California taxpayers may be interested to know that the Treasury Inspector General for Tax Administration (TIGTA) recently released its annual report on whether the IRS is in compliance with Section 6501(c)(4)(B) of the Tax Code. The IRS is supposed to give taxpayers and their representatives notice that they can decline an extension of the statute of limitations. In the alternative, the Code section also allows the taxpayer to make a request as to the length of any extension and the issues it may cover. When TIGTA reviewed 51 IRS audits, it found that this Code section had not been adhered to by IRS employees.

As it turned out, the spirit of the Code was adhered to, but the Code may not have been properly followed. In some cases, only the taxpayer was notified. In other cases, only the taxpayer’s representative was notified. The Code expressly states that both the taxpayer and the taxpayer’s representative are to be notified.

Even if the taxpayer’s representative receives notification and has the taxpayer execute the necessary form regarding an extension, the IRS is still required to notify the taxpayer directly. TIGTA did not make any additional recommendations in the report other than those that had been previously made. TIGTA did not express the belief that taxpayers were not fairly treated due to this Code section not being strictly applied by the IRS.

California taxpayers who are the subject of audits may want to make sure that they and their representatives are given the proper notices under Tax Code Section 6501(c)(4)(B). However, this is not the only Code section the IRS is required to follow during audits. Having the proper representation during an audit is essential to making sure that the taxpayer receives the appropriate treatment from the IRS.

Source: accountingtoday.com, “IRS May Not Always Advise Taxpayers of Their Rights,” Michael Cohn, Aug. 6, 2013