small dollar case appeal, contingent fees

We filed Form 843. We just received notice that the claim was denied. The instructions in the letter regarding the time frame for appealing is confusing.

First it says that taxpayer can submit a POA, and if the IRS doesn't hear from him within 30 days, it will process "your case with the information we have now." We already submitted the POAs, as evidenced by the fact that I received this notice.

Then it talks about the small dollar case appeal process. It does not provide a deadline for appealing.

Then it talks about a 2 year deadline for filing suit.

Does anyone know how much time we have to submit a small dollar case appeal? I took a quick look and didn't find a quick answer and thought I'd check in here before spending time on this.

Also, does anyone know how the CPA compensation rules work? I normally bill hourly and don't negotiate, but my client is really getting screwed here. I am thinking about offering to do this for him for the lesser of my hourly or 50% of the ultimate refund. The amount at issue is $8,000, and I don't want him to walk away due to not wanting to deal with the fees. Plus he's already paid the attorney and me a lot associated with the larger transaction.

Thanks.

You said it yourself, 30 days.

https://www.irs.gov/compliance/appeals/ ... or-appeals

I would research contingent fees and refund claims. And yes, you would be representing the client here, not just preparing a tax form.

The letter you received is probably Letter 105C. This is a notice of claim disallowance sent by certified mail, as described in sec. 6532(a)(1). The taxpayer has 2 years from the date of the notice to file suit in either U.S. District Court or U.S. Court of Federal Claims.

I agree that the letter is ambiguous as to the time frame during which you must file an appeal. I don't agree with Jeff-Ohio that you only have 30 days. Pub. 5 doesn't mention any time frame for filing an appeal for claims. But two sections of the Internal Revenue Manual might be helpful. IRM 4.19.16.2.4.1 says that after issuing the claim disallowance letter, the IRS will wait 45 days for the taxpayer’s response, and after that, they will close the case. And IRM 8.7.7.2.2 states that Appeals won’t accept such a case with less than 180 days remaining on the 2-year "file suit" period. Oops, sorry. Your message said that if the IRS doesn't hear from your client within 30 days, they will close the case.

Regarding contingent fees, see sec. 10.27(b) of Circular 230. You can charge a contingent fee if the claim was filed within 120 days of notification of an audit from the IRS, and if the claim involves interest or penalties assessed by the IRS. There might be other restrictions in the AICPA's Code of Professional Conduct or your state society's rules.

Thanks, both.

Kevin Brady's updated tax bill in the House (December 10) has a new section. Sound tax policy???

SEC. 409. RESTRICTION ON REGULATION OF CONTINGENCY FEES WITH RESPECT TO TAX RETURNS, ETC.

The Secretary of the Treasury may not regulate, prohibit, or restrict the use of a contingent fee in connection with tax returns, claims for refund, or documents in connection with tax returns or claims for refund prepared on behalf of a taxpayer

I hope that this passes. I don't like contingent fees, but I would love to charge one for some of my high-dollar, nonautomatic changes.