Thanks all -- wonderful advice. I have an informal
conferance scheduled with the collection agent next week.
We've prepared amended tax returns, which I wll provide a
copy to the collection agent and prepare form 843, if
required. My initial thoughts were consistant with Phil's to
present our issues and ask the government to 'entertain a
claim for abatement'. We have one material issue that we
believe was a mistake, two material issues that hinge on the
timing of the deduction -- our client incurred siginficant
income while in S status; converted to C and material losses
were recogized by the C corp -- these losses have been losed
due to an entity change in control in 2004. Client records
are good to excellent to support our posistions.

Thanks again,

Bill Carlson

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Phil Marti wrote:
- quote -

You forgot one intermediatie step, Phil, and that is to
request a conference with the person's manager.

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

A few thoughts,

These are things that a Revenue Officer, ACS collections Rep
would be thinking!

The collection rep is probably concerned that after nearly 7
years that the liability has been on the books, that the
collection statute of limitations is running short, three
more years to go, the clock continues to click with accrued
interest while the issue is reviewed, in the end if the
liability is reduced, all is moot.

-BUT-

If the liability stands, then there is less time to collect
more liability (accrued interest is growing), this is the
KEY to paying the debt now & filing a claim immediately, if
1040x is accepted as filed the TREASURY will pay the TP
interest currently 6%

Is this a stalling tactic?, Are assets about to be shifted
in a fraudulent manner, the Federal Tax lien needs to be
filed, by now I HOPE IT HAS BEEN FILED!

These are things a tax examiner/auditor would be thinking!
After SEVEN years that the client is opinion shopping!

Are the mistakes caused by bad accounting?
Tax preparation on the original return coding errors?
Are the documents supporting the proposed adjustments available?
Can they be validated & verified against third party records?

http://www.irs.gov/irm/part25/index.html

http://www.irs.gov/irm/part25/ch06s01.html

This flow chart indicates that you might be successful in
getting the taxes adjusted down, but prepayments, with
holding credits & subsequent payments (unless made within
the last 24 months) will -NOT- be refunded, they will be
offset into EXCESS COLLECTION FUND.

http://www.irs.gov/irm/part25/36881001.html

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Bill,

You should file Form 843, Claim for Refund and Request for
Abatement, along with the Form 1040X.

Also, DO NOT give the original 1040X and Form 843 to the
collection officer, not matter what he tells you. Only give
him photocopies.

Mail the originals to the IRS Service Center for the state
that the taxpayer lives in.

Rudy
www.LizcanoTaxServicesLLC.com

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Bill,

Don't listen to the Collection agent. Prepare the 1040X and
send it to the IRS Service Center where the taxpayer would
file their tax return.

1998 tax return due on April 15, 1999
Normal 3 year Refund claim due on or before April 15, 2002
Normal 2 year Refund claim due on or before 2 years from the
date of each payment

Exceptions to the normal statute of limitations include
request fo extensions to file, adjustments to SE and FICA
tax, etc.

Example
If the taxpayer only made 12 payments, 1 each month on the
1st day of each month, starting on Jan 1, 2003, then all of
those payments are barred since the latest date the refund
claim could have been filed would have been Dec 1st, 2005
for the very last payment the taxpayer made on Dec 1st,
2003.

Jan 1, 2003 payment, refund claim due by Jan 1, 2005
Feb 1, 2003 payment, refund claim due by Feb 1, 2005
etc.

It is in Regulation 301.6511(b)
http://frwebgate5.access.gpo.gov/cgi...ction=retrieve

Internal Revenue Code 6511
http://www.law.cornell.edu/uscode/ht...1----000-.html

Rudy
www.LizcanoTaxServicesLLC.com

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"Bill Carlson" <BillC[at]CarlsonCpa.com> wrote:

- quote -

In a way everyone's right. You cannot claim a *refund*
until the entire tax is paid. At that point you're limited
to claiming refund of amounts paid within the prior 2 years.

Since there's still a balance due on the books, IRS can
certainly entertain a claim for abatement even though the
assessment statute has tolled. Another approach is an offer
based on doubt as to liability.

I'd start by trying to convince the collection person that
they can consider the claim and that it's valid. If that
doesn't work, I'd try the Advocate.

--
Phil Marti
Clarksburg, MD

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We have been retained by a new client who owes significant
taxes from their 1998 individual income tax return. They
have paid approximately 25% of the outstanding liability.
The return was filed timely. We believe a material error was
made on this return which would justify amendment and
significatly reduce the tax liability. The IRS instructions
state that an amended return must be received within 3 years
from the date of filing or within 2 years from the date you
paid the tax, whichever is later.

The IRS collection agent has stated that the full tax must
be paid before an amended return could be filed.

I have been unsuccessful in finding the Code section or
regulation that makes reference to the 2 year period; or,
fully understanding its intent. We've received comments on
both sides, i.e. statute is still open as tax has not been
paid and the above response from the IRS.

Any help in directing me to the proper cites and any
experiences in this area would be greatly appreciated.

Bill Carlson

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