Below is examples of an individual 1040 formal protest we submitted to the IRS on
behalf of a clients. We have entered blanks to protect the identity of the clients.
_____________________________________________________________________________
April 16, 2009
Internal Revenue Service
Group Manager
Attn: --02AWN
9450 Koger Blvd., Rm 201
St. Petersburg, FL 33702-2414
Re: ------- -------
Taxpayer Identification Number: ***-**-****
Examination for Tax Years Ended: December 31, 2004
December 31, 2005, December 31, 2006, and December 31, 2007
Dear Mr. -------,
------- ------- hereby protests the proposed adjustments to income and expenses
as set forth paragraph 6 below. This protest is filed with respect to the 30 Day
Letter (Letter 91 5(DO)) dated March 17, 2009, and the accompanying explanations.
Taxpayer reserves the right to file one or more supplements to this protest.
The following information is submitted in support of this protest:
1.Taxpayer’s name, address and identification number:
------- -------
400 ------ -- Drive
#---
Sarasota, FL 34236
SSN: ***-**-****
Taxpayer is a calendar year-end taxpayer. Taxpayer filed his federal income tax
return on Form 1040.
2.Date of the 30 Day Letter: March 17th, 2009.
3.Taxable years at issue: 200412, 200512, 200612, 200712
4.Request for conference: Taxpayer requests a conference with the Internal
Revenue Office of Appeals in the Plantation, FL office with respect to the findings
of the examining Revenue Agent.
5. Request to be present at, and receive documents relating to, certain Appeals
communications: In accordance with section 1001(a) of the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. No. 105-206, Taxpayer requests to
be present at all communications between the Internal Revenue Service Examination
Division and the Appeals Division with respect to this matter. Taxpayer requests
advance notice of such communications so that Taxpayer can arrange to be present.
In addition, Taxpayer requests to be present at all communications between Chief
Counsel representatives and the Appeals Division with respect to this matter. Taxpayer
requests advance notice of such communications so that Taxpayer can arrange to be
present. Taxpayer further requests copies of all written communications and summaries
of any oral communications between the Internal Revenue Service Examination Division
and the Appeals Division with respect to this matter. Finally, Taxpayer requests
copies of all communications, whether written or written summaries of oral communications,
between the Examination Division and any third party that occurred during the course
of the examination of Taxpayer.
6.Taxpayer does not agree with, and hereby protests, all proposed adjustments for
his tax years ended 12/31/2004, 12/31/2005, 12/21/2006 and 12/31/2007 in the 30
Day Letter including those set forth below:
Adjustments to Income/Expenses
Tax year 200412:
Schedule C1 – expenses for Business Use of Home - $2835
Schedule C1 – Gross Receipts or Sales - $51,796
Schedule E – Income/Loss Partnership/S Corp – Passive/Non-Passive - $33,551
SE AGI Adjustment - $(3859)
Tax year 200512:
Schedule C1 – Gross Receipts or Sales - $120,631
Schedule E – Income/Loss Partnership/S Corp – Passive/Non-Passive - $(59,957)
SE AGI Adjustment - $(1756)
Capital Gain or Loss - $9934
Tax year 200612:
Schedule C1 – Gross Receipts or Sales - $123,021
Schedule E – Income/Loss Partnership/S Corp – Passive/Non-Passive - $(75,283)
SE AGI Adjustment - $(6372)
Exemptions - $748
Tax year 200712:
Wages, Salaries and Tips, etc. - $754,414
Schedule E – Income/Loss – Partnership/S Corp – Passive/Non-Passive - $(189,525)
SE AGI Adjustment - $9058
Adjustments to Penalties/Code Sections
Tax Years 200412 200512 200612 200712
Delinquency – IRC 6651(a)(1) 7651.30 24,889.50 15,637.50 17,574.39
Estimated Tax – IRC 6654 126.26 1640.99 29.99
Accuracy – IRC 6662 5980.69 5522.00 5290.80 36,553.00
General Background:
------- ------- should be given the opportunity to present his proper income and
expenses for tax years ended 2004, 2005, 2006 and 2007.
Issue 1: Schedule E – Income/Loss (Passive Activity)
Is the taxpayer entitled to deduct the passive activity loss of $273,909 on his
2007 Form 1040 as a result of his real estate activities?
Facts
The taxpayer operates a real estate development business. In this business, he actively
sought to purchase residential properties that had a good possibility of increasing
in value within a short period of time. The primary purpose for purchasing these
properties was to realize a gain on sale in the short run and not for rental purposes.
Unfortunately, the unexpected downturn in the real estate market has impacted the
ability of these properties to appreciate in value quickly. Faced with the possibility
of not being able to sell these properties as soon as the taxpayer intended, he
started to rent them out in order to positively impact his bottom line.
The taxpayer spends considerable amount of time researching for and investigating
new investments. He also spends considerable time managing the properties he currently
owns.
The taxpayer owned ten rental properties during this tax year. The properties were
purchased on the following dates:
26** Trico Rd – 9/7/2005
88** Wawana Rd – 9/7/2005
83** Teepee Ave – 8/24/2005
81** Teepee Ave – 8/24/2005
156** Luna Ridge – 8/30/2006
20** SE 27th Terrace – 9/11/2006
2** Dwyer – 0/1/2006
44** McAllister Lane – 7/12/2006
3** County Road – 9/27/2006
70** 74th St. Circle E – 1/1/2005
The taxpayer materially worked more than 750 hours on his real estate development
business and has performed more than one half of his personal services on this business
during the taxable year.
Law
IRC Section 469, states, in part “
(a) DISALLOWANCE
(1) IN GENERAL
If for any taxable year the taxpayer is described in paragraph (2),
neither--
(A) the passive activity loss, nor
(B) the passive activity credit,
for the taxable year shall be allowed.
(2) PERSONS DESCRIBED
The following are described in this paragraph:
(A) any individual, estate, or trust,
(B) any closely held C corporation, and
(C) any personal service corporation.
(c) PASSIVE ACTIVITY DEFINED
For purposes of this section--
(1) IN GENERAL
The term "passive activity" means any activity--
(A) which involves the conduct of any trade or business, and
(B) in which the taxpayer does not materially participate.
(2) PASSIVE ACTIVITY INCLUDES ANY RENTAL ACTIVITY
Except as provided in paragraph (7), the term "passive activity"
includes any rental activity.
(7) SPECIAL RULES FOR TAXPAYERS IN REAL PROPERTY BUSINESS
(A) IN GENERAL
If this paragraph applies to any taxpayer for a taxable year--
(i) paragraph (2) shall not apply to any rental real estate
activity of such taxpayer for such taxable year, and
(ii) this section shall be applied as if each interest of
the taxpayer in rental real estate were a separate
activity.
Not withstanding clause (ii), a taxpayer may elect to treat all
interests in rental real estate as one activity. Nothing in the
preceding provisions of this subparagraph shall be construed as
affecting the determination of whether the taxpayer materially
participates with respect to any interest in a limited
partnership as a limited partner.
(B) TAXPAYERS TO WHOM PARAGRAPH APPLIES
This paragraph shall apply to a taxpayer for a taxable year if--
(i) more than one-half of the personal services performed
in trades or businesses by the taxpayer during such taxable
year are performed in real property trades or businesses in
which the taxpayer materially participates, and
(ii) such taxpayer performs more than 750 hours of services
during the taxable year in real property trades or
businesses in which the taxpayer materially participates.
In the case of a joint return, the requirements of the preceding
sentence are satisfied if and only if either spouse separately
satisfies such requirements. For purposes of the preceding
sentence, activities in which a spouse materially participates
shall be determined under subsection (h).
(C) REAL PROPERTY TRADE OR BUSINESS
For purposes of this paragraph, the term "real property trade or
business" means any real property development, redevelopment,
construction, reconstruction, acquisition, conversion, rental,
operation, management, leasing, or brokerage trade or business.
I.T. Regulation Section 1.469-9
(g) ELECTION TO TREAT ALL INTERESTS IN RENTAL REAL ESTATE AS A SINGLE
RENTAL REAL ESTATE ACTIVITY --
(1) IN GENERAL. A qualifying taxpayer may make an election to treat
all of the taxpayer's interests in rental real estate as a single
rental real estate activity. This election is binding for the taxable
year in which it is made and for all future years in which the
taxpayer is a qualifying taxpayer under paragraph (c) of this
section, even if there are intervening years in which the taxpayer is
not a qualifying taxpayer. The election may be made in any year in
which the taxpayer is a qualifying taxpayer, and the failure to make
the election in one year does not preclude the taxpayer from making
the election in a subsequent year. In years in which the taxpayer is
not a qualifying taxpayer, the election will not have effect and the
taxpayer's activities will be those determined under section 1.469-4.
If there is a material change in the taxpayer's facts and
circumstances, the taxpayer may revoke the election using the
procedure described in paragraph (g)(3) of this section.”
IRC Section 212 states, in part “
In the case of an individual, there shall be allowed as a deduction all the
ordinary and necessary expenses paid or incurred during the taxable year--
(1) for the production or collection of income;
(2) for the management, conservation, or maintenance of property held for
the production of income; or
(3) in connection with the determination, collection, or refund of any tax.”
IRS Letter Ruling # 200834020 dated 01/31/2008 states, in part:
“Under I.T Reg Section 301.9100-1(c) the Commissioner may grant a reasonable extension
of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory
election, or a statutory election (but no more than six months except in the case
of a taxpayer who is abroad), under all subtitles of the Code, except subtitles
E, G, H, and I. Section 301.9100-1(b) defines the term "regulatory election"
as an election whose due date is prescribed by a regulation published in the Federal
Register, or a revenue ruling, revenue procedure, notice, or announcement published
in the Internal Revenue Bulletin.”
Analysis
The passive activity loss rules provide relief from the rule that all rental activities
are passive activities for certain real estate professionals. IRC Section 469(c)(7).
The rental real estate activities of qualifying taxpayers are not subject to the
rule that treats all rental activities as passive. IRC Section 469(c)(7). Thus,
a rental real estate activity of a qualifying taxpayer is not passive if the taxpayer
materially participates in the activity. Further, each of a qualifying taxpayer's
interests in rental real estate is treated as a separate activity, unless the taxpayer
elects to treat all interests in rental real estate as a single activity. To make
the election, the taxpayer must file a statement for the tax year declaring that
he or she is a qualified taxpayer for the tax year and is making the election pursuant
to IRC Section 469(c)(7)(A). I.T. Reg. Section 1.469-9(g)(3).
To qualify under this provision, a taxpayer must satisfy two tests. First, over
one-half of the personal services performed by the taxpayer in trades or businesses
during the tax year must be performed in real property trades or businesses in which
he materially participates. Second, the taxpayer must perform more than 750 hours
of services during the tax year in real property trades or businesses in which he
materially participates. The taxpayer has satisfied both of these tests to the IRS’
satisfaction.
The determination of whether a trade or business is a real property trade or business
is based on all the relevant facts and circumstances, and taxpayers may use any
reasonable method of applying such facts and circumstances to make such a determination.
The taxpayer states that he is a qualified taxpayer under IRC Section 469(c)(7).
The taxpayer elects pursuant to IRC Section 469 (c)(7)(A) to treat all his interests
in rental real estate as a single activity. The real estate activities are as follows:
26** Trico Rd – 9/7/2005
88** Wawana Rd – 9/7/2005
83** Teepee Ave – 8/24/2005
81** Teepee Ave – 8/24/2005
156** Luna Ridge – 8/30/2006
20** SE 27th Terrace – 9/11/2006
2** Dwyer – 0/1/2006
44** McAllister Lane – 7/12/2006
3** County Road – 9/27/2006
70** 74th St. Circle E – 1/1/2005
The taxpayer relied upon a qualified tax professional, who failed to properly prepare
the election to treat all interests in rental real estate as a single rental real
estate activity. The taxpayer filed his tax return without the statement required
by IRC Section 1.469-9(g)(3). However, under LTR 200834020 dated 01/31/2008 (and
other numerous letter rulings ), the IRS has stated that, when a taxpayer has acted
in reasonably and in good faith, requests for relief subject to I.T. Section 301.9100-3
will be granted by the IRS.
Conclusion
Taxpayer is a real estate professional, is requesting that the extension of time
to file the election to treat all rental activities as one activity be granted pursuant
to I.T Regulation Section 301.9100-1(c) and is therefore electing to treat all of
the rental real estate activities as a single activity. The passive activity loss
limitation rules of IRC 469, should therefore not be applied and the full deduction
of $273,909, should be allowed.
Issue 2: Gross Receipts or Sales
Must the taxpayer report additional officer’s compensation for all years under audit?
Fact, Law, Analysis, and Conclusion
Please refer to our protest for ------- ------- Enterprises, Inc. for a complete
analysis and explanation of our protest position. Taxpayer protests the adjustment
to officer’s compensation proposed by the IRS.
Issue 3: Schedule E – Pass thru Income/Loss – Partnership/S Corporation
Must the taxpayer make the pass thru adjustments from the audit of ------- -------
Enterprises, Inc. (1120S) for all years under audit?
Fact, Law, Analysis, and Conclusion
Please refer to our protest for ------- ------- Enterprises, Inc. for a complete
analysis and explanation of our protest position. Taxpayer protests the adjustment
to above noted
Form 1120S corporation proposed by the IRS.
Adjustments to Penalties/Code Sections
Issue 1: Delinquency Penalty – Section 6651(a)(2)
Should the taxpayer be liable for the delinquency penalty for all of the years under
audit?
Facts
The taxpayer relied upon qualified tax preparers to prepare his tax returns for
all of the years under audit.
Law
IRC 6651 states in part:
(a) ADDITION TO THE TAX
In case of failure--
(1) to file any return required under authority of subchapter A of chapter
61 (other than part III thereof), subchapter A of chapter 51 (relating to
distilled spirits, wines, and beer), or of subchapter A of chapter 52
(relating to tobacco, cigars, cigarettes, and cigarette papers and tubes),
or of subchapter A of chapter 53 (relating to machine guns and certain
other firearms), on the date prescribed therefor (determined with regard
to any extension of time for filing), unless it is shown that such failure
is due to reasonable cause and not due to willful neglect, there shall be
added to the amount required to be shown as tax on such return 5 percent
of the amount of such tax if the failure is for not more than 1 month,
with an additional 5 percent for each additional month or fraction thereof
during which such failure continues, not exceeding 25 percent in the
aggregate;
Analysis
The taxpayer spends a considerable amount of time traveling throughout the United
States and in doing so has relied upon tax professionals to prepare his tax returns
timely. He has always acted responsibly in this regard.
Conclusion
The taxpayer has shown reasonable cause as prescribed by IRC Section 6651 and therefore
believes that this penalty should be waived for all years under audit.
Issue 2: Accuracy – Related Penalties under IRC 6662
Should the taxpayer be liable for the accuracy related penalties for all of the
years under audit?
Facts
The taxpayer is unsophisticated as it relates to income tax matters. He has continually
relied upon tax professionals to prepare his tax returns. He asked questions about
the preparation of his tax returns and was assured by the tax professionals that
the tax returns were being prepared correctly and met the “more likely than not”
reporting standard.
Law
IRC Section 6662 states in part:
(B) REDUCTION FOR UNDERSTATEMENT DUE TO POSITION OF TAXPAYER OR
DISCLOSED ITEM
The amount of the understatement under subparagraph (A) shall be
reduced by that portion of the understatement which is
attributable to--
(i) the tax treatment of any item by the taxpayer if there
is or was substantial authority for such treatment, or
(ii) any item if--
(I) the relevant facts affecting the item's tax
treatment are adequately disclosed in the return or in
a statement attached to the return, and
(II) there is a reasonable basis for the tax treatment
of such item by the taxpayer.
Analysis
The taxpayer relied upon his tax preparers stating that the positions taken on his
tax returns complied with the substantial authority standard.
Conclusion
The taxpayer has acted reasonably in having his tax returns prepared by qualified
tax preparers and should not be liable for the accuracy-related tax penalties for
all of the years under audit.
________________________
As noted above, Taxpayer reserves the right to file one or more supplements to this
protest, as appropriate. We would be pleased to discuss with you a schedule for
resolving this appeal promptly.
Please continue to direct all future correspondence concerning this matter to:
Jeffrey Galante
JG Tax Group
Respectfully submitted,
By:
Jeffrey Galante
Enrolled Agent
JG Tax Group
REPRESENTATIVE’S PERJURY DECLARATION
Under penalties of perjury, I declare that this protest was prepared under my supervision
and although I do not know of my own knowledge if the facts contained herein are
true, on the basis of the information furnished me, I believe them to be true and
correct.
By:
Jeffrey Galante
Enrolled Agent
JG Tax Group
1
October 7, 2009
JG Tax Group
4701 N. Federal Highway, Suite 400
Pompano Beach, FL 33064
Internal Revenue Service
Mr.William England, Technical TerritoryManager
Attn: Mark Butera, Technical Services
955 So. Springfield Ave.
Springfield, NJ 07081
Re: Ravichandran & Shankari Rajaratnam
Taxpayer Identification Number: ------------
Examination for Tax Years Ended: December 31, 2006 and
December 31, 2007
Dear Mr. Butera,
-----------------------------hereby protest the proposed adjustments as set forth
paragraph 6 below. This protest is filed with respect to the Statutory Notices of
Deficiency Letters
(Letter 531-T) dated July 15, 2009, and the accompanying explanations. Taxpayer
reserves the
right to file one or more supplements to this protest.
The following information is submitted in support of this protest:
1. Taxpayer’s name, address and identification number:
-------------------------------
24---------------Ct
-----------------, NJ 08502-5346
Taxpayers are calendar year-end taxpayers. Taxpayers filed their federal income
tax return on
Form 1040.
2. Dates of the Notice of Deficiency Letters: July 15,
2009.
3. Taxable years at issue: 200612, and 200712
4. Request for conference: Taxpayer requests a conference
with the Internal
Revenue Office ofAppeals in the Plantation, FL officewith respect to the findings
of the
examining RevenueAgent, or that the Appeals hearing be conducted telephonically
if
the Appeals Office assigned to this case is not located in southeast Florida.
2
5. Request to be present at, and receive documents relating
to, certain Appeals
communications: In accordance with section 1001(a) of the Internal Revenue Service
Restructuring and ReformAct of 1998, Pub. L. No. 105-206, Taxpayer requests to be
present
at all communications between the Internal Revenue Service Examination Division
and the
Appeals Division with respect to this matter. Taxpayer requests advance notice of
such
communications so that Taxpayer can arrange to be present. In addition, Taxpayer
requests to be
present at all communications betweenChiefCounsel representatives, and the Appeals
Division
with respect to thismatter. Taxpayer requests advance notice of such communications
so that
Taxpayer can arrange to be present. Taxpayer further requests copies of all written
communications and summaries of any oral communications between the Internal Revenue
Service Examination Division and the Appeals Division with respect to thismatter.
Finally,
Taxpayer requests copies of all communications, whether written or written summaries
of oral
communications, between the Examination Division and any third party that occurred
during
the course of the examination of Taxpayer.
6. Taxpayers do not agree with, and hereby protest, all proposed adjustments for
tax years ended 12/31/2006 and 12/31/2007 in the Notice of Deficiency including
those set
forth below:
Adjustments to Income/Expenses
General Background:
----------------------m do not believe that the Revenue Agent gave due
consideration to the evidence provided by the taxpayers during the audit process
and
ask for an independent party to review the accompanying evidentiary documents that
support the expenses that were claimed by the taxpayers on their Form 1040 tax returns
for tax years ended 12/31/2006 and 12/31/2007.
Issue: Schedule C1 – Expenses for Business Use of Home
Tax Years
200612 200712
Revenue Agent’s proposed adjustments $30,292 $24,323
Facts
Mr.------------------------------used his home for his computer consulting
business that is separate and apart from his work as a Senior Systems Engineer
with -----------------------, Inc., and the American Institute of Certified
Public Accountants. Please find the enclosed declaration by the taxpayer that
certifies that his business use of home was for his schedule C, consulting
3
business. The taxpayer has substantial experience and credentials that resulted
in
his being recruited to work as an outside computer consultant for firms with
offices throughout the world. None of these companies provide workspace for the
taxpayer.
Also, please find photographs of the taxpayer’s home office which shows that the
space is dedication solely and exclusively for his Schedule C business.
Law
There are two basic requirements for the allowance of home office expenses, as follows:
1.
Regular and Exclusive Use. You must regularly use part of your home exclusively for
conducting business. For example, if
you use an extra bedroom to run your online business, you can take a home office
deduction for the extra bedroom.
2.
Principal Place of Your Business. You must show that you use your home as your principal
place of business. If you conduct
business at a location outside of your home, but also use your home substantially
and regularly to conduct business, you may
qualify for a home office deduction. For example, if you have in-person meetings
with patients, clients, or customers in your home
in the normal course of your business, even though you also carry on business at
another location, you can deduct your expenses
for the part of your home used exclusively and regularly for business. You can deduct
expenses for a separate free-standing
structure, such as a studio, garage, or barn, if you use it exclusively and regularly
for your business. The structure does not have to
be your principal place of business or the only place where you meet patients, clients,
or customers.
Analysis
The taxpayer performed computer consulting for companies needing 24/7 monitoring
support. The work requires computer monitoring using equipment located in the taxpayer’s
home office. The companies that retain the taxpayer for the consulting/monitoring
activities
do not provide a workplace for the taxpayer. The taxpayer has a dedicated home office
that
is used regularly and exclusively for his Schedule C consulting business. The home
office is
also the principle place of work for the Schedule C consulting business.
Not until we received the Revenue Agent’s final report, did we learn that the home
office
deduction would be disallowed because the home office was being used by the taxpayer
as
an employee, and that the taxpayer did not use the home regularly and exclusively
for that
purpose. The Revenue Agent was concentrating on the amount of income and expenses
being deducted on the tax returns and did not consider the fact that the taxpayer
used the
home not for his employers, but for other firms, who retained him as a consultant.
Conclusion
The Revenue Agent did not gather the evidence necessary to determine whether or
not the
taxpayer met the above two referenced tests. The Revenue Agent incorrectly determined
that
the home office was used by the taxpayer for work being performed by him for his
two
4
employers. The Agent did not correctly determine the fact that the Schedule C business
activity was for companies other than those two firms for which the taxpayer was
working as
an employee. We believe that the taxpayer met the two critical tests and that the
claimed
deductions for home office should be fully allowed.
Issue: Schedule C1 –Meals and Entertainment
Tax Years
200612 200712
Revenue Agent’s proposed adjustments $1900 $1900
Issue: Schedule C1 – Travel
Tax Years
200612 200712
Revenue Agent’s proposed adjustments $6000 $5050
Issue: Schedule C1 – Rent/Lease – Vehicles/Machinery/Equip.
Tax Years
200612 200712
Revenue Agent’s proposed adjustments $8830 $9321
Issue: Schedule C1 – Car and Truck Expenses
Tax Years
200612 200712
Revenue Agent’s proposed adjustments $19,070 $14,155
Facts, Law, Analysis, Conclusion
We are requesting that an independent review of the enclosed documents that are
being
submitted to substantiate the above referenced issues, be conducted to ascertain
and make the
correct decision regarding substantiation of the above referenced business expenses.
We
believe that this matter involves the decision as to whether the enclosed documents
meet the
Code requirements. From our perspective, the information and documents do conform
to
both the spirit and letter of the Code requirements.
Please find the enclosed documents:
Explanation for using bank statements for evidence of payment
? Vehicle business mileage log
? Auto maintenance invoices
? Car lease payments
5
? Car insurance payments
? Gasoline receipts
? Travel and meals expense credit card statement and taxpayer
calendar
We respectfully request that you consider the taxpayer’s unique situation that caused
his
inability to prove actual receipts for payment of his expenses. As you will note
in the
attached taxpayer’s explanation for using bank statements for evidence of payments,
in
November, 2008, the taxpayer’s septic pump failed, and flooded his entire storage
area.
Since most of the taxpayer’s payments are posted on his debit card, his only alternative
was
to prove the enclosed bank statement to prove business payments. Please find the
enclosed
copy of the bill from the ------------------t Group, for support for the taxpayer’s
statement.
We believe that the Revenue Agent did not take into consideration the taxpayer’s
unfortunate
situation into consideration when the Revenue Agent reviewed the information we
previously provided to substantiate the above referenced business expense. We respectfully
request an independent review of the taxpayer’s unique situation and the compiled
evidence
we have submitted in order to reverse the Revenue Agent’s adjustments.
Issue: Other Unreimbursed Employee Expenses
Tax Years
Revenue Agent’s proposed adjustments 200612 200712
$21,430 $16,529
Facts, Law, Analysis, Conclusion
Please consider the enclosed statement and supporting evidence for substantiation
of the
other unreimbursed employee expenses. The taxpayer, ----------------------, is a
Family
--------------------, working at Columbia University in City of New York. The taxpayer
was
hired in 2007 as a registered nurse on a contingent basis that she becomes a board
certified
Family --------------------. The taxpayer had to attend the Family----------------training
program at Pace University and pay the full tuition on her own, since a similar
program was
not offered at Columbia University.
Please find the enclosed documentation to substantiate the fact that the taxpayer
paid the
tuition for the Family Nurse Practitioner certification program, and for her unreimbursed
automobile mileage expense that was required by the clinical training schedule.
The Revenue Agent’s position for disallowing this expense was because the taxpayer
did not
provide documentation to verify her employee business expense. It is our position
and belief
that the enclosed documentation, including the taxpayer’s own testimony, does provide
6
adequate documentation to substantiate the taxpayer’s other unreimbursed employee
expenses.
We therefore ask that the Revenue Agent’s adjustments be reversed.
Adjustments to Penalties/Code Sections
Tax Years
200612 200712
Accuracy – IRC 6662(a) $3614.60 $2893.00
Issue 2: Accuracy – Related Penalties under IRC 6662
Should the taxpayer be liable for the accuracy related penalties for all of the
years under audit?
Facts
The taxpayers are unsophisticated as it relates to income tax matters. Because of
the flood in
their storage area in 2008, they were unable to provide orignal documentation of
payment for
their expenses. In lieu of that documentation, the taxpayers provided alternative
testimony and
evidence.
Law
IRC Section 6662 states in part:
(B) REDUCTION FOR UNDERSTATEMENT DUE TO POSITION OF TAXPAYER OR
DISCLOSED ITEM
The amount of the understatement under subparagraph (A) shall be
reduced by that portion of the understatement which is
attributable to--
(i) the tax treatment of any item by the taxpayer if there
is or was substantial authority for such treatment, or
(ii) any item if--
(I) the relevant facts affecting the item's tax
treatment are adequately disclosed in the return or in
a statement attached to the return, and
(II) there is a reasonable basis for the tax treatment
7
of such item by the taxpayer.
Analysis
The taxpayers are very compliant taxpayers and we believe that the imposition of
this penalty
would be an extreme inequity.
Conclusion
The taxpayer has acted reasonably, and should not be liable for the accuracy-related
tax penalties
for all of the years under audit.
________________________
As noted above, Taxpayer reserves the right to file one or more supplements to this
protest, as
appropriate.We would be pleased to discuss with you a schedule for resolving this
appeal
promptly.
Please continue to direct all future correspondence concerning this matter to:
Jeffrey Galante
JG Tax Group
4701 N. Federal Highway, Suite 400
Pompano Beach, FL 33064
Respectfully submitted,
By: _____________________
Jeffrey Galante
Enrolled Agent
JG Tax Group
8
REPRESENTATIVE’S PERJURY DECLARATION
Under penalties of perjury, I declare that this protest was prepared under my
supervision and although I do not know of my own knowledge if the facts contained
herein are
true, on the basis of the information furnished me, I believe them to be true and
correct.
By: _____________________
Jeffrey Galante
Enrolled Agent
JG Tax Group
cc: ------------------------------– letter only
