{"id":3204,"date":"2019-06-11T10:26:27","date_gmt":"2019-06-11T14:26:27","guid":{"rendered":"https:\/\/keysolutions.us\/blog\/?p=3204"},"modified":"2019-06-11T10:26:35","modified_gmt":"2019-06-11T14:26:35","slug":"irs-advises-its-auditors-how-to-avoid-taxpayers-right-to-go-to-tax-court","status":"publish","type":"post","link":"https:\/\/keysolutions.us\/blog\/irs-advises-its-auditors-how-to-avoid-taxpayers-right-to-go-to-tax-court\/","title":{"rendered":"IRS ADVISES ITS AUDITORS HOW TO AVOID TAXPAYER’S RIGHT TO GO TO TAX COURT"},"content":{"rendered":"\n

IRS Challenges Corporate Taxpayers Who Fail to Pay Shareholder Employees a Reasonable Compensation by Denying Taxpayers Access to the Tax Court<\/strong><\/p>\n\n\n\n

<\/p>\n\n\n\n

Background<\/strong><\/p>\n\n\n\n

Since 2005, the IRS has focused more attention of the issue of compliance and reasonable compensation to improve it enforcement and compliance strategies. If a taxpayer fails to pay its key shareholder\/employees a reasonable compensation, the non-compliance by the taxpayer can be very costly. The IRS will assess the taxpayer payroll tax penalties and interest for failure to timely remit its required payroll taxes on the unreported compensation when the taxpayer filed its quarterly Form 941 and the required remittances. <\/p>\n\n\n\n

Tax Court Advantage <\/strong><\/p>\n\n\n\n

When a taxpayer has the right to file a petition with the Tax Court, the taxpayer can avoid paying the IRS assessment until the case is resolved. Another significant possible benefit of going to Tax Court is that the IRS Appeals Office, if the taxpayer appeals the audit exam decision, needs to consider the risk of litigation. Generally this means that the Appeals Officer will often look for a compromise payment to have the taxpayer agree not to go to Tax Court if the IRS Appeals Officer feels that the IRS position may not be upheld by the Tax Court.<\/p>\n\n\n\n

IRS Strategy to Avoid Going to Tax Court<\/strong><\/p>\n\n\n\n

When a taxpayer has the right to file a petition with the Tax Court, the taxpayer can avoid paying the IRS assessment until the case is resolved. Another significant possible benefit of going to Tax Court is that the IRS Appeals Office, if the taxpayer appeals the audit exam decision, needs to consider the risk of litigation. Generally this means that the Appeals Officer will often look for a compromise payment to have the taxpayer agree not to go to Tax Court if the IRS Appeals Officer feels that the IRS position may not be upheld by the Tax Court.<\/p>\n\n\n\n

Tax Planning Tip #1<\/strong>: <\/p>\n\n\n\n

The easiest, best and most cost-effective course of action is by avoiding the challenge in the first place by having your tax professional prepare a comprehensive reasonable compensation analysis. These studies can usually be prepared for a cost of approximately $750.00 for the initial year and approximately $300.00 in subsequent years to keep the study current. Compared to audit representation fees that can run in the thousands of dollars, this would be money well spent. <\/p>\n\n\n\n

Tax Planning Tip #2:<\/strong><\/p>\n\n\n\n

If you did not do Tax Planning Tip #1, be advised that the IRS examining agent will likely take two steps to keep the dispute out of Tax Court. <\/p>\n\n\n\n

First, the IRS will ask that the taxpayer confirm that the corporate officers are employees under IRC Sec. 3121(d)(1) and will not send the taxpayer IRS Letter 3523: Notice of Determination of Worker Classification. <\/p>\n\n\n\n

Second, the agent will ask the taxpayer to confirm that it is not entitled to relief under Sec. 530 of the Revenue Act of 1978.<\/p>\n\n\n\n

Tax Planning Tip #3:<\/strong><\/p>\n\n\n\n

We recommend that a taxpayer not represent themselves in an IRS audit. Rather, an experienced tax professional, preferably a tax resolution specialist, be engaged to resolve the IRS’s audit concerns. The IRS agent’s job is to collect the monies due the IRS. Sometimes tax issues are not black or while, but are gray and open to interpretation. The IRS will interpret these issues to maximize the tax assessment. A tax pro, who understands the tax law and how the IRS operates, will be an advocate for the taxpayer with the objective of minimizing the audit assessment. <\/p>\n\n\n\n

If you would like to discuss your business or personal tax planning<\/a>, tax preparation<\/a> and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601<\/a> today to make an appointment at our Exton PA CPA office<\/a> to discuss your situation. You can also schedule a consultation at Click Here<\/a>. <\/p>\n\n\n\n

Copyright \u00a9 2019 Keystone Financial Solutions, Inc.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.<\/strong><\/p>\n\n\n\n

About F. Bryan Haarlander, EA, CTRS:<\/strong><\/p>\n\n\n\n

Bryan\nHaarlander is an IRS licensed Enrolled Agent and who owns and operates a\nspecialized tax services firm serving clients in the western suburbs of\nPhiladelphia, PA, which includes the cities of Chester Springs, Coatesville,\nCollegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia,\nPhoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks,\nChester,  Delaware, Montgomery and\nPhiladelphia Counties, as well as clients in Delaware, New Jersey, New York and\nthroughout the continental USA. <\/p>\n\n\n\n

A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems. <\/strong><\/a><\/em><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

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IRS Challenges Corporate Taxpayers Who Fail to Pay Shareholder Employees a Reasonable Compensation by Denying Taxpayers Access to the Tax Court Background Since 2005, the IRS has focused more attention of the issue of compliance and reasonable compensation to improve it enforcement and compliance strategies. If a taxpayer fails to pay its key shareholder\/employees a […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[132,69,73,63,33,34,21,64,71,31,72,66,23,41,65,32,40,39,67,68,38,70,201,200,202,151,37,36,35,150,42,28],"class_list":{"0":"post-3204","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-irs-tax-planning-ideas-tips-news","7":"tag-accuracy-related-penalty","8":"tag-audits","9":"tag-bankruptcy","10":"tag-bryan-haarlander","11":"tag-chester-county-cpa","12":"tag-exton-accountant","13":"tag-exton-cpa","14":"tag-f-bryan-haarlander","15":"tag-first-time-abatement","16":"tag-frank-haarlander","17":"tag-innocent-spouse","18":"tag-installment-agreements","19":"tag-irs","20":"tag-irs-tax-debts","21":"tag-irs-tax-payments","22":"tag-keystone-financial-solutions","23":"tag-offer-in-compromise","24":"tag-oic","25":"tag-partial-installment-agreements","26":"tag-penalty-abatement","27":"tag-philadelphia-cpa","28":"tag-reasonable-cause","29":"tag-reasonable-compensation","30":"tag-s-corporations","31":"tag-self-employment-taxes","32":"tag-tax-adviser-near-me","33":"tag-tax-blog","34":"tag-tax-expert","35":"tag-tax-planning","36":"tag-tax-professional-near-me","37":"tag-tax-resolution","38":"tag-west-chester-cpa","39":"entry"},"aioseo_notices":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9W9tf-PG","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/comments?post=3204"}],"version-history":[{"count":12,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3204\/revisions"}],"predecessor-version":[{"id":3216,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/posts\/3204\/revisions\/3216"}],"wp:attachment":[{"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/media?parent=3204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/categories?post=3204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/keysolutions.us\/blog\/wp-json\/wp\/v2\/tags?post=3204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}