Based on the language in comment, it appears that Essayons may be Rachel Porcaro's attorney. He makes some interesting additional observations.
Rachel tried to get help from Block first, but they refused to help. Anyone relying on Block's "Peace of Mind" product should read the contract very carefully. IMO it protects Block as much as or more than the taxpayer.
Rachel was going to go the DIY route, but her father strongly advised her not to go to her audit alone. IMO that was very good advice.
The reasons the fees were so high is the IRS applied the "support test" under Section 152(c)(1)(D) to the EIC in two of the three Notices of Deficiency. Although Code Section 32(c)(3)(A) specifically excludes the support test for purposes of the EIC, it took two separate written Requests for Appeal, many telephone calls, emails and letters and five months to get the IRS to change their position. Since the IRS position was not substantially justified, we also prepared a written request for costs under Code Section 7430.
Most taxpayers and many tax "professionals" would not have recognized the IRS's error. I believe most low income taxpayers would have (1) paid, (2) gone bankrupt, or (3) been driven permanently out of compliance. However, if Rachel or another tax pro had recognized the IRS's error, they might be able to get the required help from the Taxpayer Advocate or a low income tax assistance program.
If we can't recover fees from the IRS undere Section 7430, we will have to write off the vast majority of our fees.
Thanks for the interesting comments. I hope you will keep us posted on how the attempts to recover fees come out.
Your mention of the possibility that the fees may have to be written off reminds me that there are some attorneys in private practice (in addition to law students who take on such cases under supervision in Low Income Tax Clinics) who do volunteer their time pro bono to represent low-income taxpayers at no cost, or very low cost.
I enthusiastically applaud such pro bono efforts and so does the National Taxpayer Advocate:
Wow. However, I can't say that I am surprised. I had a similar nightmare situation.
ReplyDeleteFollowing an audit, I had the IRS impose penalties against a client under a code section that did not exist. Then the IRS -while we were fighting the assessment - took the penalty out of a refund claim. It took a year and a half and to get this error corrected.
Unfortunately, the advocate only made it worse when he closed the case after seeing that the penalty had been paid from the refund claim. Only problem was the advocate had been brought in to help with the bogus assessment. He basically said, oh its paid case closed….yikes
We did get the money back - eventually, but only after legal action was threatened, but by that time the client was so fed up he just wanted the whole thing to go away. The client did pay my fees which were lower than the refund received - but not by much.
Nice blog! Your blog is very informative and useful for everyone. Cost are key for investing in, and operating/maintaining energy projects.All our activities are designed to create & manage cost efficiency, based on our Cost Intelligence philosophy.
ReplyDeleteGenuinely loved this website, Also the content is very amazing. I have bookmarked this web page so that I can visit here again. Keep updating
ReplyDeleteReadout our blog 8 Books For People Who Are New To Protesting