filed,” she said, adding, “Pretty sad that we have to tell them where to look and what was involved before they will process the return.”

In all three of these cases, she said, “none of my clients received any correspondence stating why their returns were being held up or requesting additional information.  Now one of the other two ladies is trying to apply for health insurance and has hit a brick wall because it says her return has not been filed.  To say that I am a little frustrated with this entire experience is an understatement.  I have been preparing returns now for 25 years and have never had anything like this happen even once in the past.”

Client Owed $40,000

Linda Wegge of Grayslake, IL, had the IRS file a tax lien on a client who was owed a $40,000 refund. In her survey response, she summarizes: “Amended return filed August of 2014; 2013 return.  To date 10/18/16 amendment has not been processed.  Repeated calls to Collections.  I was told they were working on it.  10/5/16 I was told IRS lost return and I had to resend it. There was a $40,000 refund we applied to 2014 return.”  She said it is all legitimate, and the IRS has now filed a tax lien on the client. “They have put a 30-day stay on collections.  What is going on with the IRS? Clients think I am not doing my job,” she said, adding, “This has to stop.”

Wegge explained what happened in more detail over the phone:  She applied an overpayment from ’13  to ’14, “so we filed a ’14 return.  Obviously the IRS processed it [as] $40,000 missing.  I called and they said we received the amended return that was filed, but it hasn’t processed yet.“

Wegge had one IRS rep say he would “definitely send this down and find out – we’ll have this processed within 30 days.”  But then another six months went by and she didn’t hear anything, and then her client got another notice.  She was also tracking it on wheresmyamendedreturn.com. Wegge called a second time, and was told it had been assigned out to an agent and would be done within 30 days.’

“So the next thing I know, in September of ‘16, my client gets a notice of federal tax lien,” she said.  So Wegge called another IRS rep and explained the situation, and he said, “You have an amended return that hasn’t been processed?  Can I put you on hold please?”  After being transferred to other reps and continued to be put on hold, she was told, “I’m really sorry to tell you, we don’t know where that amended return is.”

Wegge explained where some of the confusion came from.  Her client had sold a company in ’13, and during that time he took a distribution of $95,000 from his IRA. But it turned out he had put the money back his IRA within 60 days, so Wegge agreed then it wasn’t taxable after all. “So that’s what prompted the amendment,” she said.

At this point, explained Wegge, “they put a 120-day stay on the tax lien.  So I guess they’re not going to file it; well that’s what they told me, but I don’t talk to the IRS anymore because they tell me one thing and they do [another]. But at this writing, Wegge planned to bring up the case at a big IRS tax symposium in the ChicagoLand area.  “And I’m going to grab these guys and bring in the file, and I’m going to ask them to personally oversee this and get this done. Because this is absolutely ridiculous what they’ve done to this poor man. There’s $40,000 at stake sitting here. And we did everything correct.”

And Wegge had another story. She had been filing “this gentleman’s tax return for probably 30 years. He’s about 70 years old now and he’s been a self-employed insurance broker.” He had a refund coming back, and he had a schedule C.  It had been over a year, and the client told her “Linda, I still haven’t gotten that refund back yet.”

“So I said ‘you’re kiddin’ me,’” said Wegge, and she got POA.  “And I call in, and I get a very nasty woman. She said, ‘Well the first problem was with the schedule C.’

First the woman said the Schedule C had a zero dollar amount, so they thought it was odd or fraudulent. But Wegge explained the Schedule C she sent in had a $25,000 profit. But then the rep said the problem was with that the return was taking advantage of the earned income credit. Wegge had to explain that not only did she not file a return with an earned income credit, this gentleman didn’t even qualify for the it because he’s 70 years old, and earned income credit is only for ages from 25 up to 65. She said, “Oh, well that may be so but we’re still not giving you his money back. He’s not getting his refund with you.”

Wegge then brought the client’s case in to the very first IRS Tax Forum in Chicago, where they had case resolutions.  An agent there agreed her client was owed that money, but then she was told she couldn’t get an answer from the division to release the money, because they weren’t answering their phones. She had to go back and forth with several agents, at one point being told she wasn’t allowed to leave until they resolved it, until she could get a satisfactory answer. Finally, an agent said Wegge’s client would have his money in about two to three weeks.

“And my client did get his money back within three weeks,” confirmed Wegge.  “So he was happy.”

But Wegge stressed that she had two “very bizarre cases where the IRS has just totally dropped the ball.” And she added that “what really upsets me about this whole thing is I spent a lot of time on this. And sometimes the client gets upset with me when I charge them…and I say, look, we did the return right; the IRS admitted we did the return right, and they’re the ones that messed it up. And the client says, ‘Yeah, yeah, yeah I know.”

Rude Auditors and IRS Employees

Cecilia Bowers, of Tulsa, OK, says, “I have been preparing taxes for 59+ years and during that time have had multiple horror stories of rude and incompetent auditors.  I have always just taken the position that ‘tax particular Human should not be where they are,’ and I am going to ask for a group manager, or the current in-office “complaint department.”

Fortunately, for her that has resolved the problem in 80% of the issues, she says.  “Beyond that, I have simply gone to Tax Payers Advocate Service and I don’t recall ever having them fail me.” But Bowers is skeptical that “a bill of rights or any other written rule is ever going to change who people are or how they think and respond,” and she suggests tax professionals “just move on to the many good employees.  Spoke to one this morning at ACS collections and he was awesome.”

Nils Lenz, of Zephyrhills, Florida, says he also has worked with IRS Agents that are very rude.  “I have had several Compliance Officers insult myself and well as my clients, plus they try to intimidate us also,” he said.  “My agent said that ‘even his dog could be a CPA Candidate’; another asked me if I was going to practice another year, and still another one used to shake the Schedule C in front of both client and myself if there a was loss and said that it did not make sense, regardless of the fact that all of the expenses and revenue were documented.

Another problem he has with them is “they tend to disallow too much, even though the correct documentation had been presented,” he said.

There were two different agents with whom he had a very hard time dealing.  He said he had two agents disallow everything for two different clients who are Over the Road Truckers, even as the documentation was all sorted out to make It easier for the agent; “I had gone through the trouble of sorting everything by category, and sorted chronologically,” he said.

And “the other agent never stated what the issues were.”  Both of these disallowed everything because of their impatience, he said.

He said he took both of these Over the Road Truckers cases to appeals, and fortunately the appeals agents were both very nice and allowed everything.  “Either through appeals, audit reconsideration or amendments, I was able to get the entire taxes abated,” he said.

Then, he added, “Don’t get me started on CP2000 letters, I had sent many back almost ten times, with the issues already covered the first time,” he said. He explained that CP2000 letters are from underreporting, and “always have mistakes.”  But “then when I send in a response, I might receive four or five letters saying that nothing has been corrected and want to keep increasing the taxes, interest and penalties, so I have to reply to each one, saying it has already been corrected, several letters ago.  I understand the main issue with CP2000 letters, is that it is it automated, all by computer; the process would not be corrected until an actual human starts working on the case; otherwise it can drag on for months.”

Overall, he said, “With the four or five agents in the small business section in Tampa, I do not want to have to deal with them anymore,” though he says he has no problem with any of the other offices, even Lakeland.  And, he says that “when I have spoken to other preparers about these same agents, they all have very similar opinions, they hate dealing with them also.”

Correspondence Not Received?

Sometimes the problem can be maddening, especially when the tax professional has sent in timely responses, and yet they seem to go into a black hole at the IRS.  Lennison Alexander of Atlanta, GA, tells of one such case:  “Filed for Innocent Spouse Relief. IRS agent in charge of the case calls and verbally request additional information. Additional information provided within two days.”

Ten months later, he said, the taxpayer receives a letter via standard first class US Mail from the agent denying spousal relief, and stating that since the taxpayer did not respond to in a timely manner to several pieces of IRS correspondence regarding this, the time to appeal and petition the tax court has elapsed. “Needless to say the taxpayer never received any correspondence, and when told of this, the agent claimed that all correspondence was sent via certified mail but could not or flatly refused to provide proof of service,” he said.

“After protestation on my part,” he continues, “the agent offers to look into the case once more and ‘see what I could do if anything to help.’” Alexander says, “Since my objective is to win this case for my client, I have not cried foul thus far. However, if denied a proper hearing I will be screaming ‘bloody murder’ and demand a meeting with the supervisor,” he says.

Other Issues

With some other types of problems, it’s with the decision itself, and would require a supervisor or appeals process.

For Roger Lubiens, of Folsom, CA, the problem just seemed one of a bad decision on the IRS’s part. “The IRS audited my client’s tax return and disallowed three dependents who live with the client. Despite tax law, court rulings, school records, birth certificates, and medical records, the agent denied one of claimed children as a tax dependent citing a divorce decree,” he said, adding that “Common sense did not prevail, and even the Taxpayer Advocate could not override the IRS agent’s onerous decision.”

As for Wegge, she is all for the NSA’s Tax Practitioner’s Bill of Rights.  “I’m happy about anything that can be done for our taxpayers,” she said, so that when there are problems, it can be handled in a timely fashion by competent IRS people.  “And I think that’s our big problem right now; there are very few competent IRS people.”

A tax audit on April 15? IRS agents insulting accountants? Based on the stories we heard back from members, the NSA’s Tax Practitioner Bill of Rights is sorely needed. The NSA has proposed a Tax Practitioner Bill of Rights, to help practitioners dealing with problems arising from the IRS’ handling of various issues. We reached out to NSA members with a survey, and followed up to see what stories they had around the topics covered by the Bill of Rights.

Here is a roundup of what we heard back.

Audits

NSA’s First Vice President Brian Thompson dealt with perhaps the worst appointment time for an audit: April 15th.

“During the 2015 filing season, one of my business clients brought me a notice from the IRS which indicated they were being audited,” he said.  “After reviewing the notice, I saw that the appointment date for the audit was surprisingly set for April 15th.”   He then called the auditor to obviously try and reschedule the audit until after the tax filing deadline.

“I was greatly disappointed to find out from the auditor during the call that this audit set for April 15th could not be rescheduled,” he said.  “After I got over the jaw-dropping surprise after hearing the news, of course I expressed my surprise and displeasure that the IRS could not be more flexible, especially given the date chosen for this audit.  After all, who in their right mind chooses April 15th for an audit?”

He found out later when the auditor showed up in his office on April 15th, that the reason it could not be postponed to a more convenient time was that it was a training audit.  “It turns out that the reason was that the auditor in training was coming from out-of-state and had very strict travel days,” he said.  “The audit did in fact take place on April 15th at my office as planned, however, after the auditors had toured my client’s business,” he said.  “Generally I would be at my client’s business to accompany the auditor on the tour.  However, in this case, I simply didn’t have the time because of the need to deal with extensions for a host of other clients which also had to be done on April 15th. “

Meanwhile, Jeff Krieger, of Jefferson City, Missouri, EA, ABA, ATA, ATP, said that he had an audit during last tax season “that is just now wrapping up.”  Another problem he encountered was that there was “no POA [Power of Attorney] on file, but we have proof that it went to the IRS.”

“Audits should not be allowed during tax season,” said Krieger.  “Because of the hours we have to work in order to meet the IRS deadlines, I did not answer an auditor’s 10-day request, so I had to have a conference call with both of his supervisors, which took time out of my already hectic schedule to tell them why I couldn’t meet his requirements,” he said.  “It seems it is OK for us to wait on the IRS, but when they ask for information, we are commanded how, when and where,” he added. It needs to be equal on both sides of the fence, he said.

As for the POA, “this is the favorite response from anybody with whom you make contact with the IRS about your clients,” he said.  “They tell us they do not have the form 2848, which we have proof of them receiving it, but it hasn’t been put into the system.”  However, he added, the funny thing is that “sometimes they do what we ask them to as POA, but [they] send a letter to our client that they have no record of the Power of Attorney.

“I have been preparing taxes and doing Accounting for 36 years, and the IRS is a complete joke at this time,” he added.  He said he has clients who have not received refunds for their 2014 returns, unanswered communications, and “all kinds of examples of the nonsense that takes place on a daily basis.”

The best one from last year, he said, was during the audit he previously mentioned, the IRS auditor faxed him someone else’s audit information, with very detailed information. “I haven’t shared that with him, as we are still finalizing that audit, which will be a year old in December.”  In this instance, Krieger got a 10-day demand notice, “but we are still waiting on the auditor to finish his job.”

Ninety-Day Letter Received the Day Before Her Audit

For Jan Telesky, of Telesky Financial Services in San Jose, CA, the audit was for herself. She explains, “I received an audit letter for myself covering two years.  The audit was scheduled for mid-February.  They would not reschedule.  I received the 90-day letter just the day before my scheduled audit.”

She says she ended up filing pro se in tax court.  “The audit was on fringe benefits.  I have always paid the medical and dental insurance for my staff.”  Anyway, audit results were a “no change” [the returns stood as filed], she said.  “They could have looked up my record to see how may hundreds of returns I file by April 15.  There was no way I had the time to go to an audit, much less prepare for one,” she said.

She further explained, “By April 15, I personally have prepared around 400 returns including individuals, corporations, trusts, LLCs, LLPs, partnerships.  Most of my individuals have rentals, businesses, stock sales, etc.  That means I have no life and no time for anything other than tax prep.”

This was the only audit she has had during tax season, and they were auditing two years on her own return.  “The IRS could have checked to see how many returns I filed and would know I had no time but they didn’t care,” she said.

Communication

Meanwhile, Bill Nemeth, EA, of Atlanta, Georgia, has had problems with communication with the IRS.

“I have several clients under full Form 2848 POA,” he explains.  “When they have balances due, I get a copy of the CP14 Letter showing the tax liability.  I do NOT get copies of the CP14H which is the liability for the Shared Responsibility Payment.”  He said he just called into the IRS PPS Line to discover that his client has a Shared Responsibility Liability for 2014 (that he knew nothing about) as well as a Shared Responsibility Liability for the recently filed 2015.

“The Shared Responsibility liabilities do not show up on the IRS Account Transcripts,” he said.  “Fundamentally, the current IRS system has taken away my ability to assist the taxpayer through the confusion of the ACA.” He added that he just spent an hour on hold to talk to a PPS assister who informed him of the 2014 and 2015 Shared Responsibility Liabilities.  “The taxpayer has the means to pay these amounts immediately but looks to me to advise him when to pay.  All this is complicated by the fact that the taxpayer has an ID Theft Flag on his 2013 return (I just requested the ID Theft Flag be removed because it sounds like my client called the IRS in a confused state and created the ID Theft Situation in the first place).”

Nemeth explains that his standard policy is to have an active 8821 (Information only) or 2848 (IRS Power of Attorney) on every one of his clients with the box checked to have the IRS send him a copy of all IRS correspondence.

“With the IRS form in place (8821 or 2848), I create a ‘virtual partnership’ with each of my clients and monitor their IRS accounts.  I get copies of all their IRS letters (except those relating to the ACA – think CP14H and ID Theft).  We have reported the issue of no CP14H to Nina Olson, Taxpayer Advocate.”

He gives one simple example:  “I filed taxpayer’s 2014 return and he had a tax balance due, as well as a penalty for no health insurance.  I work with him to pay off his tax bill.  The Health Insurance penalty is a separate liability and I have no way of knowing he has an outstanding obligation except to call the IRS PPS with my authority in place (8821 or 2848).”

Refunds

For Lori Owens, of Celina, Texas, the problem was one of refunds. She said she had three clients this year that did not receive their refunds.  They also did not receive any correspondence to why they had not received them, she said.  All were electronically filed prior to April 15, “and none receiving refunds until end of September.” She said it took “hours on the phone on hold and being shifted around to find out they needed no additional info, but that they couldn’t even read the return correctly, with the correct code being used from the beginning.  Incredibly frustrating.”

She added that she still has two clients that have not received their refunds.  “One was electronically filed on April 13th, and we received the acceptance notification right away,” she said.  “The other was filed the first part of April, and that client still has not seen anything on their refund either.”  The other was filed the middle of March, and it took until late September before he received his refund.

“In all cases I have spent hours on hold and being transferred from one agent to another,” she said.  “In the end, on the last one I had to tell the agent what he was looking at and that they were reading the return incorrectly.  After bringing it to their attention they finally agreed with the way the return was filed,” she said, adding, “Pretty sad that we have to tell them where to look and what was involved before they will process the return.”

In all three of these cases, she said, “none of my clients received any correspondence stating why their returns were being held up or requesting additional information.  Now one of the other two ladies is trying to apply for health insurance and has hit a brick wall because it says her return has not been filed.  To say that I am a little frustrated with this entire experience is an understatement.  I have been preparing returns now for 25 years and have never had anything like this happen even once in the past.”

Client Owed $40,000

Linda Wegge of Grayslake, IL, had the IRS file a tax lien on a client who was owed a $40,000 refund. In her survey response, she summarizes: “Amended return filed August of 2014; 2013 return.  To date 10/18/16 amendment has not been processed.  Repeated calls to Collections.  I was told they were working on it.  10/5/16 I was told IRS lost return and I had to resend it. There was a $40,000 refund we applied to 2014 return.”  She said it is all legitimate, and the IRS has now filed a tax lien on the client. “They have put a 30-day stay on collections.  What is going on with the IRS? Clients think I am not doing my job,” she said, adding, “This has to stop.”

Wegge explained what happened in more detail over the phone:  She applied an overpayment from ’13  to ’14, “so we filed a ’14 return.  Obviously the IRS processed it [as] $40,000 missing.  I called and they said we received the amended return that was filed, but it hasn’t processed yet.“

Wegge had one IRS rep say he would “definitely send this down and find out – we’ll have this processed within 30 days.”  But then another six months went by and she didn’t hear anything, and then her client got another notice.  She was also tracking it on wheresmyamendedreturn.com. Wegge called a second time, and was told it had been assigned out to an agent and would be done within 30 days.’

“So the next thing I know, in September of ‘16, my client gets a notice of federal tax lien,” she said.  So Wegge called another IRS rep and explained the situation, and he said, “You have an amended return that hasn’t been processed?  Can I put you on hold please?”  After being transferred to other reps and continued to be put on hold, she was told, “I’m really sorry to tell you, we don’t know where that amended return is.”

Wegge explained where some of the confusion came from.  Her client had sold a company in ’13, and during that time he took a distribution of $95,000 from his IRA. But it turned out he had put the money back his IRA within 60 days, so Wegge agreed then it wasn’t taxable after all. “So that’s what prompted the amendment,” she said.

At this point, explained Wegge, “they put a 120-day stay on the tax lien.  So I guess they’re not going to file it; well that’s what they told me, but I don’t talk to the IRS anymore because they tell me one thing and they do [another]. But at this writing, Wegge planned to bring up the case at a big IRS tax symposium in the ChicagoLand area.  “And I’m going to grab these guys and bring in the file, and I’m going to ask them to personally oversee this and get this done. Because this is absolutely ridiculous what they’ve done to this poor man. There’s $40,000 at stake sitting here. And we did everything correct.”

And Wegge had another story. She had been filing “this gentleman’s tax return for probably 30 years. He’s about 70 years old now and he’s been a self-employed insurance broker.” He had a refund coming back, and he had a schedule C.  It had been over a year, and the client told her “Linda, I still haven’t gotten that refund back yet.”

“So I said ‘you’re kiddin’ me,’” said Wegge, and she got POA.  “And I call in, and I get a very nasty woman. She said, ‘Well the first problem was with the schedule C.’

First the woman said the Schedule C had a zero dollar amount, so they thought it was odd or fraudulent. But Wegge explained the Schedule C she sent in had a $25,000 profit. But then the rep said the problem was with that the return was taking advantage of the earned income credit. Wegge had to explain that not only did she not file a return with an earned income credit, this gentleman didn’t even qualify for the it because he’s 70 years old, and earned income credit is only for ages from 25 up to 65. She said, “Oh, well that may be so but we’re still not giving you his money back. He’s not getting his refund with you.”

Wegge then brought the client’s case in to the very first IRS Tax Forum in Chicago, where they had case resolutions.  An agent there agreed her client was owed that money, but then she was told she couldn’t get an answer from the division to release the money, because they weren’t answering their phones. She had to go back and forth with several agents, at one point being told she wasn’t allowed to leave until they resolved it, until she could get a satisfactory answer. Finally, an agent said Wegge’s client would have his money in about two to three weeks.

“And my client did get his money back within three weeks,” confirmed Wegge.  “So he was happy.”

But Wegge stressed that she had two “very bizarre cases where the IRS has just totally dropped the ball.” And she added that “what really upsets me about this whole thing is I spent a lot of time on this. And sometimes the client gets upset with me when I charge them…and I say, look, we did the return right; the IRS admitted we did the return right, and they’re the ones that messed it up. And the client says, ‘Yeah, yeah, yeah I know.”

Rude Auditors and IRS Employees

Cecilia Bowers, of Tulsa, OK, says, “I have been preparing taxes for 59+ years and during that time have had multiple horror stories of rude and incompetent auditors.  I have always just taken the position that ‘tax particular Human should not be where they are,’ and I am going to ask for a group manager, or the current in-office “complaint department.”

Fortunately, for her that has resolved the problem in 80% of the issues, she says.  “Beyond that, I have simply gone to Tax Payers Advocate Service and I don’t recall ever having them fail me.” But Bowers is skeptical that “a bill of rights or any other written rule is ever going to change who people are or how they think and respond,” and she suggests tax professionals “just move on to the many good employees.  Spoke to one this morning at ACS collections and he was awesome.”

Nils Lenz, of Zephyrhills, Florida, says he also has worked with IRS Agents that are very rude.  “I have had several Compliance Officers insult myself and well as my clients, plus they try to intimidate us also,” he said.  “My agent said that ‘even his dog could be a CPA Candidate’; another asked me if I was going to practice another year, and still another one used to shake the Schedule C in front of both client and myself if there a was loss and said that it did not make sense, regardless of the fact that all of the expenses and revenue were documented.

Another problem he has with them is “they tend to disallow too much, even though the correct documentation had been presented,” he said.

There were two different agents with whom he had a very hard time dealing.  He said he had two agents disallow everything for two different clients who are Over the Road Truckers, even as the documentation was all sorted out to make It easier for the agent; “I had gone through the trouble of sorting everything by category, and sorted chronologically,” he said.

And “the other agent never stated what the issues were.”  Both of these disallowed everything because of their impatience, he said.

He said he took both of these Over the Road Truckers cases to appeals, and fortunately the appeals agents were both very nice and allowed everything.  “Either through appeals, audit reconsideration or amendments, I was able to get the entire taxes abated,” he said.

Then, he added, “Don’t get me started on CP2000 letters, I had sent many back almost ten times, with the issues already covered the first time,” he said. He explained that CP2000 letters are from underreporting, and “always have mistakes.”  But “then when I send in a response, I might receive four or five letters saying that nothing has been corrected and want to keep increasing the taxes, interest and penalties, so I have to reply to each one, saying it has already been corrected, several letters ago.  I understand the main issue with CP2000 letters, is that it is it automated, all by computer; the process would not be corrected until an actual human starts working on the case; otherwise it can drag on for months.”

Overall, he said, “With the four or five agents in the small business section in Tampa, I do not want to have to deal with them anymore,” though he says he has no problem with any of the other offices, even Lakeland.  And, he says that “when I have spoken to other preparers about these same agents, they all have very similar opinions, they hate dealing with them also.”

Correspondence Not Received?

Sometimes the problem can be maddening, especially when the tax professional has sent in timely responses, and yet they seem to go into a black hole at the IRS.  Lennison Alexander of Atlanta, GA, tells of one such case:  “Filed for Innocent Spouse Relief. IRS agent in charge of the case calls and verbally request additional information. Additional information provided within two days.”

Ten months later, he said, the taxpayer receives a letter via standard first class US Mail from the agent denying spousal relief, and stating that since the taxpayer did not respond to in a timely manner to several pieces of IRS correspondence regarding this, the time to appeal and petition the tax court has elapsed. “Needless to say the taxpayer never received any correspondence, and when told of this, the agent claimed that all correspondence was sent via certified mail but could not or flatly refused to provide proof of service,” he said.

“After protestation on my part,” he continues, “the agent offers to look into the case once more and ‘see what I could do if anything to help.’” Alexander says, “Since my objective is to win this case for my client, I have not cried foul thus far. However, if denied a proper hearing I will be screaming ‘bloody murder’ and demand a meeting with the supervisor,” he says.

Other Issues

With some other types of problems, it’s with the decision itself, and would require a supervisor or appeals process.

For Roger Lubiens, of Folsom, CA, the problem just seemed one of a bad decision on the IRS’s part. “The IRS audited my client’s tax return and disallowed three dependents who live with the client. Despite tax law, court rulings, school records, birth certificates, and medical records, the agent denied one of claimed children as a tax dependent citing a divorce decree,” he said, adding that “Common sense did not prevail, and even the Taxpayer Advocate could not override the IRS agent’s onerous decision.”

As for Wegge, she is all for the NSA’s Tax Practitioner’s Bill of Rights.  “I’m happy about anything that can be done for our taxpayers,” she said, so that when there are problems, it can be handled in a timely fashion by competent IRS people.  “And I think that’s our big problem right now; there are very few competent IRS people.”


About the Authorjulia-head-shot

Julia Wilkinson
Freelance Writer
Alexandria, VA

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The right to have tax laws and rules passed in a timely manner. Including:
a. The right to have tax laws affecting the current tax year enacted no later than September 1st of that year.
b. The right to have IRS forms reflecting any new laws for the current year available no later than October 1st of that year.

The right to quality service from the IRS. Including: 
a. The right to have telephone calls answered within 15 minutes, on a practitioner-only hotline, staffed by
knowledgeable employees.
b. The right to have taxpayer correspondence answered within 20 days.
c. The right to have any collection action on the taxpayer’s account frozen while the IRS is considering a taxpayer’s timely filed response to IRS collection activity.
d. The right to have one IRS representative deal with a tax issue from start to finish until the issue is resolved.
e. The right to request a supervisor be involved in resolving a matter if the initiating IRS representative is unwilling or unable to resolve an issue.
f. The right for practitioners with Practitioner Tax Identification Numbers (PTINs) to communicate electronically with the IRS on taxpayer matters in a secure manner.

The right to practice without undue IRS demands during Tax Filing Season. Including: 
a. The right to have an IRS audit moratorium during the three weeks immediately before major tax deadlines such as March 15, April 15, September 15, October 15 of each year.
b. The right to have an IRS moratorium on collection actions or collection information requests during the three weeks immediately before major tax deadlines such as March 15, April 15, September 15, October 15 of each year.
c. The right to have an IRS moratorium on planned software maintenance and computer downtime periods during the three weeks immediately before major tax deadlines such as March 15, April 15, September 15, October 15 of each year.

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