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The Tax Practice of IIT Chicago-Kent College of Law

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summons, IRS appointment, Chicago Tax LawyersIt is rarely a good idea to ignore IRS audit correspondence "inviting" you to an examination of your tax return. If the Service sends you a letter unilaterally scheduling a meeting for an office audit, confirm (or reschedule) the appointment, get professional help to prepare you, and show up.  Perhaps the only time you might want to second-guess the audit participation, is after you and your representative conclude that there are potential criminal implications, which justify a strategy of silence.  But this is certainly not the norm. What if the time for the scheduled first meeting has come and gone, and you didn’t go, out of fear, lack of preparation, or simple inadvertence?

IRS Responses to Examination "No-Shows"

Normally, the IRS will send a second letter, allowing for a rescheduling of the appointment.  But, anticipating another "no-show", the Service will generally take two simultaneous steps:  First, the auditor will start examining the return without you – securing records from third party sources (i.e., bank accounts, customer records, etc…); and 2) you may very well receive an administrative "summons" requiring your attendance at a compelled interview (and also demanding that you bring with you to the interview certain identified documents).

Failure to Obey an IRS Summons

When you fail to obey the summons, it's not the IRS that ultimately forces your compliance - it's a federal district court.  If you fail to appear in response to the summons, the IRS will typically seek the assistance of the Department of Justice to "enforce" the summons, by obtaining an order from the court. If you have a good reason for not complying, you can present your defense to the court in response to the government’s motion to enforce the summons. Or, you can be more proactive and on your own file a "Motion to Quash" the summons with the district court, seeking a ruling that the IRS has exceeded its authority in asking you for particular records or seeking your submission to an interview. Unfortunately, there are not a lot of good reasons for failing to obey the summons. As long as the IRS has complied with the statutory procedural steps in issuing the summons, and so long as the information being sought is relevant, for a legitimate purpose, and not already in the government’s possession, you are pretty much stuck. You do have the legal right to attempt to quash a summons initiated by the IRS, but that's a failure-wrought legal avenue that you probably shouldn't attempt. Failure to comply with the Court order could subject you to an order finding you in contempt of court; i.e., possible time in the federal lock-up.

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idr, audit, Chicago Tax AttorneysThis is one of the more often-asked tax controversy questions.  I’ll  just state the obvious first: simply ignoring the IRS is never going to get you the result you want. The chances of the agency forgetting about you or letting your case "slip through the cracks" is about …nil.

But, let's look at the actual IRS audit process to more fully answer this question:

The Audit Information-Gathering Process

  1. Your return is reviewed, and one or more "red flags" regarding it pop up (or, very rarely, it's chosen for a "random audit" which goes in deep and potentially takes apart your  whole return).
  2. The agent conducting the review determines which documents you (should) possess, that would most effectively answer the questions they have or substantiate the subject deduction claimed.
  3. The agent creates an Informal Document Request (IDR) that asks you (or a third party such as a tax preparer) to provide the documents, or to instead provide a valid reason why those documents are being withheld.
  4. If you don't respond to the IDR in time, the agent will consider sending an administrative Summons, compelling you to appear before him with the documents and submit to an interview.
  5. You can attempt to have the Summons legally "quashed" by filing a motion in federal district court (a very difficult maneuver; only 6 cases out of 117 in 2013 ended without a complete victory on the IRS' part).  You will need to present one or more  compelling reasons why the Summons was issued in error or for an illegal purpose.
  6. If you don't respond to the Summons in time, the agent directs the case to an IRS lawyer, who will decide whether or not to ask the Department of Justice to  enforce the Summons. If they don't, the audit will proceed anyway, the agent typically obtaining the documents he wants from third parties (banks, customers, etc…).

In short, it's rarely to your benefit to ignore an IDR – and it can definitely put you on the agent's bad side, which obviously is not a good thing. If the agent does decide to issue a Summons, its best to consult a professional to determine the scope of your response.

IRS audits can be a scary thing and it is important to have all your ducks in a row in order to emerge from the process successfully, or at least minimize the potential damage At Chicago-Kent Tax Clinic, we offer low-cost audit representation from professionals with in-depth experience working both for the IRS and in private practice. For a free consultation with one of our skilled Chicago tax lawyers, contact our office today at 312-906-5041.

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