To Be a Tax Controversy Attorney….

I get a number of inquiries from tax attorneys who are interested in adding tax controversy work to their law practices. I do my best to encourage other tax attorneys to pursue this practice area because there are not that many tax attorneys who want to do tax controversy work. At the same time I do feel the need to explain the frustrations that they will face if they start accepting tax controversy work. Here are a few of my favorite examples that I recently related to another Denver tax attorney who is thinking about starting tax controversy work to her practice:

1. During a phone call to the IRS tax practitioner priority hotline, the IRS employee accessed the taxpayer’s computer tax record, stated that she was going to place the tax attorney on hold, and, unbeknownst to the tax attorney, the IRS employee then left to go to lunch. The tax attorney waited for twenty minutes and called back. The second IRS employee was not able to access the taxpayer’s computer tax record because the prior employee’s computer still had the taxpayer’s record open. Fortunately, the second IRS employee recognized the other IRS employee’s initials and/or username because the first IRS employee sits two desks (or cubicles) over from the second employee - which is how the tax attorney discovered that the first IRS employee had left for her lunch break.
2. During a phone call to the IRS automated collection system (ACS) office, the IRS employee stated that she could not talk to the tax attorney about the tax matter because there was no Form 2848 power of attorney on file for the tax attorney. The tax attorney offers to fax in the Form 2848 while the IRS employee is on the phone - as he has done several hundred (possibly even thousands) of times. The IRS employee refused to give the tax attorney her fax number, insisting that no IRS employee or office can accept a Form 2848 that is faxed to the IRS. The tax attorney asked if this is just a unique aspect of the ACS office that this IRS employee is in (and, if so, why the IRS employee’s office even has a fax machine if it cannot be used). The IRS employee again stated that no IRS office or employee can accept a faxed Form 2848. The tax attorney quotes Publication 947 that states “The IRS will accept a copy of a power of attorney that is submitted by facsimile transmission (FAX).” The IRS employee responded by hanging up the phone.
3. During a phone call to the tax practitioner priority hotline, the tax attorney provided a Form 2848 to the IRS (via facsimile transmission), explained that the taxpayer had died more than a decade ago, and the tax attorney provided documentation showing that the personal representative for the estate signed the Form 2848. The IRS employee refused to discuss the case with the tax attorney explaining that the dead taxpayer was the only person who could legally sign the Form 2848.
4. During a phone call to the IRS ACS office, the tax attorney proceeded to provide the taxpayer’s financial data to the IRS employee. The IRS employee entered the financial data into the IRS computer and told the tax attorney that the IRS computer showed that the taxpayer could make a monthly payment of $XXX thousand dollars per month. The tax attorney explained that this could not be possible given that the taxpayer had no assets, the taxpayer did not even earn $XXX thousand dollars per month, and that the underlying tax liability was not $XXX thousand dollars in total. The IRS employee spent nearly two hours reviewing the information that she entered into the IRS computer only to verify that she did not know why the minimum monthly payment required was $XXX thousand dollars per month, that she was surprised that it was so high, but that that is what had to be paid because the computer said so.
5. During a phone call to the IRS ACS office, the ACS office answered the phone (after about thirty minutes) and the IRS employee immediately suggested that she needed to transfer the tax attorney to the New York large dollar IRS ACS office due to the size of the tax liability. Despite the tax attorney explaining that the tax liability is nowhere near large enough to involve the large dollar office, the IRS employee transferred the tax attorney anyway. The IRS large dollar office answered the phone (after another thirty minutes had gone by) only to confirm that the tax liability is too small for it to assist the tax attorney. The large dollar office transferred the tax attorney back to the regular ACS office. After about thirty minutes the ACS office answered the phone and, as luck would have it, the tax attorney was connected with the same IRS employee with whom he first spoke. The tax attorney explained that the case had been transferred in error. The IRS employee insisted that the case was not transferred in error. The tax attorney asked how the IRS employee had reached this conclusion. The IRS employee responded by not responding at all. The IRS employee sat in silence on the phone line. The tax attorney placed the phone call on speaker phone and started working on another client matter. After about an hour the IRS employee stated that it is time for her to go home and she hung up the phone.

I suppose it isn’t fair to provide only these examples. A more representative list would include:

1. The mysterious “twenty four hour manager call back” that never happens;
2. Being placed on hold for several hours only to be directed to a message saying that the IRS is now closed and you need to call back during regular office hours;
3. Back dated correspondence which imposes very short deadlines for responding;
4. Correspondence that has the wrong taxpayer, tax period, and/or tax issue;
5. Correspondence that misstates the facts and/or law and reaches a conclusion based on the misstatement;
6. Correspondence randomly being sent to the taxpayer and not to the tax attorney;
7. Mountains of redundant correspondence sent to both the taxpayer and the tax attorney (I have had one case where both my office and the taxpayer received over two hundred letters from the IRS that said the same exact thing);
8. Tax matters being assigned and reassigned to new IRS employees;
9. Endless requests for irrelevant information;
10. Response times that could last months or even years;
11. IRS employees telling you wrong information; and
12. IRS employees refusing to follow the express mandates set out in our tax laws and IRS policies and procedures - even after you point out their deficiency.

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