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IRS retirement plan audit / SOL Q

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Early 2020 (after 3 yr irs audit of ESOP and related entities) irs issues NOD (Notice of Deficiency) with language stating the IRS position is that the retirement plan is not qualified. 

Plan years under audit covers 2011-2018.

Due to Covid and a number of other factors US Tax Court case is still pending. 

One of our arguments is that the plan was disqualified per the IRS NOD and that the IRS erred for a variety of reasons. 

Fast forward to this past week, Govt counsel calls and states that it's now the Gov'ts position that the plan was never disqualified. 

Q: If the Plan was never disqualified for the 2011-2018 tax years, and the 2017 5500 return was filed July 2018, is there any argument that a 3 yr SOL has run out for 2011-2017 tax years? The 3 year sol would have run out in all tax years except 2018. 

It's been my understanding that for the IRS to use the 6 yr SOL the burden of proof would then shift to them. 

Or does the IRS have carte blanche until they finish their audit even after 6 years? 

Thoughts and comments appreciated. 

Thank you 



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5 hours ago, Tax Cowboy said:

Thoughts and comments appreciated. 

Need better description of facts.

For example, if IRS position is that plan is qualified, what is the basis for claiming tax owed?

The six-year vs. three-year statute is based on whether the amount of the deficiency is more than 25% of gross income. The plan's trust should have a 3-year statute if 5500 filed.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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Thank you for the response. 

There are a number of other background facts I've been intending to post. Unfortunately we've had a death in the family over the weekend and taking some time off until after funeral. I'll be able to better update the facts at that time. 

Thank you 

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