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.

  • How Returns Are Examined
  • Audit Rules for Partnerships
  • The Time Limits Within Which the IRS Must Act for Additional Taxes
  • Filing Refund Claims
  • How To Arrange Closing Agreements and Compromises
  • How To Get the IRS’ Opinion on a Tax Problem
  • Circular 230: Practice Before the IRS
  • Tax Return Preparer Penalties


Preliminary Examination

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

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