Materiality and CPA/Legal Fees, Cost-Benefit Analysis, and the Appeal to the IRS
TAX 700 Module Four Journal Guidelines and Rubric
The decision to appeal a tax adjustment can have a significant impact on a client and must be carefully considered. This week, you will examine the many factors that influence such a decision and weigh in on what you believe is the most important factor in making the decision to appeal. The decision to appeal a proposed tax adjustment proposed by the IRS can be a complex one. Ultimately, the client must determine the cost versus benefit of a potential appeal. While the client may have an idea of some of the factors involved, such as how much they are willing to spend on the process, the client will often depend on your professional opinion when deciding whether to appeal. You must be aware of all the factors to be considered and the potential impact they can have on the decision. For this assignment, explain why a cost/benefit analysis must be considered in regard to challenging the IRS via an appeal. • What role do you think materiality and CPA/legal fees should play in the decision to move forward with an appeal to the IRS? • What impact could the cost/benefit of the analysis have on the decision to appeal? Also, explain the other factors a client should consider when appealing. • What do you feel is the most important factor when appealing the issue and why? • What percentage of certainty would you have to have in your client’s case in order to advise the client to appeal? Support your answer. • Can the circumstances ever change which factor is most important? Explain how. Rubric Guidelines for Submission: Submit assignment as a Word document with double spacing, 12-point Times New Roman font, and one-inch margins.
Discussion Post
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Discussion Post
Materiality and CPA/legal fees play a crucial role regarding an appeal to Internal Revenue Service (IRS) for tax adjustment. It makes sense to consider a tax adjustment appeal if it reflects materiality, which means the relevance of the specific adjustment in question. On the other hand, fees, such as those related to hiring an attorney to facilitate the appeal process, should be considered and weighed against the possible gains (benefits) from an appeal. The tax adjustment would be pointless if such costs or fees surpass the benefits.
A cost-benefit analysis is among the factors before appealing for tax adjustment. Specifically, it assesses the expenses connected to the appeal to an appeal’s potential benefits. Such an analysis influences the outcome of an appeal and guides the client on whether to continue or ignore the appeal (Bates, 2019).
Since a tax appea...