news.optonline.net wrote:
- quote -

Not necessarily now.

all three answers should be: "ask your tax professional,
whether he/she be a CPA OR an EA."

Yes, I just had to say that!

Cheer$,
Harlan Lunsford, EA in LA

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Y Lee wrote:

- quote -

Last question first: Was the IRS correct? If so, then you
don't have grounds to contest the audit.

Interest on income taxes isn't [yet] deductible [again(*)],
so unless you can't pay it in a lump sum, there's no reason
not to.

* - Before 1986, interest on tax adjustments arising from
trade/business transactions had business character and were
deductible as such. In 1987, Treasury wrote a regulation
calling all interest on personal income tax as personal.
The most recent opinion on this (2003) by the Tax Court has
upheld this view (but a motion to reconsider the opinion is
outstanding, on the grounds that a pre-1988 "temporary
regulation" cannot extend twelve years out from its
enactment - i.e. 12 years is not "temporary"). If the
regulation in question is subsequently found to have
expired, then the pre-1987 case law becomes controlling
again, and business related interest on taxes will be
deductible again.

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Lee <blue_stars_shiver[at]yahoo.com> wrote:

- quote -


The answers are
1. ask your own CPA
2. ask your own CPA
3. ask your own CPA

Depending on the facts and circumstances of your own case,
he or she would be best qualified to answer you.

--
<<< Benjamin Yazersky CPA [NJ & NY] > >
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Y Lee wrote:

- quote -

The last question bothers me, since it indicates you aren't
even sure if you *owe* the tax in question. That is,
contesting the audit is a decision that is made based on
whether there are *grounds* for doing so.

Frankly, for anyone to give useful advice would require a
lot more details than you have given, such as the exact
status of the audit (where in the process are you right
now), exactly who is auditing you and for what tax (Federal,
state, local? Income tax, payroll taxes, sales taxes,
property taxes, etc.?), your ability to pay the tax in
question and the amount in question.

I would strongly suggest that the if amount in question is
at all significant, you seek out competent local
professional counsel on this matter.

--
Ed Zollars, CPA
Phoenix, Arizona

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blue_stars_shiver[at]yahoo.com (Y Lee) writes:

- quote -

It's two different issues. If you agree with the audit's
conclusions, pay it. That stops interest and avoids late
payment penalty. If you don't agree with the audit's
conclusions, exercise your appeal rights. You don't have to
pay until there's a final determination. However, you don't
want to drag it out just for the nuisance value, since
interest on the ultimate deficiency continues to accrue
until you pay it.

Phil Marti
Topeka, KS

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Our business was audited, and we just found out that
we owe money. We have some saved up cash, but any
advice on paying the back taxes owed?

Should we pay it all in one lump sum? Or draw it out?
Or contest the audit?

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