J.K. Lasser's Your Income Tax Professional Edition 2017

Part 11 Practice Before the IRS

Because the IRS is unable to examine every return, it follows a policy of examining returns that, upon preliminary inspection, indicate the largest possible source of potential tax deficiency.

Returns are rated for audit according to a mathematical formula called the discriminant function system (DIF). In recent years, the IRS has audited fewer returns overall, but has increased audits of high-income taxpayers, Schedule C filers, S corporation and other business owners, and tax-shelter investors.

Taxpayers selected for audit are advised of their right to be represented by a certified public accountant, attorney, or enrolled agent. Once the taxpayer has chosen a representative, the IRS may not interview the taxpayer alone, unless consent is given. Together with the first letter of proposed tax deficiency, the IRS must give the taxpayer a clear and complete explanation of the administrative process from examination and appeals to the collection of taxes.

1. How Returns Are Examined
2. Audit Rules for Partnerships
3. The Time Limits Within Which the IRS Must Act for Additional Taxes
4. Filing Refund Claims
5. How To Arrange Closing Agreements and Compromises
6. How To Get the IRS' Opinion on a Tax Problem
7. Circular 230: Practice Before the IRS
8. Tax Return Preparer Penalties

How Returns Are Examined

Preliminary Examination

Correspondence notices are used to correct the following types of obvious errors spotted at IRS Service Centers: medical expenses under ...