Question

In: Accounting

Friend2Friend, Inc., a social network provider, is cited by an Internal Revenue Service (IRS) representative for...

Friend2Friend, Inc., a social network provider, is cited by an Internal Revenue Service (IRS) representative for an underpayment of federal income tax. Friend2Friend’s accountants believed that the agency overlooked some of the firm’s legitimate tax deductions and credits. Erin, Friend2Friend’s chief executive officer, wants to challenge the assessment. What are Erin and Friend2Friend’s next steps??

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Expert Solution

Friend2friend Corporation does not have any right to ask court for an injunction to stop the regulations’ enforcement until it has exhausted its administrative remedies.

   The first step would be it should appeal the agency on IRS representative’s order. The agency might negotiate a settlement after doing some investigation with friend2friend. If the settlement is not done during the investigation, agency might issue a complaint against a firm and same may be accompanied by a press release.

Friend2Friend Corporation may issue its own press release by giving answer to the charge. If there is no settlement proceedings takes place then there may be a hearing before administrative law judge. After hearing is done, Administrative law judge will issue an order. If the Friend2friend Corporation is still dissatisfied with the order issued by Administrative law judge, it can appeal to the commission that governs the agency. If the Firm still not satisfied with the order given by the commission then it may appeal in federal court of appeals. If the commission or agency refuses to give an order or there is no appeal then the order given by the Administrative Law Judge is final


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