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Caroline D. Ciraolo and Bryan C. Skarlatos participated in a panel on "IRS Exams and Appeals" in the IRS Workshop at the AICPA ENGAGE 2019 Conference

As IRS enforcement becomes more automated, the need for trained representatives who know what to do and when to do it has never been greater. This panel covered the mechanics of representing taxpayers before the IRS, including Exam, Appeals and Collections, so that attendees could identify and understand when taxpayers need help, and how to go about the process of helping them resolve their IRS issue. This session was covered in 2 parts: 1:00 - 3:00 pm: Part 1 - Examinations and Appeals (Bryan Skarlatos and Caroline Ciraolo) 3:00 - 5:00 pm: Part 2 - IRS Collections (Eric Green, Robert McKenzie and Paul Mamo, IRS Director of Collections).


Learning Objectives:
1. Understand the examination process
2. Identify opportunities to challenge an examiners findings
3. Explain the process for appealing from an IRS examination
4. Understand the IRS collection process
5. Explain the options taxpayers have to resolve an outstanding tax debt


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FARA Enforcement Is No Slam-Dunk For Prosecutors

By: Jay R. Nanavati
Expert Analysis - Opinion

In the wake of the Mueller investigation and the U.S. Department of Justice Office of the Inspector General’s 2016 “Audit of the National Security Division’s Enforcement and Administration of the Foreign Agents Registration Act,” Attorney General William Barr and DOJ National Security Division head John Demers have signaled an increased appetite for enforcing alleged Foreign Agents Registration Act registration violations more aggressively, and members of Congress have been agitating for the DOJ to do just that.

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Claude M. Millman quoted in "Students Admitted to Elite Schools Through Diversity Push Do Well Academically, City Data Show," Wall Street Journal, Regarding Lawsuit Handled by K&F

The new data came in response to an appeal by seven students who said the recent expansion of Discovery had unfairly denied them seats in the specialized schools. They asked the state commissioner this spring to ensure they get spots and declare the city’s implementation of Discovery unlawful.

For this fall, the mayor has vastly expanded the Discovery program, which offers seats and free summer tutoring to disadvantaged students who score below the test-score cutoff for regular acceptance. The mayor roughly doubled the size of Discovery, to about 500 seats this fall, or about 13% of specialized high school spots in ninth grade. That growth has sparked an outcry from parents who say their high-scoring children were edged out by Discovery students with lower exam scores. The mayor plans for Discovery students to have 20% of seats in fall of 2020. He also restricted eligibility to students from certain high-poverty middle schools.

The petitioners claim the city ignores language in state law requiring that Discovery operate “without in any manner interfering with the academic level” of the sought-after high schools.

Their lawyer, Claude Millman, rebutted the city Department of Education’s GPA analysis last week. He said the average GPA for Discovery students at a school can mask how individuals may have floundered, and their cohorts were too small to draw conclusions. Further, he said their accomplishments didn’t reflect how well a broader group with lower entrance exam scores will do in the bigger program.

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Recovering Fees from the IRS

By: Megan L. Brackney
The CPA Journal
June 2019 Edition

Although some are unaware of the fact, taxpayers can recover fees and costs from the government if the IRS has taken an unreasonable position against them. The IRS may be responsible for fees due to unreasonable positions that it took during audit, on appeal, in connection with a refund claim or collection matter, or as related to a summons.

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Bryan C. Skarlatos quoted in "Personnel, Tech Changes Could Help IRS Buck Audit Declines", Law360

A continuing decline in Internal Revenue Service audit rates could soon reverse course due to an influx of workers to conduct examinations and a plan to modernize technology at the agency.

The IRS Data Book released in May showed the audit rate for the largest corporations fell to just under 50% in 2018 from over 91% in 2013, and the rate for the highest-earning individuals dropped to 6.7% in 2018 compared with an audit rate of nearly 35% in 2015.

IRS officials have blamed the yearslong drop in audit rates on dwindling agency funding over the past nine years and staff retirements that drain the agency's knowledge base. However, the decline may soon be reversed due to developments that will likely give the IRS more resources than it has had in the past, according to Bryan C. Skarlatos, a partner at Kostelanetz & Fink LLP.

“I'm thinking things are going to start trending up,” he said. “It may take more than a year to get it up, but I think by 2020 you'll see audit rates go up.”

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Ian Weinstock quoted in "Foreign Individuals, Trusts Face New U.S. Tax on Some Income", Bloomberg Tax

Wealthy foreigners who live in the U.S. face the prospect of an unexpected new tax on non-U.S. income.

Drafters of the 2017 tax overhaul repealed a rule that kept some foreign-held assets outside the U.S. tax net, meaning foreigners who become U.S. residents now have to report the worldwide income of their families’ foreign businesses in the U.S. and pay tax on the income of each company and subsidiary.

The repeal of tax code Section 958(b)(4) not only affects multinationals and private equity firms that have foreign subsidiaries but also domestic trusts, partnerships, and estates in ways that leave the U.S. individual with tough options: pay taxes on more income, dispose of foreign shares, or leave the U.S—a move that could bring its own income and estate tax consequences.

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Caroline D. Ciraolo moderated the panel titled "The Current State Of The IRS, Personal Income Tax Committee" at the New York City Bar

For years Congress has asked the IRS to do more with less. Notwithstanding budget cuts, the Service remains responsible for, among other things, civil and criminal tax enforcement and assisting millions of taxpayers comply with their legal obligations. This Town Hall addressed how fiscal constraints affect the IRS’s ability to execute its mission. Caroline Ciraolo, the former Acting Assistant Attorney General of the Department of Justice's Tax Division, moderated a discussion of the Service’s current enforcement priorities as well as its efforts to assist taxpayers and taxpayer representatives facing bureaucratic hurdles and complex tax issues.

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Michael Sardar quoted in "Massive College Fraud Scheme Could Showcase New Sentencing Rules", TaxNotes Today

New rules from the First Step Act and sentencing guidelines amendments could be on display when judges start deciding on punishment for participants in the recent massive college bribery scheme.

The sentencing hearings will begin in June for those facing charges, including tax and fraud charges, in the “Operation Varsity Blues” college admissions scandal, with the hearings for the parents who have pleaded guilty to start in the fall.

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Caroline D. Ciraolo moderated the panel titled "Whistleblowers: Protections And Privacy" at the 4th International Conference on Taxpayer Rights

This panel explored the role of whistleblowers in tax administration, including the whistleblower’s access to information about the taxpayer and progress on the investigation, and the taxpayer’s access to information about the whistleblower’s proffer. 

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Caroline D. Ciraolo participated in a panel titled “Exchange of Tax Information is Everywhere! Knowing the Rules, Understanding the Landscape,” at the 2019 Audits and Appeals Seminar, Tax Executive Institute

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