Category Archives: Dealing With The IRS

IRS Imputed Interest on Corporate Loan Transactions – Paul Gaulkin CPA

loan signature

If a formal or informal loan has taken place between a corporation and the owner, a Revenue Agent will be able to see if an appropriate interest rate has been paid under IRC Sec. 7872. Recently, the applicable federal rate for loans has fallow to very low levels. This can be beneficial to taxpayers who can now replace existing higher interest loans with new lower rate loans or convert demand loans to term loans to lock in lower rates. As … Read more

Quick Refund of Corporate Estimated Taxes Form 4466 – Paul Gaulkin CPA

Tax refund check

A corporation that has an overpayment of its estimated tax for the year can file Form 4466 (Corporation Application for Quick Refund of Overpayment of Estimated Income Tax) to get a quick refund from the IRS. For purposes of a quick refund, an overpayment equals the excess of the corporation’s estimated tax payments over its expected final tax liability for the year. Form 4466 Form 4466 must be filed in paper form after the close of the tax year. The … Read more

Executor Tax Liability Discharge Form 5495 – Paul Gaulkin CPA

living trust and estate planning

The executor or administrator for a decedent can request a release from personal liability for the decedent’s income and gift taxes by filing Form 5495 (Request for Discharge from Personal Liability Under Internal Revenue Code Section 2204 or 6905). This request must be in writing and must be filed after the income or gift tax return has been filed with the IRS. After the tax return has been filed, the IRS has nine months to notify the executor of the … Read more

IRS Appeal Settlement Authority – Paul Gaulkin CPA

Court settlement with money

Appeal settlement authority is very broad but the Appeals Officer’s intent is to settle the case without litigation. For this reason, settlement through the Appeals Officer cannot be automatic and must go through a certain process. This process involves convincing the Appeals Officer that there is significant uncertainty regarding the facts of a case or the application of the law to the case. IRS Appeal Settlement Authority Most of an Appeals Officer’s authority is derived from settling issues based on … Read more

Third Party Summons – Paul Gaulkin CPA

supreme court

Whenever a summons is issued to a third party in regard to a issue about a taxpayer, the taxpayer has the ability to file a suit in court to prevent the third party from complying with the summons. The reason a taxpayer may wish to do this is to prevent the third party from sharing information with that IRS that it does not want disclosed. If the taxpayer chooses to file a suit in court, the statute of limitations on … Read more

Extension of Limitations Period Due to Hobby Loss Form 5213 – Paul Gaulkin CPA

hobby yarn

Determining whether an activity is engaged in for profit can be very subjective and therefore the IRS offers a safe harbor which allows flexibility that normally would not be permitted. This safe harbor basically establishes a presumption that the activity is a for-profit endeavor. If the taxpayer wishes to meet the safe harbor, they must show that there activity generated a profit in at least three of the five years ending with the tax year in question. Once the safe … Read more

Return of Case to Examination Division – Paul Gaulkin CPA

pass_fail

A telephone conference is designed to resolve factual disputes and settle the case, any new evidence (whether deliberately withheld from the examiner or found on its own since the examination was completed) may cause the Appeals Officer to return the case to the Examination Division for further development. Return of Case to Examination Division IRM 8.2.1.9.3 provides guidance for the handling of new information that arises during an appeal. In a case where the information was deliberately withheld from the … Read more

Form 872 Consent to Extend the Time to Assess Tax – Paul Gaulkin CPA

A money puzzle

When it comes to consent forms for extending the statute of limitations for time to assess tax there are three basic types, the fixed period consent, the open ended consent, and the restricted consent. Form 872 Form 872 (Consent to Extend the Time to Assess Tax) is used to extend the statute of limitations on assessment to a specific future date. This form is used in most situations and is considered the most basic form for extending the statute of … Read more

Protective Claim for Refund Form 907 – Paul Gaulkin CPA

Refund check with cash behind

A taxpayer can file a claim for refund only if the request is made in a timely fashion and the taxpayer provides the IRS with grounds for the claim and facts to inform the IRS of the basis for the claim. In the event the taxpayer does not have complete information or recovery of the claim depends on the occurrence of a future event, a protective claim for refund can be filed to toll the applicable limitations period for filing … Read more

Estate Tax Extension – Paul Gaulkin CPA

Estate Tax Return

In order for a taxpayer to obtain an extension of time to pay estate taxes, they must request to do so under one of three IRS Code Sections. It is important to apply for an extension with the IRS as soon as possible. If you postpone the ability to file for an extension, you will add more penalties that could have been avoided. The IRS will also begin collection efforts against the estate if you are not careful. The three … Read more