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explanation of the purpose of petitioner’s payment of $27,000 to
Pekas. Petitioner sent a letter, received by Hughs on April 1,
2002, in which he asked her to answer 28 questions, including
whether she had proof that all administrative steps required by
the Internal Revenue Code had been followed, whether statutory
authority for the audit existed, which Internal Revenue Code
section allowed her to solicit information, whether she could
explain the relevance of the material she sought, and whether
compliance with the audit was voluntary or mandatory.
On April 2, 2002, Hughs requested additional documents from
petitioners concerning their deduction of legal, travel and
employee business expenses and job search costs for 1999 and
2000. Petitioner postponed a meeting that Hughs had scheduled.
On April 30, 2002, petitioner asked that the audit of
petitioners’ 2000 income tax return be reassigned to someone
other than Hughs because petitioners believed that Hughs had lost
her objectivity.
3. Examination of Petitioners’ 2001 Tax Return
Hughs sent a letter dated June 4, 2002, to petitioners and a
second letter to Susan Fairey concerning the audit of
petitioners’ 2001 income tax return. In those letters, Hughs
requested records of petitioner’s Schedule C income and expenses,
and petitioners’ employee business expenses and itemized
deductions. Hughs sent copies of a letter to each petitioner
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Last modified: May 25, 2011