Going straight to the IRS for advice

[otctrader]

Does anyone know how the process of going to a local IRS office to get your return examined works, and whether this constitutes a "rubber stamp" if they approve of it?

For those of us who have nothing to hide, isn't this better than hoping your definition of a session (or whether partial netting is acceptable) holds up in an audit 3 years from now?

[Niediam]

The IRS agent won't know what constitutes an online session either because NOBODY knows as there havn't been any ruling/statements/opinions regarding the topic.

If you want to be safe you will consider every table a session as that surely is applicable to all the B&M session precidents available. Anything else is taking a risk but we really don't know how big of a risk that is.

Nothing that the IRS advices you about your taxes is binding. If an agent says you owe 10k and it's really 50k then somewhere down the line you can expect a very nice penalty/latefee/interest to pay off.

Yes, this all sucks. [img]/images/graemlins/smile.gif[/img]

[The IRS]

We appreciate your good faith effort to pay, however, remember that we are both understaffed and underfunded, and in addition, are confused about even our own rules.

[AAAA]

the proper thing to do is to file in the way that you believe is correct and to pay the amount you believe is correct.

then go back and file the most negative way possible and put that money aside. then when or if IRS contacts you, you will have the money. as long as your method was not fraudulent, they will not assess fines, but there will be interest payments due, so be sure that you put aside a generous amount in a relatively high yielding account.

then after three years of doing this, your first year money will be free because of the statute of limitations and you will have set up a baseline that IRS will look to for a normal return from you. after 20 years, you will be in fine shape as long as you file something that is not obviously fraudulent.

if you do not file at all, there is no statute of limitations ever! and don't count on being able to keep anything when you win the WSOP, cause for sure they will be checking your last three years of returns!

[grapabo]

I don't know enough about the OP's situation to say if this option matters, but if you do have a legitimate question, the IRS has a procedure where you can request a letter ruling. I believe if the IRS takes a position beneficial to you, they're bound by that position as applied to you for a set amount of time (3 years?).

However, if I remember correctly, this option costs a significant amount of money, and they might not necessarily be issuing rulings on that topic. But if you think it's worth a shot, do a search at the IRS website on letter rulings and see if it helps.

[otctrader]

[ QUOTE ]
I don't know enough about the OP's situation to say if this option matters, but if you do have a legitimate question, the IRS has a procedure where you can request a letter ruling. I believe if the IRS takes a position beneficial to you, they're bound by that position as applied to you for a set amount of time (3 years?).

However, if I remember correctly, this option costs a significant amount of money, and they might not necessarily be issuing rulings on that topic. But if you think it's worth a shot, do a search at the IRS website on letter rulings and see if it helps.

[/ QUOTE ]

Thanks grapabo - that's what I was looking for (some sort of way to get binding advice from the IRS).

Here's the fun part: I searched the IRS website, and unfortunately there's no letter ruling FAQ, but rather a 300 page long-winded document full of obscure rules purely devoted to letter rulings, plus it looks like a $9,000 fee to submit the ruling (not to mention the thousands you'd owe to CPA/lawyer to draw up the damn thing - it's apparently not a simple form). Not only that but they can easily refuse to issue it based on it being "frivolous" or already covered by pre-existing rules.

God bless the USA!

[Holden97]

[ QUOTE ]
[ QUOTE ]
I don't know enough about the OP's situation to say if this option matters, but if you do have a legitimate question, the IRS has a procedure where you can request a letter ruling. I believe if the IRS takes a position beneficial to you, they're bound by that position as applied to you for a set amount of time (3 years?).

However, if I remember correctly, this option costs a significant amount of money, and they might not necessarily be issuing rulings on that topic. But if you think it's worth a shot, do a search at the IRS website on letter rulings and see if it helps.

[/ QUOTE ]

Thanks grapabo - that's what I was looking for (some sort of way to get binding advice from the IRS).

Here's the fun part: I searched the IRS website, and unfortunately there's no letter ruling FAQ, but rather a 300 page long-winded document full of obscure rules purely devoted to letter rulings, plus it looks like a $9,000 fee to submit the ruling (not to mention the thousands you'd owe to CPA/lawyer to draw up the damn thing - it's apparently not a simple form). Not only that but they can easily refuse to issue it based on it being "frivolous" or already covered by pre-existing rules.

God bless the USA!

[/ QUOTE ]

There are a couple of options on getting IRS pre-approval:

1) A Pre-Filing Agreement - cost $50,000. This can be binding for up to 5 years. It is largely meant to apply to factual issues. This really is like having an audit done before a return is filed. You have to apply and be accepted to this program.

2) A Private Letter Ruling - cost $10,000. This is largely for tax technical issues and the IRS national office is ruling on the issue that the taxpayer asks questions about. You can have a pre-submission conference with the IRS national office prior to submitting the ruling request. The IRS may decline to make a ruling.

For both options, if you are not accepted or the IRS declines to make a ruling, no fee is due. The fees I listed are actually for corporate taxpayers and they changed in early 2006, so (1) individuals may be subject to a different fee structure that I'm not familiar with and (2) various searches may return results that show the old fee structure.

[KaneKungFu123]

Individuals obviously will pay different fee

[Easy E]

You give some really frightening advice... or was that frightful?

[goodgrief]

In the 1990s, the GAO released a notorious study showing that a significant amount of advice given by IRS employees was incorrect. You have to do your own research or hire a trusted tax professional. The IRS is simply too understaffed to serve as your personal tax attorney. I can tell from the number of correspondence audit letters I received over the years, which were ultimately ruled in my favor, that the IRS itself struggles to understand some of its own laws. I am not aware that individuals would pay a different fee for a private ruling letter but I am certainly not a CPA or a tax attorney myself.