The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service charged with assisting taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

Approximately 1.45 million taxpayers who qualified for relief from tax penalties totaling close to $181 million never heard from the Internal Revenue Service that they were entitled to it and never received it, according to a new government report.

After over 30 years in the tax business, we continue to find that solid accounting and good communication with your CPA is the key to lowering taxes.

As a general rule, a tax return is deemed filed on-time if it was mailed and postmarked on or before the due date of the return. (In this day of electronic filing this is less of an issue). It is also a general rule that a taxpayer has three years (including extensions) after the date they filed the original return to file an amended return.

A few weeks ago in (TTW #154) we first talked about identity theft and the growing tax fraud problem. This week we want to share with you a statement from the IRS’s Chief Legal Counsel on this issue that appeared in the Journal of Accountancy.

The taxpayer was a former assistant U.S. attorney who suffered from various health ailments, including cardiac disorders, depression, and memory loss. He retired in 2000 because of disability. For 2007, the year at issue, he prepared his own tax return. He claimed that distributions from an IRA were a return of investments made through nondeductible contributions, and that the gains on those investments should be taxed as capital gains rather than ordinary income. The taxpayer produced no evidence to support his claim that the IRA contributions were made with after-tax funds. Nor could he cite any law to support his claim that the gain on his non-deductible contributions should be taxed as capital gains rather than ordinary income. The Court ruled all of the IRA distributions were taxable as ordinary income.