Not All IRS Tax Assessments Are Valid!

Let former IRS Agents and Appeals agent determine whether the IRS has properly assessed your tax liability.

The validity if tax assessments or tax bills.

The IRS may be correct that you owe additional income taxes; but if the assessment was not made according to the Internal Revenue Code, the IRS is not authorized to collect it. The IRS does make mistakes in assessing taxes due to procedural errors on its part. Also, the IRS must make the assessment of the additional tax before the assessment statute has expired.

When the IRS determines that your income tax liability should be increased, the Internal Revenue Code requires that IRS assess the additional tax. The “assessment of tax” is the posting of the additional tax to your tax account for that specific tax year. The Internal Revenue Code provides various procedures for assessing taxes. The most common method for assessment is for the IRS to solicit from the taxpayer a signed Form 870 or Form 4549. After these signed forms have been received by the IRS, the IRS then has the authority to make the assessment of the additional tax against the taxpayer.

Another form that gives the IRS the authority to assess the additional tax is Form 870-AD, when a case is under the jurisdiction of the Appeals Division. The Form 870-AD becomes valid for the purpose to assess tax only after the taxpayer signs and the IRS executes (signs) the form. If the IRS makes the assessment based on Form 870-AD that has not been executed, the assessment is not valid.

The IRS can also make an assessment after the taxpayer signs a decision document and is properly signed by the IRS Area Counsel Attorney when the case is in docketed status before the Tax Court. Also there are specific periods of time that the assessment is prohibited and specific periods of time that the assessment can be made by the IRS. If the decision document is not properly signed by the IRS Area Counsel Attorney or the assessment is made during the period that the assessment is prohibited or after the assessment is allowed, then the assessment is not valid.

The least common method that authorizes the IRS to make an assessment is when the taxpayer signs Form 866 (Agreement as to Final Determination of Tax Liability). If the Form 866 is not executed by the proper IRS official (signed), the assessment is not valid.

It should be noted that if the taxpayer signs Form 906 (Determination Covering Specific Matters), the Form 906 by itself does not authorize the IRS to assess the additional tax attributable to the specific matters of the closing agreement. The IRS is still required to either solicit a signed agreement form such as an 870, 4549 or and 870-AD. Should the taxpayer refuse to sign any of these agreement forms, the IRS must then issue a Notice of Deficiency and should the taxpayer then file a petition to Tax Court, he would be precluded from contesting the issues found in the Form 906 in Tax Court.

When the taxpayer does not agree to a proposed assessment, the IRS issues a Notice of Deficiency (more commonly known as the 90 day letter) which authorizes the IRS to assess the additional tax after the expiration of the 90 day period, if the taxpayer does not petition Tax Court. An important fact to remember is if the IRS does not mail the Notice of Deficiency to the last known address, the assessment based on the defaulted Notice of Deficiency (that means that the taxpayer did not file a petition to Tax Court within the 90 day period) is not valid.

If the assessment is not valid, the IRS is required by law to reverse out the invalid assessment. It is up to you, to raise the issue with the IRS that the assessment is not valid. If the assessment statute has expired, the IRS will no longer be able to assess the additional tax. In the other hand, if the assessment statute is still open, then the IRS can properly assess the additional tax by soliciting an agreement form from the taxpayer or issue a Notice of Deficiency. The correct strategy is to raise the invalid assessment issue only after the assessment statute has expired; thus, the IRS would be precluded from assessing the increase in tax.

Let us at Fresh Start Tax review your case. Our experienced staff of former IRS Examiners and Appeals Officers will evaluate your case and determine whether you should raise the issue that the assessment is invalid and demand that the IRS reverse the invalid assessment.

Many assessments of tax attributable to the taxpayer’s flow through adjustments from partnerships are not valid due to procedural errors on the part of the IRS. The assessment of tax attributable to a taxpayer’s share of partnership items is a complex area of tax law that even the IRS makes many errors in its application.

Let Former IRS agents get you the tax relief you need on your back taxes.

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