My Story of Perseverance and Commitment to Our Members
August 03, 2015 | Written by: Brett Rosser
I was assigned this case in April of 2013. At the time it was an office audit, and it was being conducted by a Tax Compliance Officer (TCO). As I went through the two banker boxes of documents, bank statements and the members’ QuickBooks file, I found that many of the documents were in Chinese. This was due to the fact that the members' business is importing products from China. I reviewed the documents with the TCO over a period of about six months before she told me about her pending retirement. While she advised me to expect a no-change report, she never did send it, and the case was transferred to a new TCO.
The new examiner contacted me to request more information about the reported income and said that the previous auditor had made quite a few adjustments, resulting in a balance due of about 116K. The new TCO refused to review some of the support documents and made adjustments solely based on the QuickBooks file, which was known to be incorrect. One major obstacle was the Chinese documents, which had to be verified. The member hired a third party to complete an income analysis, identify the numerous transfers, and try to lower the almost 200K in additional income the auditor was applying to the current report with a new balance due of 269K due for this two year audit.
During the analysis the firm completed pro-forma returns so that I could show the auditor what the correct adjustments should have been, but these just seemed to confuse the TCO even more. We were able to get some of the expenses adjusted, but for every step we took forward the auditor seemed to change her focus, make assumptions, and make unfounded adjustments. In my last meeting with the TCO she said, “this is all over my head,” and soon after that the case was transferred to a Revenue Agent (RA).
The transfer took place in January of 2015, twenty months after the case had first been opened. The new RA was equally confused until I met with him to explain the member’s business, the history of the case and the associated records. The RA questioned some of the actions that had been taken previously on the case by the TCOs'. He said he appreciated the effort that had been put into creating the pro-forma drafts. He suggested that the amended returns be signed and submitted so he could accept them. Within a week, the amended returns were sent to the auditor, and three weeks later I received a report that matched the amended returns.
This case proved to be challenging due to the nature of the member’s business, the lack of expertise of the TCOs', and the transfers of the case within the IRS. After more than two years, finally the case has been closed and the member’s tax liability went from a high of $269k to a final number of $23K. The member has expressed his appreciation and gratitude for the efforts we made on the case and the final results we achieved.
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