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NSPA provides testimony on IRS proposed regulations.

The Internal Revenue Service recently issued proposed regulations that would amend the procedural rules relating to how taxpayers may appeal adjustments affecting their tax liability without going to court. The announcement of the rules was accompanied by a request for written comments and testimony from interested parties.

On behalf of NSPA, Federal Taxation Committee Vice-Chair William Stevenson submitted a written statement and oral testimony. He focused on the provision in the new regulations that would create a "small case request" for adjustments of $25,000 or less.

Under the proposed rules, a taxpayer could request Appeals consideration in these small cases by indicating the amount of the unagreed adjustments and the reason for the disagreement. However, the new rules fail to explain the relationship between the new small case request and the existing rules defining when an oral request, written statement of differences or written protest are required to request Appeals consideration.

The following is a summary of Stevenson's comments.

My comments are given from the viewpoint of an individual who is at the "front line" at the examination level. I have had numerous encounters with the Appeals Division and, quite frankly, I do not find it in need of great repair. I would like to comment on one facet of the proposed rules, the small case request, and I would also like to suggest another item for consideration as you fine-tune the appeals process.


I am greatly concerned by the small case request as described in the proposed regulations. While the idea of a simplified small case request is a good one, the rules in their current form do not explain the relationship between this new status and the existing appeals request rules which would continue in effect. NSPA members would like to see final rules that clarify how the small case request relates to the existing thresholds in field exam cases, which allow oral requests in cases where up to $2,500 of additional tax is in dispute, require written statements of differences for amounts between $2,500 and $10,000 and require written protests for amounts above $10,000.

The Society would be uncomfortable with a system that allowed oral requests up to $25,000. It is not hard to imagine a scenario where a case gets lost in the shuffle moving from audit to appeal while the interest clock continues to run. For this reason, we recommend that the small case require a one-page request for appeal, similar to the one currently in use for small cases in the United States Tax Court.

Should the Service choose to drop the small case request from the final regulations, we would still recommend that some type of one-page form be developed for filing an appeal. A form such as this would provide everyone involved with a better method for keeping track of this critical tax matter. It gives the taxpayer tangible proof of filing and it gives the Service a document to track through the system. Such a document could even further enhance the efficiency of the appeals process which, in my opinion, has shown itself to be one of the most effective branches of the IRS.
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Title Annotation:Practitioner Communique; National Society of Public Accountants
Author:Lear, Jeffrey
Publication:The National Public Accountant
Date:Feb 1, 1994
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