Case Study

Tax Controversy Team Successfully Resolves Manufacturer’s Tax Assessment Issues

April 16, 2019

Situation

A specialty parts manufacturer was audited by the IRS. During the audit, The IRS agent assigned to the case asserted extraordinary adjustments to the company’s inventory over a three-year period, which resulted in considerable taxes and onerous penalties.

Cherry Bekaert’s Guidance

Cherry Bekaert’s Tax Controversy team collaborated with the client’s tax professionals to develop a solid explanation to refute the agent’s inventory adjustments. Despite referencing the taxpayer’s data in our explanation, the IRS agent would not budge on the penalties levied. Our team then elevated the case, along with our explanations and arguments, to the IRS Office of Appeals. In addition, the Cherry Bekaert team provided arguments as to why penalties should not apply.

Result

After meeting with the IRS Appeals officer and conferring with Appeals specialists for inventory and accounting methods, a resolution was reached that was fair to both the taxpayer and the IRS. The resolution eliminated all incorrect tax assessments and provided a reasonable path forward for the taxpayer to report its inventory. After considering all the information and evidence, the Appeals officer waived the penalties that had been previously asserted.

Knowing our clients business, understanding and applying tax law, building a case with evidence and support for conclusions, working with examiners and appeals officers, and professionals with deep experience working through the IRS controversy process are the skills and experiences Cherry Bekaert’s Tax Controversy team bring to successfully resolve clients’ issues with IRS and other taxing authorities.