Magazine article The National Public Accountant

Taxation and Representation

Magazine article The National Public Accountant

Taxation and Representation

Article excerpt

Taxation and Representation

In 1776 the colonies rallied around the cry, "No taxation without representation!" The colonies went to war and in victory received representation and, eventually, taxation.

These two words, "taxation" and "representation," define the source of much of the income of NSPA members. Our clients rely on us to prepare accurate and money-saving tax returns, tax advice in various situations, and to provide representation in various circumstances - especially in examination of their tax returns.

We are a small CPA firm located in a suburb of Philadelphia, Pennsylvania. As with many members of NSPA, we perform a variety of services for clients in various fields. Some of our clients are in the broadcast industry. The nature of this industry is such that our clients have a tendency to relocate frequently all across the country. In order to service our clients properly, we travel to their locations. This allows us to meet face-to-face with our clients and, by spreading the costs out per client, our fees remain affordable.

Until recently, when a client received an examination notice from the IRS, he or she was able to request a transfer to the Philadelphia region and we handled the audit. All of a sudden, our clients have become victims of Regulation 301.7605. The Philadelphia district has decided not to accept the transfer of audits for several of our clients citing the aforementioned regulation. Quoting the background information provided with the temporary regulation, "In keeping with both the spirit of the legislation and the policy of the service, it is the goal of these regulations that the service officer or employee setting the time and place for examination will in all cases balance the convenience of the taxpayer with the requirements of sound and efficient tax administration." In addition, the regulation states that the location of the taxpayer's representation will generally not be considered in determining the place for an examination.

It seems to us that all parties concerned derive a benefit by having the qualified preparer handle the examination in a location within a reasonable distance of the practitioner. Let us consider the benefits of the three interested parties.

The foremost concern should be for the taxpayer. In most instances, the taxpayer develops a relationship with the person preparing the return. While sitting together the taxpayer is responding to questions from the practitioner as well as resolving the uncertainties he might have due to the complexity of the tax laws.

Beyond that, the taxpayer will periodically call his accountant during the year to discuss various tax matters. The conclusion, therefore, is that the taxpayer will be best represented by the person preparing the return. A taxpayer who relocates frequently should not be required to change tax prepares every time. Is it in the taxpayer's best interest to have the audit take place where he currently (although probably temporarily) resides? The cost of airfare alone makes it prohibitive for a taxpayer to engage the person best equipped to handle the audit.

The Internal Revenue Service must be taken into consideration next. …

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