SFR and 90 day notice of deficiency

Technical topics regarding tax preparation.
#21
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NoCalCPA85 wrote:
terpfan101 wrote:The tax assessed was $54k plus about 35k in penalties and interest.

Are you now saying that the IRS processed the return and assessed the tax shown on that return? Or are these the amounts shown on the notice of deficiency.

If the "default date" of the notice of deficiency is 8/16/2022, then the IRS has no right to assess the amounts shown in the notice of deficiency unless the taxpayer signed the waiver that came with the notice or these are the amounts shown in the return that was filed.

As long as the petition is postmarked by 8/16/2022 (the 90th day), it will be timely. It should be sent by USPS certified mail so that you have the green-and-white receipt with the postmark on it.

I'm with gatortaxguy --- file the petition.


As an update, I spoke to someone today and he made it sound like the 90 day letter case was closed by the examiner well in advance of the expiration of the 90 day period and he saw a comment that no return was filed. However the taxpayer did file the return back in late 2021, it just sat around Fresno until after the examiner closed the case and then appeared on the transcript as forwarded for processing.

I saw in the IRM you posted earlier the following text below. I guess my question at this point is, is it better to file the petition and have the return/case moved to appeals vs having it process through the ASFR channel?

4.8.9.23.2.2 (08-11-2016)
Delinquent Return Secured
Situations where a nonfiler submits a delinquent return after the statutory notice of deficiency has been issued should be handled as follows:
The statute of limitations must be updated to correctly reflect the receipt of the delinquent return. Complete Form 3177, Notice of Action for Entry on Master File, in accordance with IRM 4.4.9.7.1, TC 971 Action Code 282. Prepare / input Form 5348, AIMS/ERCS Update (Examination Update), to request the statute date be updated on AIMS and ERCS.
Hold the case until the 90 day period expires to determine if the taxpayer has petitioned Tax Court.
If not petitioned and the Service accepts the figures shown on the return as substantially correct, prepare a revised report reflecting the tax shown on the delinquent return. Consider delinquency and estimated tax penalties and assert on the report when applicable. Close the case to CCP with Disposal Code 08.
If not petitioned and the Service does not accept the figures on the return as substantially correct, assess the amounts on the defaulted notice using partial assessment procedures and update to Aging Reason Code 53. Return the case to the group for audit reconsideration procedures.
If a petition has been filed with the Tax Court, the delinquent return will be transmitted to the appropriate Appeals office that serves the area making the determination of the tax liability.
 

#22
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Good luck. Let us know how it turns out.
Steve
 

#23
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It's interesting to know that even after an NOD is issued the examiner is still looking at things related to that case without even knowing whether a petition was filed.
 

#24
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terpfan101 wrote:I saw in the IRM you posted earlier the following text below. I guess my question at this point is, is it better to file the petition and have the return/case moved to appeals vs having it process through the ASFR channel?

Yes, it's better to file the petition because, as I said in #14 above,

Whether or not they accept the return is an unknown because they aren't required to do so. That's why we advise the filing of a petition.
 

#25
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NoCalCPA85 wrote:
terpfan101 wrote:I saw in the IRM you posted earlier the following text below. I guess my question at this point is, is it better to file the petition and have the return/case moved to appeals vs having it process through the ASFR channel?

Yes, it's better to file the petition because, as I said in #14 above,

Whether or not they accept the return is an unknown because they aren't required to do so. That's why we advise the filing of a petition.

Thanks again for your help! What’s next? Can we expect to hear from appeals?
 

#26
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terpfan101 wrote:What’s next? Can we expect to hear from appeals?

Assuming that the petition was timely filed with the Tax Court, the next thing that will happen is that the Tax Court will send a "Notice of Receipt of Petition" to the taxpayer and will "serve" the petition on IRS Counsel. IRS Counsel then has 60 days to file its "Answer" to the petition. In the "Answer," the IRS usually denies all of the allegations stated in the petition, which is normal. The case is then referred by IRS Counsel to Appeals under Rev. Proc. 2016-22.

https://www.irs.gov/pub/irs-drop/rp-16-22.pdf
 

#27
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NoCalCPA85 wrote:
terpfan101 wrote:What’s next? Can we expect to hear from appeals?

Assuming that the petition was timely filed with the Tax Court, the next thing that will happen is that the Tax Court will send a "Notice of Receipt of Petition" to the taxpayer and will "serve" the petition on IRS Counsel. IRS Counsel then has 60 days to file its "Answer" to the petition. In the "Answer," the IRS usually denies all of the allegations stated in the petition, which is normal. The case is then referred by IRS Counsel to Appeals under Rev. Proc. 2016-22.

https://www.irs.gov/pub/irs-drop/rp-16-22.pdf


Right and then does appeals review things presumably the delinquent tax return is reviewed? Do we receive contact from IRS appeals at some point.
 

#28
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terpfan101 wrote:Right and then does appeals review things presumably the delinquent tax return is reviewed? Do we receive contact from IRS appeals at some point.

I answered this in #3.
 

#29
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Following up on this post made last year. The taxpayer eventually received a refund from the return that was eventually processed by the ASFR unit. This occurred several months after we filed the petition. I assumed it was due to the petition but got replies re the petition. The tax court date has been scheduled and we wish to stop the process since everything is done.

I reached out to the attorney who was listed on the last case. Before I follow up with him, wanted to confirm whether this is the appropriate way to handle since neither I nor the taxpayer ever heard from IRS appeals.

The attorney did note that the return should not have been processed due to the petition having been filed.

Any thoughts are appreciated.
 

#30
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You need to resolve this with the IRS attorney(s) named in the "Answer" that was filed with the Tax Court.
 

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