Audit of uncollectible account

[appelman]

A client has come to me for help with an audit of his 2008 return. Most of his income is from self-employment, and the examiner is focusing on Schedule C expenses. The taxpayer owes 7K on the account, which has been tagged as "currently not collectable." (His current income is just social security.) Two questions come to mind:

1) Why is the IRS bothering with this? Doubling his liability isn't going to make it any more collectable!

2) How much of this poor guy's money can I justify taking to represent him? What's the worst that can happen if he simply ignores them?

Or am I missing something?

[JohnH]

This is just an off-the-top-of-my-head guess, but I'm wondering if something in their records makes them suspicious about the info he provided when it was placed in CNC status. He had to give them info about his income & expenses at that time, and it all has to be truthful. If he was deceptive with that info, he could have some big problems.

[DaveO]

I would guess that the return was selected for audit on its own merits. Audit and collections don't communicate with each other. If you decide to represent them in the audit explain their collection status to the auditor and they may decide it's not worth pursuing at that point.

[JON]

2008

was not that long ago. Where did the money go that he was taxed on? I have a real problem feeling sorry for people who pay their income taxes last.. There may be good reasons, but not very often. Get the money up front from him, or tell him to do the best that he can. Maybe the IRS will feel sorry for him, if that is his only hope send him alone. You are right why add another bill to his stack..

[taxea]

A client has come to me for help with an audit of his 2008 return. Most of his income is from self-employment, and the examiner is focusing on Schedule C expenses. The taxpayer owes 7K on the account, which has been tagged as "currently not collectable." (His current income is just social security.) Two questions come to mind:

1) Why is the IRS bothering with this? Doubling his liability isn't going to make it any more collectable!

2) How much of this poor guy's money can I justify taking to represent him? What's the worst that can happen if he simply ignores them?

Or am I missing something?

1 The IRS is focusing on him because he didn't pay his taxes and it is either a random audit or they see a problem

2 what do you mean "poor guy" it was his choice not to be responsible and if you are going to help him I would get your normal fee up front before you spend any time on this.

[Gretel]

A client has come to me for help with an audit of his 2008 return. Most of his income is from self-employment, and the examiner is focusing on Schedule C expenses. The taxpayer owes 7K on the account, which has been tagged as "currently not collectable." (His current income is just social security.) Two questions come to mind:

1) Why is the IRS bothering with this? Doubling his liability isn't going to make it any more collectable!

2) How much of this poor guy's money can I justify taking to represent him? What's the worst that can happen if he simply ignores them?

Or am I missing something?

If he is in CNC status then IRS probably filed a lien. I don't know what more bad can happen, all the damage is done. I would agree to call auditor and advise him of status. I would not take on representation for this audit.

Anyway, if auditor has any common sense he will close the case.