Strategic Options for Taxpayers - Federal Tax Procedure 101

The IRS directly interacts with more Americans than any other public or private organization. The Commissioner of the IRS has been delegated the authority to administer and enforce the Internal Revenue laws and has the final administrative authority concerning substantive interpretation of the tax laws as reflected in legislative and regulatory proposals, revenue rulings, letter rulings, and the technical advice memoranda. In its most recent fiscal year, the IRS collected more than $2 trillion in revenue and processed approximately 222 million tax returns. It costs about 48-cents for each $100 collected by the IRS. The IRS annually assists more than 97 million taxpayers who called the toll-free automated telephone line, wrote letters or visited one of the more than 400 offices the IRS maintains nationwide. The four IRS operating divisions presently include the Wage and Investment Division, the Tax-Exempt/Governmental Entities Division, the Small Business/Self-Employed Division, and the Large and Mid-Sized Business Division with each having a Division Commissioner reporting directly to the IRS Commissioner. Representation of clients involved in an audit or dispute with the IRS requires the exercise of considerable judgment, discretion, and caution. There are often unknown, potentially sensitive issues that might unexpectedly arise during the course of any audit. Throughout, the representative must balance their duties to their client with the representative's ethical and legal obligations. Effective representation requires that the representative understand the entire administrative process and the inherent limitations involved at each level of the administrative process. Further, the representative must be able to acknowledge their own limitations.