Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Posted by taxguru on September 12, 2002

IRS Differences

One of the many frustrating aspects to dealing with the IRS is how different things are handled between different areas of the country. For a national tax system, there is very little uniformity & consistency around the country. That wouldn’t be a problem if you were always dealing with the same IRS offices. However, they have split their tasks up in such ways that contacting several different offices is just normal procedure nowadays.

For example, filing tax returns has long been broken up by geography. While I do work with clients in practically every state, most of them are located in the closest three states, each of which files with a different IRS Service Center. Arkansans file with Memphis, TN. Oklahomans file with Austin, TX. And Missouri residents file with Kansas City, MO.

Back about a month ago, I filed over 80 extension requests (Form 2688) for clients’ 2001 1040s. As I always do, I separated them by Service Center and put the ones going to the same Service Centers in the same envelopes, which seemed like the common sense thing to do. Just yesterday, many of the approved extension forms came back to me via snail mail. A large envelope from the Kansas City Service Center contained ten approved 2688s. However, there were 54 separate #10 envelopes from the Memphis Service Center, each one containing a single 2688. As Sherry said when she saw that, “Our tax dollars at work.” I know the Postal Service needs all the money it can get, but this is ridiculous. We obviously know which Service Center has more common sense.

I don’t want to be completely negative about our friends at IRS. I do want to express my appreciation for the unusually quick turn around of the 2688 forms this year. Normally, they all come back marked as Approved some time around November. This makes attaching them to the 1040s that were due on October 15 a little difficult; so I normally just attach my photo-copy of the form that was mailed in. While some of the returns for which 2688s were received yesterday have already been completed, most of them haven’t.

Appeals

If an IRS audit doesn’t go well, that isn’t the end of the line. IRS has long had an Appellate Branch that is supposed to allow a second, and impartial look at the facts of the case. While the Appeals Officer is technically an employee of the IRS, s/he is supposed to look at the facts objectively and give both sides equal consideration. Here is where I have seen a huge discrepancy between jurisdictions.

Before moving to the Ozarks in 1993, almost all of my work with IRS Appeals Officers was with those stationed in San Francisco. I have to say that those people understood the mindset they needed to review cases. I was able to present my clients’ side of the case and in the 15+ years of handling cases there, I estimate I won about 98% of them at the Appeals level. Most of the time this was simply because the auditors were morons and the Appeals Officers knew it.

Since relocating to the Ozarks, and having to deal with Appeals Officers in Little Rock and Oklahoma City, there couldn’t be a bigger difference in attitude. Rather than start from an objective open minded “Show Me” attitude, these Appeals Officers literally rubber stamp the opinions of the auditors, even those that are blatantly idiotic and wrong. Battling this built-in bias, I have only been able to win about half of the cases I have worked on with Appeals since moving here. While this may sound like I’m just being a sore loser, that isn’t the case at all. It is a very real difference in attitude and approach that has severely hurt my faith in the entire Appeals system within IRS.

Ironically, I found that I’m not the only one upset with the Oklahoma City Appeals Office. I was speaking with an IRS Auditor out of the Fayetteville, AR office a little while ago and I was explaining to him how frustrated I was getting with the Appeals Officers. To my surprise, he said that he & his fellow Fayetteville auditors were also unhappy with the way they are treated by the OK City Appeals Officers after the merger a few years ago of control over Arkansas into the Oklahoma City office, in one of the IRS’s many reorganizations (Titanic deck chairs?). He said that all of the policies & practices that had controlled the Arkansas offices were tossed out and replaced by those developed by Oklahoma. This is just like the situation in corporate mergers, when the dominating company crams its policies down the throats of the vanquished employees. However, it also illustrates how varied the policies for a national tax agency are.

I have recently spoken with other tax practitioners around the country who have noticed similar variations between Appeals attitudes in different IRS offices, often within the same state. We are trying our best to work cooperatively with IRS; but this sure makes it difficult when rules and procedures are interpreted so differently by so many different IRS offices.

KMK

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