Get Client Resolution from the IRS 

    by Darrell G. Eskam C.P.A., C.V.A., M.A.F.F. 

    Client Resolution from the IRSWhen a client gets a letter from the IRS or tax authority, they often worry that they or we did something wrong - and that’s not always the case.  To ease this panic or anxiety, our firm and clients have benefited from a process that we developed for handling and resolving client correspondence and notices from the IRS.

    As we prepare each client’s tax return, we diligently document if there is something that the IRS may think is suspicious or out of the ordinary in the client file.  We also document these issues on the tax return for the client.  For example, if a client has large itemized deductions for charitable contributions, we make sure that we have the receipts in our file because we know that it could trigger a red flag for the IRS because it looks out of the ordinary.  So when preparing the return, if there are any unusual circumstances, we ensure that we get all the documentation at that time instead of waiting to deal with it if we receive an IRS notice.

    When a client calls us when they receive a notice or correspondence from the IRS, we ask them to bring in the letter so we can best determine how to help them.  When they bring in the letter, we have a power of attorney ready for their signature so that we can correspond with the IRS on their behalf.  We set our client’s expectation that it could take three to six months to get the issue resolved.  We also let the client know that in the meantime, they may continue to receive additional letters from the IRS that they should read and submit to us and we remind them that it’s normal for them to continue to receive these while we’re corresponding with the IRS to resolve the issue.  Most clients understand that it will take time dealing with the government and they trust us to stay on top of the matter.

    We rarely call the IRS, because we can better track our correspondence when we do so in writing.  Our approach is to write a letter and provide the appropriate information or supporting documentation with a copy of the IRS notice – and we always send our correspondence to the IRS via certified mail.  After three attempts, if we don’t get results, we file a Form 911, a Request for Taxpayer Advocate Service Assistance, with the IRS and fax it to the Taxpayer Advocate Service (TAS), which for us is in Omaha, NE.  This form provides the TAS with the client’s information and a description of the tax issue and includes the relief we are requesting on behalf of the client.  The TAS is there to guide us through the process of resolving tax problems that we haven’t been able to solve on our own with the IRS.  Within 48 hours of receiving our letter, the TAS calls us to let us know that they received the case and whether they will take it on or if it doesn’t qualify under their area.  They typically take on the case and resolve the issue with the IRS within three to six months.  We support the TAS through the process by providing them with the documentation or other information they need to resolve the issue for our clients.  If it becomes a multi-month process, the TAS provides a status on our case once a month to let us know what is going on, which is really impressive. 

    Unfortunately, sometimes we feel that a notice has been sent to a client that does not contain a valid issue and we work to prove to the IRS that the tax return is accurate.  For example, we recommended that a couple file separate returns and the client received a notice saying that the wife owed money because the IRS did not allow their estimate to be split.  We then submitted the documentation showing where the IRS actually does allow this option.  Or, in our region, we have several agriculture clients so some of our clients receive letters from the IRS on their 1099 patronage dividend statement.  We then have to facilitate correspondence with the IRS to remove additional income and the additional tax on that income that the IRS is trying to apply because it was already reported.  We usually get the TAS involved in these types of issues too to help us resolve the matter because of their complex nature. 

    We charge for our services to correspond with the IRS and/or the TAS on a client’s behalf and we set the expectation with our clients that tax preparation services are separate from IRS correspondence.  If we simply write a letter and it’s easily resolved directly with the IRS, we will often add the time and bill it with the following year’s tax return.  If it is going to be a longer process, or we have to get the TAS involved, we’ll let the client know that we will bill these services under a separate engagement.

    In addition to using the TAS, we use the RIA and PPC Tax Compliance Deskbooks and Planning Guides and the resources and information available on the AICPA Tax website including the various tax checklists.  These AICPA checklists used in preparation of the various types of returns is very beneficial to the shareholder reviewing the return and the staff associate who is preparing the income tax returns and adds to our firm’s documentation and due diligence.  We also leverage the relationships we’ve developed in our PCPS Small Firm Networking Group by sending emails to the group to see who may have already encountered an issue we are working on for a client.  Often, someone has dealt with a similar situation and shares how they handled it, which is very helpful.

    Practitioners can make a big difference for their clients – and increase their peace of mind - by being proactive, communicating with clients, and using the many resources available to them to navigate and resolve their clients’ issues with the IRS. 

    Darrell G. Eskam C.P.A., C.V.A., M.A.F.F. is a partner of a small two-partner, five-person firm in Gerring, NE. For more information about Eskam & Eskam, CPAs, visit www.eskamcpas.com.


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