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October 2016

September 2016

Procedures for Statutory Notice of Deficiency

Mike Williams, CPA-Panhandle 

Tax practitioners in Texas and other states have had some concerns about receiving a Statutory Notice of Deficiency without being given an opportunity to appeal the deficiency. Taxpayers responded to the Automated Underreporter (AUR) notices and eventually received a recomputed CP2000 (Letter 2030), but there was no reference on how to appeal the decision. The local IRS stakeholder liaison addressed this concern in a recent conference call that included representatives from TSCPA’s Relations with IRS Committee.

The IRS explained in the AUR program, a 30-day notice is not sent prior to the issuance of a Statutory Notice of Deficiency. AUR issues a CP2000, a notice that addresses underreported income. This notice provides a response form to be completed whether the taxpayer agrees or disagrees with the proposed tax changes. If the taxpayer does not agree, they should provide additional documentation to support their explanation by a designated due date. CP2000 notices also include an IRS link to Publication 5181, Tax Returns Reviewed by Mail, which instructs taxpayers how to resolve disagreements and appeal a decision. If there is no response by the due date, AUR will issue a Statutory Notice of Deficiency followed by a final bill for the proposed amount due.

If a taxpayer receives a Statutory Notice of Deficiency, they or their representative can still respond and the IRS will work with the taxpayer to consider any and all information provided, resolve disagreements and consider penalty abatement requests. Responses can be mailed or faxed to the address or fax number on the notice or by calling the AUR toll-free telephone line at 800-829-3009 or 800-829-8310 and speak to a representative (Monday through Friday, 7 a.m. to 7 p.m., local time). Practitioners can receive priority treatment by contacting AUR via the Practitioner Priority Service (PPS) at 866-860-4259 and selecting menu option 5 – AUR Notice, to be transferred and placed at the front of the AUR call line.

Current versions of the CP2000 notice and Publication 5181 are under review to determine any changes needed to clarify information and instructions.

New e-Services Authentication Process to Strengthen Protection

The IRS notified tax preparers and taxpayers who use many IRS e-services that it is strengthening the verification process for identifying users. The new, more stringent procedures will require existing users to re-register. Starting Oct. 24, existing users will be required to re-register and verify their identities through the new Secure Access platform for entry to certain online self-help tools. It will help if you prepare to register in advance.


U.S. House Passes Mobile Workforce Bill

The U.S. House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2015, H.R. 2315, by voice vote on Sept. 21. The bill would establish a uniform national standard governing the withholding of state income taxes for nonresident employees. Cosponsors from Texas included Reps. Kevin Brady (R-8), Joaquin Castro (D-20), Mike Conaway (R-11), John Culberson (R-7), Blake Farenthold (R-27), Bill Flores (R-17), Louie Gohmert (R-1), Kay Granger (R-12), Gene Green (D-29), Jeb Hensarling (R-5), Ruben Hinojosa (D-15), Will Hurd (R-23), Eddie Bernice Johnson (D-30), Sam Johnson (R-3), Michael McCaul (R-10), Beto O’Rourke (D-16), Pete Olson (R-22), Ted Poe (R-2), John Ratcliffe (R-4), Pete Sessions (R-32), Lamar Smith (R-21), Mac Thornberry (R-13), Marc Veasey (D-33) and Roger Williams (R-25). The bill now moves to the Senate.