Monday, September 13, 2010

Judge Not and Persistence

As a tax guy, I work many controversy cases. Before I take on a case, I need to evaluate the case and determine if I feel there is a possible resolution that I can work with the IRS to effect.

Recently, I was approached by a CPA who wanted help on a penalty abatement for a non profit who was delinquent with their 990 filing. This is a 990 organization with larger gross receipts and the delinquency covered a span of years. Some penalties can be abated if reasonable cause is demonstrated. In fact, in the Gear Up Class, IRS Audits, Appeals, and Collections: Successful Strategies, Rick and I teach about penalty abatement. I have historically had good success but not 100% success (who has?). I evaluated the 990 case and I felt there was an argument for reasonable cause but I was not overly optimistic about getting the penalty abated. I typically take on cases that I feel very positive about and not only do I practice positive affirmation of the good results, but I usually have quite a fighting spirit going in. In this case, I was not overly optimistic and, while I fashioned a very well argued letter, covering the issue, facts, rule of law, argument, and conclusion, I still did not expect exceptional results.

And herein lays the surprise. Close to $83,000 of penalty abatement was accomplished. And this was an appeal of a previously rejected penalty abatement.

There are two lessons to be learned. The first, and most obvious lesson, is: If at first you don't succeed, try, try again. Learn about the appeals process. Do not be afraid to take the case up to the next level. Use your tax knowledge to make a strong case, as the facts warrant. Sometimes you make an initial fantastic presentation, but it doesn't move the IRS. Make the same presentation to someone different in the IRS, and the results could be sensational. Now, when you make the second presentation, you have the advantage of having gone through a dress rehearsal, which means the second presentation is improved. Also, you prepare further for the appeals hearing. So, it is not solely a case of persistence, but persistence, along with applied skills is a winning combination.

And, the second lesson is, you never know what the results will be. The enjoyment of resolving controversy cases with the IRS is that you never really know how the case is going to end. Even though we assess the case, we never know the ending. With this case, I was not overly optimistic. I do believe the abatement is warranted and I do believe the protest was soundly structured, and I did hope for, but did not expect the best. And the best came our way.

With the IRS you just never know. Do your best. Persist. Be of good cheer. Persist. And, oh yes, persist.

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