Category Archives: Dealing With The IRS

Employment Taxes Overpayment Error Form 941 – Paul Gaulkin CPA

description showing FICA

In the event an error involves overpaid FICA taxes from a previous quarter in the same calendar year or a pervious calendar year, or over collected federal income tax from a previous quarter in the same calendar year there are a few steps that need to be taken to fix the error. Filing Form 941 The first thing that needs to be done is file a Form 941 (Employer’s Quarterly Federal Tax Return) for the quarter in which the error … Read more

Applicable Federal Rate for Interest on IRS Payments – Paul Gaulkin CPA


If you are ever in a situation where you make an underpayment or overpayment to the IRS, it is important that you understand how you interest will be determined. Interest on underpayments accrues at the underpayment rate, while interest on overpayments accrues at the overpayment rate. Applicable Federal Rate Both rates are based on the federal short term rate, this rate is based on the short term applicable federal rate (AFR) which is compounded daily and rounded to the nearest … Read more

No Change Audit Form 4549 – Paul Gaulkin CPA


If a return has been audited but the agent has determined that the return should be accepted as filed, the agent will prepare and issue a revenue agent’s report (Form 4549) with the phrase “No Change – Subject to Area Director’s Approval” written in the adjustments area. Once the report is sent to the case processing support unit, they will subsequently issue a no-change letter. Once the taxpayer receives a no-change letter, the case is considered by the IRS to … Read more

Unreasonably Delaying an IRS Audit – Paul Gaulkin CPA


When the representative of a taxpayer has unreasonably delayed an IRS examination by failing to provide requested information on a taxpayer to the IRS, the agent working the case can request permission to contact the taxpayer directly. If permission is granted to the agent by the IRS, the agent can contact the taxpayer directly and request the information needed. The agent will also inform the taxpayer that the practitioner hired by the taxpayer has delayed the examination unreasonably.

Repetitive IRS Examinations – Paul Gaulkin CPA


The IRS is not allowed to conduct repetitive IRS examinations against a taxpayer unless substantial audit adjustments are found. The IRS is allowed to audit the taxpayer for the same issue or issues in either of the two preceding tax years but if no substantial change in amount of the liability resulted, the auditor can close the case without adjustment. This basically means, the IRS is allowed to conduct repetitive examinations only in situations where an audit involving either of … Read more

Consent to Extend Statute of Limitations – Paul Gaulkin CPA


When it comes to extending the statute of limitations on assessment, the IRS tries to keep the requests for consent to an absolute minimum. Usually what will happen is the IRS will come to the taxpayer and request that he allow the IRS to extend the statute of limitations on their assessment. This extension is usually due to a time constraint that the IRS has in examining and processing the case file before the statute of limitations expires. In order … Read more

IRS Statute of Limitations Disclosure of Foreign Transfers – Paul Gaulkin CPA


The normal three year statute of limitations period will not begin to run until the information that is requested from the taxpayer in regard to the following foreign transfers has been furnished to the IRS: 1. An election by a passive foreign investment company shareholder to have the passive foreign investment company treated as a qualified electing fund. 2. An annual report required by a U.S. person that is a passive foreign investment company shareholder. 3. A return of a … Read more

Reporting Omitted Gifts Form 709 – Paul Gaulkin CPA

gift with green bow

If a tax return is filed for a taxpayer and that return inadvertently omitted a girl, an amended gift tax return for the year in which the gift was made should be filed with the same Service Processing Center where the prior gift tax return was filed. Form 709 On the top of the first page of the amended tax return, the words “Amended Form 709 for Gift(s) made in calendar year that the gift was made” should appear to … Read more

EPCRS – Employee Plans Compliance Resolution System – Paul Gaukin CPA

sign that says retirement

The IRS established the Employee Plans Compliance Resolution System or EPCRS to help qualified retirement plan sponsors correct technical and administrative problems with their plans thereby retaining tax favorable status. This basically gives business the opportunity to stay in compliance with the IRS in regard to their qualified retirement plan and not have to run into unnecessary penalties. EPCRS Components There are three components of EPCRS, these include: 1. The Self Correction Program or SCP – This permits plan sponsors … Read more

IRS Audit Reconsideration Letter – Paul Gaukin CPA

The IRS gives taxpayers the opportunity to apply for reconsideration of an audit decision that they do not agree with. This process is generally considered to be an informal process and therefore does not interfere with normal appeals procedures. In order for a taxpayer to be able to apply for reconsideration of their audit decision, their return must have been filed accordingly. If the taxpayer has not filed a return, reconsideration will not be given to the taxpayer until they … Read more