Dealing with the IRS
by Robert V. Lally

OK, this is not going to be politically correct. We love dealing with the IRS. How could this be true? Aren't they the enemy? The great abuser of the American people? Sorry. We don't like to run counter to conventional wisdom, but it just isn't so. These are the people who brought you AMTRAK. These are the people who bought the $5,000 toilet seats. These are the people who have a 1950 computer system still running with green screens. They still use tape drives and adding machines. Their personnel have to buy their own business cards. This is the government.

There are two fundamental principles in dealing with the IRS which virtually always lead to successful outcomes. We have names for these: First is, "fry another fish." Second is, "work the process."

Fry another fish:
The IRS has an unlimited supply of nasty, ill prepared, discourteous taxpayers, who don't know the law, represent themselves and don't keep appointments and deadlines. You don't have to be one of them. They have enough. In fact, once they figure out you are prepared, courteous, well represented, knowledgeable and on time, you're no fun at all – next! If taxpayers actually heard how nice we are to IRS agents, they would probably be appalled. They think we are in there yelling and banging on the Internal Revenue Code. Nope. Sorry. Not the way the game is played. We beg. We plead. We are respectful. We are nice. In that IRS agent's week, we will be the most pleasant appointment.

Work the process:
We try to settle everything within the realm of reason. Court is usually a silly option. In court we have no control. Anything can happen. This may change for smaller tax cases, now that the burden of proof is on the IRS. On new cases, which fit the new burden of proof rule, we may play tougher on the move to Tax Court. Historically, Tax Court was beyond a last resort. It was usually a sign of failure.

This said, settlement is not always easy. Taxpayers have little actual leverage over the IRS. It is the quintessential "pushing on the string." That said, it is amazing how often we settle.

The secret: there is always one more step in the process. The taxpayer only has to win once. Don't like how the field audit is going? Go to a supervisor. Bomb out with the supervisor? Go for technical support. Crash and burn with tech support? Go to appeals. Write a full protest and work the appeals system. Having trouble with the protest? Find out what issues are not satisfactorily covered and submit an addendum. Still not getting there? Get appeals to send it back to the field audit for more refinement of the issues. Still not settled? Try a conference with the group leader of appeals. Still not closed? There is always the problems resolution office.

Got the picture? The process, flawed as it is (by the way, appeals is not really independent and takes the IRS agent's side every time, at least to start) has numerous nooks and crannies. You just have to work with it.

We are constantly amazed when taxpayers represent themselves; how poorly they deal with the system and how quickly they let their remedies lapse.