In our office, one of the more valuable tools we use when a case is going to be appealed, or docketed for United States Tax Court, is the Freedom of Information Act (FOIA).
Without exception, after every audit or after being engaged for any tax case from another firm or practitioner (that will go on appeal), our first order of business is to retrieve the case file pursuant to the FOIA.
And further, without exception, it has never failed us. Never. There is always valuable information to be found in a case file retrieved pursuant to the FOIA. For example, our office was once able to remove penalties from an assessment, simply by reading a case file. As it turns out, the agent sought penalty waiver from a manager upon the request of our office, and the manager approved. However, the final report did not remove the penalties. We presumed that the agent and the manager reviewed the case, and the penalty waiver was denied. So on appeal, our office was easily able to get penalties removed at the Office of Appeals, simply by showing the Appeals Officer the manager approval, found in the case file. There is always something to “chew on.”
We are a little surprised at how few practitioners use this tool. In fact, it’s rarely used. We have provided sample letters to very large firms in the past, advising as to how to obtain a case file. Personally, I do not understand how proper preparation of a case on appeal can be performed without a copy of the case file, retrieved pursuant to the FOIA. We also discuss the FOIA in the Western New England University presentation, on “How to Handle an IRS Audit.” That video can be viewed by using the link attached to that post located in this blog.
Here is a copy of an actual FOIA request, used by this office. The names and addresses were changed. Ironically, this FOIA request was for the case file of a federal examination, and the results of this request helped us to overturn the results of a Massachusetts examination.
Don’t forget to pay the fee! The invoice will be on top of the documents. If you don’t, you will not be able to get a request next time. And if you practice before the IRS, or wish to practice more before the IRS, there will be a next time!
If any fellow practitioners wish to add anything to this post, please do! All professional voices and experiences are welcome!