Taxbert wrote:
- quote -

Not true!

California certainly DOES send information to the IRS, as do
(AFAIK) all the other states that have information-sharing
agreements with the IRS (which includes pretty much all the
states that impose comprehensive income taxes).

I was an audit supervisor with the California FTB in the
early 1980's, during the previous round of tax shelter audit
activity. I met with IRS personnel occasionally to share
information. It turned out not to work out too well for my
field audit group's production statistics, as a matter of
fact. Just about every name and SSN I gave to the IRS was
almost immediately contacted by IRS for audit -- and we had
to back off and wait for them to do their audit. So the
FTB's RAR unit got credit for the revenue instead of my
field group.

However, while most state tax agencies have statutory
authority to rely on the correctness of an IRS
determination, the IRS cannot rely on a state's work but
must perform its own audit. As a result, under normal
circumstances we seldom see a federal audit that appears to
be the result of information received by the IRS from the
state. Every once in a while I ask an audience of
California tax professionals if they have ever seen an IRS
audit that appeared to be the result of a California tax
audit. In an audience of 100+ active practitioners, one or
two hands may be raised. That's it.

Katie in San Diego

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<boston_guy_992[at]yahoo.com> wrote:

- quote -

The IRS sends information to the states, but the states do
not send information to the IRS.

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Harlan Lunsford wrote:

- quote -

Thanks Harlan....i already filed the amended return. If it
comes down to a hearing, are you saying the CPA shouldnt be
charging me for his time? Thanks

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boston_guy_992[at]yahoo.com wrote:

- quote -

Seems to me you shouldn't have to appeal by yourself, rather
it should be up to the CPA who prepared your return to go to
bat for you and appeal on your behalf (with suitable POA
provided him).

That's part of the "guarantee" all respectible tax pros
follows.

ChEAr$,
Harlan Lunsford, EA n LA
Thur, July 27, 2006

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An employer improperly sent me a W2 for long term cap gain
income of $100k. A CPA filed my original 1040 as follows to
correct the situation (#s simplified for sake of argument):

Line 7 Wages = $100k
Line 21 Other inc = ($100k)
Sch D Line 8 = $100k

The state return was filed the same way, but the State
rejected the negative # in their "other income" line, and
taxed me on 200k. So i am amending/appealing my state return
as follows:

Wages = $ 0
State Sch D = $100k

Assuming i win my State appeal, will this trigger red flags
with the IRS now, since the state return shows 0 in the
"wages" line and the Fed return shows $100k in "wages"? Is
the data sharing that sophisticated, or am i in good shape
since the W2 matches Line 7 on the 1040? (It's been almost 3
years since the Fed return was filed, so i obviously want to
avoid drawing any attention to the Fed return, and make it
past the 3 year statute). Thank You

NOTE: This was unrestricted, fully vested stock shares. The
cost basis was the stock's value on my termination date.
All appreciation after that was treated as LTCG. Similar
fact pattern as Turzillo v. Commissioner, 346 F.2d 884 (6th
Cir. 1965).

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >