Deposit Letter following the IRS guidelines.

PREPARE A DEPOSIT LETTER Rick and Lori Grimes have led joint returns for the last 10 years. The IRS has selected the Grimes' 2018 year for examination. Besides the return being led late, one area of the IRS' inquiry is regarding certain Business expenses taken by Rick. Upon review of these business expenses, you determine certain expenses do not qualify as deductible business expenses and, if these expenses were disallowed, it would result in a deciency De Rick claimed these same business expenses in 201'? and in 2019. The Grimes also failed to disclose on their returns a foreign account they have had in the United Arab Emirates since 2013. You are handling the examination of the Grimes' 2018 tax year and have submitted your Power of Attorney to the IRS. Based on your review of the 2018 return and the Code, Regulations and other authorities, you have determined that certain business expenses of Rick may not qualify as necessary and ordinary business expenses. You have advised the Grimes of your determination and the potential that a deciency may be asserted by the [RS on their 2018 tax year. However, as the IRS is now opening audits for the 2017 and 2019 tax years, it may be several years before the examination of all three years is completed. The Grimes want to stop the running of interest on any potential liability for the 2018 tax year. Per your calculations, you estimate that the potential deciency (tax, penalty, and interest) would be $50,000. However, you believe the Grimes have grounds for abatement of the penalty in they reasonably relied on a written opinion from their prior accountant, Jenny Jones, who stated Rick could deduct these expenses as business expenses under [RC Sec. 162. To stop the accrual of interest on any potential tax liability for their 2018 tax year, the Grimes want to make a deposit in the amount of the estimated tax, interest and penalty. However, the Grimes have stressed they may want to request the return of their deposit (with interest). Please draft a deposit letter meeting the requirements of IRC Section 6603 and Rev. Proc. 2005-18