In regard to whether the IRS in Ohio is doing the same thing as they are in Arkansas in relation to auditing people who file amended tax returns claiming refunds, I've already received two conflicting assessments from Ohio CPAs.

What an IRS employee told Ohio CPA, Dana Stahl:

Mr Guru - I spoke to Dave Holscher, who is in the Taxpayer Education & Communication section for Ohio. He denies there is such a movement afoot within IRS. His comment, which sounds reasonable, is that IRS just doesn't have the resources for such an undertaking. He also suggested I call the local TAS office, which is in Cleveland. So, I'll try that, probably tomorrow. I'll let you know what I find out there.

What another Ohio CPA actually experienced:

I have run into the exact same situation in Cleveland, OH.

I filed a 1040X for a client that owns a minority interest in a company that has lost money for a number of years. The taxpayer has not had basis in any losses for many years. The taxpayer preferred to file without an extension (the S-corp was always extended). Upon preparing the 1120S one year, we discovered the taxpayer made a loan to the S-Corp, giving basis. We amended the 1040, and an audit started. After a full audit, a no change came through. It was partly due to the fact the auditor was going to be promoted and wanted to clean his files quickly. He beat on the rental property to death. The auditor told me ALL refund requests will be audited. Due to the changes in geographic service centers, it took many months for the client to actually receive their refund.

I also filed an amended 2002 1065 which has four partners. The effect was refunds, to each partner, in the $35,000 range. Strangely, three partners immediately received their refunds and one is currently being examined internally. I am hoping that an audit doesn't start!

I hope this helps your search for justice.

I am still waiting for word from tax practitioners in Florida, Nevada and California. I have clients in those states for whom I would like to file amended returns; but would appreciate some advance warning as to whether they will be punished by IRS for that and put through the wringer if we dare try to recover taxes that they erroneously overpaid.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/07/2004 04:49:00 PM Send this post: