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TAX 700 Final Project I Milestone Two Guidelines and Rubric Appealing the Adjustment

Overview: For the first milestone of your Final Project I NOPA Response Plan, you provided your client with a brief explanation of their current situation, using details from the scenario and the final project NOPA document. For Milestone Two, due in Module Four, you will complete the research necessary to make an informed recommendation on whether to appeal the IRS adjustment, and you will complete this critical component of your NOPA Response Plan. Several factors will influence your recommendation, including whether the relevant laws and regulations support the decision to appeal, and the materiality of the case to the client. Be sure to thoroughly address all relevant information when formulating your recommendation, including tax regulations and information from the NOPA and scenario, as you will need to provide a detailed explanation of how the relevant factors lead to your recommendation. Scenario: Imagine that you are a CPA working for an accounting firm. Your client is a Fortune 500 public company that has revenues exceeding $10 billion. It is a fast-growing company that has engaged your firm to handle all tax compliance and consulting. The client has recently received notification from the IRS, and they have determined that they will be under audit for the prior tax year. The client contacts you to help them through this process. While meeting with the IRS to understand what they need for their audit, you provided the IRS with your client’s trial balances, recent tax return work papers, and the tax returns themselves. After further review of those documents, the IRS provided your client with a Notice of Proposed Adjustment (NOPA) related to per diem expenses that the client has been providing to their employees when they travel for business. The per diems were for the combined lodging and meal expenses. The IRS is recommending that these per diems are nondeductible at a rate of 50 percent. The adjustment they have proposed is $5 million. While discussing the issue with your client, you learn that they have accounted for per diem expenses the same way for the past several years in their tax returns. You estimate that the fees associated with your services will be $250,000. This fee includes defending your client before the IRS, drafting a response plan, preparing a NOPA response, and defending your client through an appeal. Prompt: In this section, you will explain to your client why appealing the IRS’s proposed adjustment is an appropriate course of action by discussing all the relevant factors that your client should consider.

 Tax Rules and Regulations: Determine the taxation laws, revenue rulings, and/or revenue procedures that apply in this scenario, and explain how they

impact your client’s current situation.

 Appeal Support: Explain which of the tax rules and/or regulations discussed above may work in your client’s favor if they appeal the IRS adjustment, and why.

 Materiality: Determine how material this adjustment is to your client, using details from the scenario to support your conclusion. Explain why your client should move forward with appealing the IRS adjustment, based on the information discussed above.

 Now that you established that appealing the adjustment is appropriate, explain the next steps that will occur in the IRS appeals process, including the possible outcomes.

 Explain why the potential benefit of an appeal to your client outweighs the fees associated with your CPA services, supported by details from the scenario. In other words, persuade your client that your services are worth the cost.

Rubric Guidelines for Submission: Your paper must be submitted as a 3- to 4-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and any sources cited in APA format.

Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value

Appealing the Adjustment: Tax Rules

and Regulations

Determines the taxation laws, revenue rulings, and/or revenue procedures that apply in this scenario and explains how they impact the client’s current situation

Determines the taxation laws, revenue rulings, and/or revenue procedures that apply in this scenario, but does not explain how they impact the client’s current situation, or response is cursory or illogical or contains inaccuracies

Does not determine the taxation laws, revenue rulings, and/or revenue procedures that apply in this scenario

20

Appealing the Adjustment: Appeal

Support

Explains which of the tax rules and/or regulations discussed above may work in the client’s favor if they appeal the IRS adjustment and why

Explains which of the tax rules and/or regulations discussed above may work in the client’s favor if they appeal the IRS adjustment, but does not explain why, or response is cursory or illogical or contains inaccuracies

Does not explain which of the tax rules and/or regulations discussed above may work in the client’s favor if they appeal the IRS adjustment

20

Appealing the Adjustment: Materiality

Determines how material this adjustment is to the client, using details from the scenario to support conclusion

Determines how material this adjustment is to the client, but does not use details from the scenario to support conclusion, or response is illogical or contains inaccuracies

Does not determine how material this adjustment is to the client

15

Appealing the Adjustment: Appealing

the Adjustment

Explains why the client should move forward with appealing the IRS adjustment based on the information discussed above

Explains why the client should move forward with appealing the IRS adjustment based on the information discussed above, but explanation is cursory or illogical

Does not explain why the client should move forward with appealing the IRS adjustment

20

Appealing the Adjustment: Next Steps

Explains the next steps that will occur in the IRS appeals process, including the possible outcomes

Explains the next steps that will occur in the IRS appeals process, including the possible outcomes, but explanation is cursory or contains gaps or inaccuracies

Does not explain the next steps that will occur in the IRS appeals process

10

Appealing the Adjustment: Potential

Benefit

Explains why the potential benefit of an appeal to the client outweighs the fees associated with the CPA services, supported by details from the scenario

Explains why the potential benefit of an appeal to the client outweighs the fees associated with the CPA services, but does not support explanation with details from the scenario, or response is cursory or illogical or contains inaccuracies

Does not explain why the potential benefit of an appeal to the client outweighs the fees associated with the CPA services, supported by details from the scenario

10

Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format

Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

5

Total 100%