IRS reviews employment tax claims

The IRS has reissued Internal Revenue Manual (IRM) 4.23.13, Employment Tax, Adjusted Returns, Abatements and Claims. The IRM has been substantially revised and reorganized with regard to requests for audit reconsiderations, adjusted returns, claims for abatements, and claims for refund.

There are three possible results when a claim is examined. The claim may be: (1) disallowed in full, with or without adjustments, (2) partially allowed, with or without adjustments, or (3) allowed in full. When the Form 94x-X claim for refund is timely filed and has merit, the examiner will develop the issues just as in any other examination. If the examiner determines the issues on the claim should be fully disallowed, other IRM sections provide for forms and letters that need to be prepared.

In certain situations, the examiner will dispose of the claim for refund without performing any audit actions, if one of the following criteria is met. The claim: (1) is not timely filed, (2) is based solely on alleged unconstitutionality of Revenue Acts, moral, religious, political, conscientious, or similar grounds, (3) is based on a return stamped Waiver of Refund or there is other evidence in the case file indicating that a refund was waived as a consideration in a settlement by the Department of Justice, the Chief Counsel’s Office, etc., (4) relates to a return closed on the basis of a final court order, unless a refund may nevertheless be allowed under specific provisions of the Code, (5) covers a taxable period in which the tax liability or specific issues were the subject of a final closing agreement under Code Sec. 7121 or in which the tax liability was compromised under Code Sec. 7122 except in the following situations: (a) statutory exceptions to finality of closing agreements, and (b) claims based on issues not included in prior specific matter closing agreements, (6) is the subject of a request for withdrawal by the claimant, (7) requests the examiner to reconsider issues previously considered by Appeals, or (8) requests examiner to reconsider a previously disallowed claim, if no additional facts are submitted. (Internal Revenue Manual, IRM 4.23.13, (01-08-2016.)

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