Can You Waive Appeal Rights?

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  • #41817
    Deanna Richardson
    Participant

    I feel a little foolish asking this, but I can’t easily locate the answer otherwise.

    I’m dealing with an Audit were we elected to use Temp. Reg. 1.274-6T(b) which allows a farmer to claim 75% business use of a vehicle without substantiation if the vehicle is used most of the normal business day directly in connection with the business of operating a farm.

    The Auditor has stated that he does not believe this is applicable to the entity as the entity sells farming equipment in addition to it’s farming operation. The vehicles with the election were also used in other farming operations (personal and multiple-S-corps.) In our most recent visit (his 3rd) he stated that if we would agree not to go to appeals he would allow 75% for one vehicle (based upon maintenance records) and allow the same amount for the 2nd vehicle on the S-Corp return but would disallow the mileage on the individual return IF we would agree not to go to appeals OR he would disallow it all.

    The short question is: Can he do that? Obviously he can, but can that be binding? Can a taxpayer actually waive their right to appeal at exam? 1. I can’t bribe him. Why is he trying to bribe the taxpayer? 2. That also seems to contravene IRM 4.10.1.2.1.5 the taxpayers right to appeal an IRS decision in an independent forum.

    #41850
    Eric Green
    Keymaster

    Deanna it is not uncommon for the agents to negotiate a bit to see if the case can settle. I would recommend doing so if the deal is a good one.

    #41954
    Deanna Richardson
    Participant

    All in just for the mileage it is a $50k adjustment. Some of it warranted because the client did not have maintenance records to support the miles taken. This is on top of the threat to disallow all credit card charges (another $45k) because they commingled personal charges (that were not expensed) and disallowing 50% of the charges for shareholder cellular devices. And he has already opened 2018.

    Something beats nothing, but I would much rather go to appeals with $50K of mileage than -0-.

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