Tax professionals and taxpayers alike have noticed a shift: IRS frivolous return notices (Letter 3176C) are landing on returns that claimed ordinary tax credits, not the tax-protester filings the program was built to catch. If you claimed a credit you believed you were entitled to and received a notice calling your position frivolous, the explanation…
Continue reading ›Not all IRS audits are the same. The IRS conducts three distinct types of IRS audits: correspondence audits, office audits, and field audits. The differences among them are not cosmetic. Each type involves different procedures, different IRS personnel, different scope, and different stakes. Identifying which type of audit you are facing is the first defensive…
Continue reading ›Receiving a frivolous return notice when you filed an ordinary, good-faith tax return is jarring. The IRS uses the word “frivolous” to describe positions it considers baseless — the stuff of tax-protester theories — yet a growing number of taxpayers are getting these letters (IRS Letter 3176C) for returns that were nothing of the sort.…
Continue reading ›For most taxpayers facing an IRS cryptocurrency examination, the defining problem is asymmetry of information. The Revenue Agent on the other side of the table has access to exchange records produced through John Doe summonses, blockchain analytics that trace transactions across wallet addresses, expanded broker reporting under digital asset rules, and dedicated IRS training programs…
Continue reading ›If you have received IRS Letter 3176C, the notice is telling you the IRS believes your tax return contains a “frivolous” position, and that a $5,000 penalty may follow if you do not respond correctly within 30 days. For many taxpayers, that language is alarming and confusing, especially when the return in question looked entirely…
Continue reading ›Most IRS audits are administrative exercises — civil examinations conducted by Revenue Agents who develop adjustments, propose additional tax, and eventually close the case. Most audits end with no change, with an agreed adjustment, or with an unagreed Revenue Agent’s Report that proceeds to Appeals. Some audits are something else entirely. An eggshell audit is…
Continue reading ›The Information Document Request (IDR) is the workhorse document of an IRS examination. It is the form IRS Revenue Agents use to ask for the records, statements, and information they need to develop adjustments, and it is, in practice, the document on which most audits are won or lost. For taxpayers who have just received…
Continue reading ›When an IRS Revenue Agent opens an examination, they are not approaching your return with an open mind looking for whatever happens to come up. They are approaching it with a defined set of issue categories they have been trained to develop, supported by analytical techniques the IRS teaches in formal examination training. Knowing what…
Continue reading ›If you understand what an IRS Revenue Agent does on paper, you understand half of an examination. The other half — the half that determines outcomes — is how they think. The mental model an agent brings to a case shapes which issues get developed, which positions get pushed, which compromises get accepted, and ultimately…
Continue reading ›When the IRS opens an examination of your return, the first practical question is who you should hire to defend it. Most taxpayers default to their CPA — and for many routine examinations, that is the right call. Some hire a tax attorney. A few hire an Enrolled Agent. And a small number ask the…
Continue reading ›
