Audit Insurance

[joanmcq]

Well, we do have an IRS office within a few miles, but that probably isn't the office the audit is out of for a correspondence. If they insist on an office audit we try to get it moved to our local office. they all know us there! For the Alabama one, once the auditor got my POA, he knew I was in CA and even joked about 'you probably don't want to fly out here'. We compromised because he did want originals as far as reciepts went, so I said I would get everything organized & send in copies and the taxpayer (who lives in Mobile where the office is) would get the originals organized in the same fashion and drop them off.

Sometimes its easier to sit across from an auditor to explain stuff though.

[Black Bart]

Okay, and thanks again but

I wasnt' trying to be sarcastic Bart! Its just sometimes that simple.

For example of simplicity. I'm filing my first OR tax court petition. I'm really nervous at doing this right; its COURT fer chrissakes and I'm afraid of not dotting every 'i' on a court doc. Figure if I was an attorney I'd know this. So, section 3 reads, "Plaintiff(s) request(s) the following relief:_______". So to make sure I'm doing it right, I read the instructions, "Section 3, Explain what you want the court to do for you".

Uh, find for my client? Change the assessment?

So I call an Oregon rep. Is it that simple? Duh, yep. So I put it into legalese: "reconsider previous determination"

another question: About that Alabama client -- do you tell the auditor you're in California without mentioning the availability of your Alabama subcontractors so that you can plead distance? Or does that play a part at all? An excuse of inconvenience/impracticality of travel wouldn't work for me (only a few miles to IRS). Does it come down to whether or not it's more convenient or easier for the agent?

[joanmcq]

I wasnt' trying to be sarcastic Bart! Its just sometimes that simple.

For example of simplicity. I'm filing my first OR tax court petition. I'm really nervous at doing this right; its COURT fer chrissakes and I'm afraid of not dotting every 'i' on a court doc. Figure if I was an attorney I'd know this. So, section 3 reads, "Plaintiff(s) request(s) the following relief:_______". So to make sure I'm doing it right, I read the instructions, "Section 3, Explain what you want the court to do for you".

Uh, find for my client? Change the assessment?

So I call an Oregon rep. Is it that simple? Duh, yep. So I put it into legalese: "reconsider previous determination"

[Black Bart]

For the sarcasm of paragraph one, I'm taking

You say, can we make this a correspondence audit?

back my compliment.

I am in the middle of a miserable 2- year- we- are- auditing- everything-including-the-kichen-sink (literally; they lost everything in Katrina) Alabama audit. I thought there is no way this one will flip. All I did was say, can I mail everything? We compromised on the taxpayer taking in original receipts when asked for, but the auditor only talking to me, and me analyzing the reams & reams of stuff the taxpayer was gonna just dump on the auditor. Auditor is happy he doesn't have a huge pile of stuff to wade through because I make the taxpayer match it to spreadsheets I've prepared. Taxpayer will eventually be happy because if he just piled the stuff on the auditor, I'm sure it would have been disallowed (I'm approaching three reams of photocopies at this point). I get a paycheck and get to curse everytime I think I'm done with this mess and taxpayer sends me in more stuff (look, I had another mortgage I didn't report!) and another state under my belt.

For the "inside information" in paragraph two, I'm giving it back again. Next audit, I'm giving them a 'flip it" call. Thanks.

[joanmcq]

You say, can we make this a correspondence audit?

I am in the middle of a miserable 2- year- we- are- auditing- everything-including-the-kichen-sink (literally; they lost everything in Katrina) Alabama audit. I thought there is no way this one will flip. All I did was say, can I mail everything? We compromised on the taxpayer taking in original receipts when asked for, but the auditor only talking to me, and me analyzing the reams & reams of stuff the taxpayer was gonna just dump on the auditor. Auditor is happy he doesn't have a huge pile of stuff to wade through because I make the taxpayer match it to spreadsheets I've prepared. Taxpayer will eventually be happy because if he just piled the stuff on the auditor, I'm sure it would have been disallowed (I'm approaching three reams of photocopies at this point). I get a paycheck and get to curse everytime I think I'm done with this mess and taxpayer sends me in more stuff (look, I had another mortgage I didn't report!) and another state under my belt.

[Black Bart]

Joan,

Bart, we were a small company until a popular DIY tax program started selling our service. We do mostly correspondence audits or try to flip office audits to correspondence if we can, but we'll do office ones as well if they won't flip. We have contractors in most areas to handle office audits if necessary.

You're a civilian treasure trove of IRS "inside" information (it's almost like having an agent working for us here on the board).
Question: How do you get IRS to "flip" an audit from office to correspondence? I assumed that office audits were office audits and correspondence audits the same way -- never even considered that the more serious office audit could be converted. Can you advise how you do it (and never mind if I'm asking for "private" info that you aren't supposed to talk about)? Thanks.

[Black Bart]

Everybody to their own taste, I guess.

When I buy an electronic or mechanical product for over 50 dollars I get the longest extended warranty that is available...It's just worth something to me to know that I won't have to do pay for the repairs and that I won't have to replace an item until at least a given time.

Sometimes they're handy. I once bought a $400 cheapo "eMachine" computer (remember those?) plus extended warranty. It conked out within weeks; I shipped it CA (rep for South Korean manufacturers), they sent me #2. It crashed. I had a local fix-it geeker check it (he said: "Man, that's made so cheap, I don't see how it even runs."). Sent it back -- they freighted me #3. I used it four or five years. Still, the odds are it won't fail, so covering small stuff (under $300-400) doesn't seem worth it to me unless the warranty's real cheap.

About that audit protection -- I found the brochure. It's from ATX, called Audit Shield, and pays up to $2,500 for tax, penalty, and interest. Costs client $24.95 -- preparer gets $5 commission (very generous, eh?). Doesn't say who is the client's rep. I assume you have to be an ATX user, but guess it doesn't hurt to ask. Info number is 866-879-2150.

[erchess]

I guess I am just different ;-)

When I buy an electronic or mechanical product for over 50 dollars I get the longest extended warranty that is available unless for some unusual reason I am sure I will stop using the item before that period is up. Just tonight I bought a TV from an online Vendor I like and I paid $40 extra for the two year extended warranty. If it malfunctions within that period I will call the company and a new TV will arrive within three business days. On the business day after the one on which the new TV arrives I will have boxed the old one up in the packing materials of the new one and the shipper will be back for pickup. In probably a year and a half I am likely to be offered two more years of this protection and if I still like the TV I will get the additional two years. I can't recall the last time I personally paid for a repair (as opposed to normal maintenance) on say a car or an electronic device. I realize that I pay more in total to own all the items than if I simply paid repair or replacement bills out of pocket when necessary. It's just worth something to me to know that I won't have to do pay for the repairs and that I won't have to replace an item until at least a given time.

[joanmcq]

Bart, we were a small company until a popular DIY tax program started selling our service. We do mostly correspondence audits or try to flip office audits to correspondence if we can, but we'll do office ones as well if they won't flip. We have contractors in most areas to handle office audits if necessary.

[Davc]

My previous software had this insurance for a cost and my new software has it for a cost. I offer it but have had no clients to take it. I believe it's another way of getting money from the client like extended warranties on all kinds of consumer products. A few years ago I purchased a color TV and the salesman wrote on the ticket customer flatly refuses the extended warranty. He said the TV would require maintenance and repair. I used it for nearly 20 years without one repair. I refuse to become part of this grand scheme to defraud the public.

When the talk that way to me, I ask them why they're selling such poorly manufactured products.

[erchess]

The nameless company I once worked for has as far as I know always paid the penalty and interest if they agree that they made a mistake. At some point while I was working with them they began to offer for additional fee a guarantee that they would also pay the additional tax. The first year they offered this they covered the entire additional tax no matter how much but then they said that had proved to expensive and they capped it at if memory serves 3K. I think that figure had risen to 5K by the time I left them and it is probably more now.

I never worked with a client who drew on this policy but I was told that a lot depended on which representative from above happened to handle your case. Some seemed to be ok with any payment as long as there had been an error and the local people thought we had at least contributed to it while others acted as though if they could deny a claim they would personally get to keep the money in question.

The textbook case we were told about to motivate us to sell this policy involved a supposedly very reliable preparer who I did not know but who was repeatedly named. Her client was a married man who lived in NC but then for some reason got a job in Texas. His wife and family moved to Texas for a short period but they didn't like it so they moved back to the same house they had been in before, which happened to be owned by his parents. He worked in Texas but he banked in NC his kids went to NC Public Schools and then attended public colleges in NC as in state students and he received all mail in NC and took his pets and family including himself to NC care providers. Knowing all this the genius preparer filed him and his family as non residents of NC owing no state tax to anyone since Tx has no state income tax. Well NC took umbridge but with audit protection the company paid all his tax penalty and interest to NC.

[Black Bart]

Audit insurance

...no reimbursement of the client for the tpi they have to pay.

About the tpi, I assume that means tax, penalty, and interest, but I wasn't aware that any insurers paid the actual tax -- just paid the penalty and interest. Block has or had something called the "Peace of Mind Extended Service Plan" and Jackson had a similar one ("Gold" something or other) which at one time paid pen/int. Do they also pay the actual tax now?

Can anyone mention a group that actually sells audit insurance such as I want?

I got mail the other day from somebody (software company, bank, etc.) selling audit insurance but misplaced it -- don't know who sent it. If it pops up I'll post it.

Does anyone know what became of the fact that the IRS was considering stopping RALs and Audit Insurance as well as another practice?

I don't think anything's been done on it since January (just a lot of talk as usual). I believe IRS got the FreeFile software bunch to drop RALs (don't know about insurance), but other than that they've just talked about limits on tax info disclosure to third parties (which wasn't what we are concerned with in the first place).

[Black Bart]

Audits

No, actually we do the work in house. And don't prepare taxes, so you don't lose that. How do you think I get all this experience on CP2000s?!!!! Hundreds a year! BTW, I am not an owner, just a working schlub, so I'm not promoting, just edumacatin'.

How do you advertise your service to the public (I've never heard of them before)?

Also, when you say you do the work in house, does this mean you deal with an IRS agent by phone rather than in person? I'm curious as to what your process is.

[MLINDER42]

Bank Products

IRS stopped pay stub rals. Some states have put ceilings on interest rates.Military has also a rate ceiling so they are not eligible.IRS needs bank products so low income clients will file for the EIC.The never have the money to pay the fees and congress wants that money distributed.

[erchess]

I appreciate knowing about your outfit Joann but for me the deal breakers are that I don't get to represent the client, the fees are higher than I wanted, and there is no reimbursement of the client for the tpi they have to pay.

Can anyone mention a group that actually sells audit insurance such as I want?

Does anyone know what became of the fact that the IRS was considering stopping RALs and Audit Insurance as well as another practice?