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| G | H
Comments on the Voluntary
Fiduciary Correction Program
- Issues Raised by Taxpayer after the 30-Day Letter is Issued.
Treas. Reg. §
301.7430-7(c)(4) addresses issues raised by a taxpayer after the issuance of the 30-day
letter. The regulation requires that the offer will not be deemed to be a qualified offer
until such time that the taxpayer has adequately explained the issue, together with the
facts and legal arguments supporting it. This seems like a reasonable concern, but the
regulations require disclosure of "ALL relevant information" (emphasis
and upper case added). That phrase would allow the Service to require a large volume of
disclosure which, if not fully provided, would prevent the offer from becoming a qualified
one. A somewhat lower standard should be imposed. The taxpayer should be required to
disclose sufficient information that would permit the Service to carry out a reasonably
thorough review of the issue (and/or disclose information that would be sufficient to file
a valid claim for refund). Such language would be open to interpretation, but it would be
preferable to the "all relevant information" standard. The standard proposed by
the regulations seems to draw the line entirely in favor of the Service, and would prevent
an offer from becoming a qualified offer if ANY small item of information is omitted, as
long as the omitted information has some small degree of relevance. If complied with, this
standard would often result in the Service having substantially more detail and
information on this issue than on issues that it had thoroughly audited and for which it
had received complete answers in response to its information document requests.
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