The IRS’ Small Business/Self Employed Division enforces the withholding rules for all businesses, regardless of size. So the advice flowing to and from SB/SE employees is especially meaningful. Here are digests of some recently released guidance documents.
1. No reliance on FAQs. The IRS is fond of FAQs—they can be posted quickly and communicate complex information to taxpayers. Problems: FAQs aren’t subject to rigorous review prior to posting and there’s no way to track changes over time. Field examiners are advised that they shouldn’t rely on FAQs posted on the IRS’ website, unless otherwise stated or the FAQs are published in the IRS’ official Internal Revenue Bulletin. (SBSE-04-0517-0030)
2. Expanded disaster relief authorization. Once the president issues a disaster declaration, the IRS can postpone filing and deposit deadlines. Areas affected by disaster declarations may be designated for Individual Assistance and/or Public Assistance. Problem: Tax relief applies only when FEMA designates an area for Individual Assistance. Guidance now extends tax relief to situations where areas are eligible for Public Assistance relief only. (SBSE-25-0617-0025)
3. Determining your ability to pay. The IRS must have a clear idea of your assets and liabilities before it collects back taxes, penalties and interest. Revenue officers gather this information by completing collection information statements. Guidance issued to revenue officers clarifies the steps they must take to obtain this information:
- During the initial contact, officers should attempt to secure, review and discuss financial statements with you.
- If you snub the officer on this initial contact, be prepared for a face-to-face follow up appointment on your business premises.
- You can provide the information by phone or letter, if you don’t want the officer to visit your business, but this is probably counterproductive, since the revenue officer will make a field call to verify the assets.
- If you refuse to cooperate, the officer will escalate the matter by issuing a summons to interview you and/or requiring you to produce your books. (SBSE-05-0817-0040)