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Thread: Disclosure under IRS Circular 230 - MUST READ

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    Banned Melonie's Avatar
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    Default Disclosure under IRS Circular 230 - MUST READ

    "Disclosure under IRS Circular 230: To insure compliance with recently released Internal Revenue Rules, this communication was not written or intended to be relied on to avoid federal tax related penalties or for promoting, marketing or recommending to any party any tax related matters addressed herein. "





    thanks to Zofia for bringing this new IRS rule to the attention of Dollar Den !

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    Senior Member hippiegirl's Avatar
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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    ok.....forgive me for being ignorant....but i do not understand what this means.......


    please no flaming.....


    ignorant newbie translation available?

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    God/dess Deogol's Avatar
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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    Quote Originally Posted by hippiegirl View Post
    ok.....forgive me for being ignorant....but i do not understand what this means.......


    please no flaming.....


    ignorant newbie translation available?
    Exactly. The IRS saying not to take the IRS' advice as what the IRS wants. This is how fucked our tax system has come to be.

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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    I can see this going well in an audit...

    "well you said not to listen to you so I listened to my shiesty accountant."
    Quote Originally Posted by Helle View Post
    ::WARNING:: stripperweb does not contain the views of any actual strippers ::WARNING::

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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    W.T.F. That's not cool. So whose advice are you supposed to fucking follow?! I thought they were THE authority for tax shit.

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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    Quote Originally Posted by PrettyCurlieQ View Post
    W.T.F. That's not cool. So whose advice are you supposed to fucking follow?! I thought they were THE authority for tax shit.
    I think, in the end, if they think you have some money in the bank account they can seize, they want to take the tax payer to a special tax court.

    I also suspect there is a little bit of "OK, if you settle for x, we won't go after you for y" going on too.


    Whoa. I think I just saw a kangaroo.

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    God/dess Zofia's Avatar
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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    Quote Originally Posted by hippiegirl View Post
    ok.....forgive me for being ignorant....but i do not understand what this means.......
    Under Internal Revenue Rules, a taxpayer is entitled to rely on the advice of a professional, and if the service later determines that the taxpayer owes taxes as a result of that advice, the taxpayer does not have to pay any penalty. However, there grew up a large industry that was selling letters of advice to taxpayers on various tax shelters. Then when the shelter was disallowed, the taxpayer waived their letter and said they did not have to pay the penalty. One court upheld the letter and the IRS did not like the implications of that So, they came up with a new rule in Circular 230 that said you cannot rely on generic advice, even advice from the IRS or a state tax authority. It has to be specific advice tailored to your own specific situation for you to get protection from penalties. Not a bad rule, not a good rule, but it is essential for a tax professional to use the Circular 230 disclaimer to alert people reading her work that it is not to be relied upon with the IRS or in court. If you want that kind of advice, it costs money.

    HTH
    Z

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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    Quote Originally Posted by Zofia View Post
    Under Internal Revenue Rules, a taxpayer is entitled to rely on the advice of a professional, and if the service later determines that the taxpayer owes taxes as a result of that advice, the taxpayer does not have to pay any penalty.
    The IRS also has a "too good to be true" test that they use to impose penalties even though the taxpayer relied on the advice of a professional. I've come up against this "test" several times representing clients that got involved in tax shelter schemes that were represented to be safe and wholly supported by existing tax law. The IRS said that, because my client's avoided paying a LOT of taxes, they should have known it was "too good to be true", and therefore could not rely on the advice-of-a-professional defense.

    I argued to the IRS that there are several legal ways to defer income, and they may all seem "too good to be true" to someone not versed in tax law. (For example, deferral of capital gains from the sale of real estate using Section 1031 like-kind exchanges.) How is a layperson supposed to distinguished between legal and illegal "too good to be true" interpretations of tax law. The IRS is supposed to be "kindler and gentler", but my experience has been the opposite of this.

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    Default Re: Disclosure under IRS Circular 230 - MUST READ

    PLEASE NOTE THAT THE FOLLOWING SHOULD NOT BE CONSIDERED LEGAL ADVICE AND IS A GENERAL DISCUSSION OF THE LAW AND NOT ADVICE GIVEN WITH TO ANY PARTICULAR TAXPAYER OR ANY PATICULAR FACT PATTERN. ANY PERSON THAT BELIEVES THAT THE FOLLOWING MAY APPLY TO THEIR SITUATION SHOULD CONTACT THEIR REGULAR TAX ADVISOR, A CERTIFIED PUBLIC ACCOUNTANT OR AN LISCENED ATTORNEY. ANYONE THAT RELIES ON THE STATEMENTS CONTAINED IN THIS POSTING DOES SO AT THEIR RISK.


    Hi, pretty much all that has been said here is true. However, it is important to note that Circular 230 is the IRS publication that applies to attorneys, accountants and others that practice in front of the IRS either on audits or tax return preparation. Generally, the terms of Circular 230 do not apply to "regular" taxpayers although there are many common themes that come up over and over again. For example,

    1. As many of you have noted, the IRS takes the position that you can rely on answers you receive when you call the IRS hotlines to ask questions. There are particular pieces of advice from the IRS you can rely, most of the time, a "regular" taxpayer will come across that sort advice through their tax advisor. Rarely does it make sense for a taxpayer to obtain any of these more formal opinions.

    2. Generally, if you rely on the advice of a tax professional in the preparation of your returns and your general tax planning, penalties may be avoided. The IRS is getting much stricter about letting taxpayers off the hook for tax penalties. As noted above, all of this flies out the window when discussing tax shelters. Tax Shelters are a very difficult area. The law is all very new and most of the time IRS doesn't know what itís doing. The hardest thing is to figure out what a "tax shelter" is. The most common type or obvious tax shelters are the "listed transactions" and the "frivolous or No Merit Shelters". A lot of tax shelters mimic or are very similar to legitimate tax planning strategies. The best place to get help for free is the IRS web site at IRS . gov. I know where the "too good be true" standard is in the law; I've never had agent pull it on me for any case that I've represented taxpayer on. I tend to decline representing people that have gotten to "frivolous" tax shelters over the internet from a book or seminar, well because they are difficult. I strongly discourage anyone from utilizing a strategy they have learned about from the internet, a book or a seminar without discussing that strategy with a CPA or tax attorney.

    3. Someone mentioned Tax Court above. Generally Tax Court is specialized court set up by Congress that hears only Tax cases. If you are audited and the IRS want to make changes they will send you several letters. The first letter is referred to as the "30 day letter". If you don't like what the auditor says you can appeal their determination to another branch INSIDE the IRS called Appeals. If you do not respond to the "30 day letter" then the IRS will issue you a "90 Day Letter". After you receive a 90 Day letter you have two choices: 1. Pay the tax; 2. File a petition in Tax Court. The advantage of going to Tax Court is you don't have to pay the tax before getting in front of a judge. If you pay the tax you can file a "refund claim" asking a federal judge to give you your money back. You have to pay all the tax the IRS says you owe to file a "refund claim". Generally I find both Appeals and the Tax Court reasonably fair but there is a lot of things that go into the decision of where to take your case, not the least of which is who you draw to hear your case.

    4. Collections. Once the IRS has determined that you owe the tax they will start trying to collect it. How fast and hard they come after you depends on how much you owe. They most common tactics are garnishment of wages, tax liens and garnishment. If the IRS is trying to collect tax you owe, you can put them off, often for a quite a while IF YOU ACT QUICKLY! Usually I invoke these defenses to collection in cases where I want to delay collection until some future event like a refund claim or something. These are not strategies to get of collection but to buy time until something else that you plan to do can be done. In the end if you owe it and you have it, they will get it.


    Generally its helpful think of IRS as the like the cops. The advice they give is usually the tax law as they WANT it to be. They are in charge of enforcing the tax law. They write tickets and hassle taxpayer just like regular police. My bias is showing. I appreciate there are a number of hardworking people in both in the IRS and law enforcement that work hard to do their jobs fairly without harming anyone that doesn't deserve it. Sadly, I've never met any of them. They have no duty help you in away or give you options that might help you. For example, a lot times ex-wives will get stuck some sort of tax bill from when they were married. There is common defense to this called "innocent spouse", I have never had anyone from the IRS mention to me even when it was clearly appropriate without me mentioning first.

    For most people, particularly taxpayers that file a Schedule C as sole proprietors, I strongly encourage you to at least have a CPA do your taxes once. The hardest thing for most people, particularly people in a cash intensive business, is having records for your deductions. These records commonly are going to be cancelled checks, bank statements or credit card receipts or statements. If you routinely make six figures, it makes some sense talk to talk to a CPA or tax attorney on a regular basis. You certainly would be able to set up insurance plans and retirement plans for yourself. While this advice will cost money, generally you will do better in the long run.

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