How To Appeal An IRS Tax Audit

An IRS tax audit brings in its wake discontent and anger into the lives of taxpayers. The amount auditors impose may always seem wrongful or excessive. But believe me, there is a way out – appealing the IRS tax audit. For appealing, all you need is to approach the IRS Office of Appeals that has been created just for this purpose.

Take my word for it; most employees at the appeals office are former auditors with a good deal of either accounting or legal experience. They review the completed examination reports and then provide the opportunity for taxpayers to plead for a more favorable deal. They appeal to a power with greater authority in the IRS. The Office of Appeals avoids litigation since it resolves the tax disputes internally, which encourages taxpayers to stay compliant with the tax laws in the future.

Appeals can be made to the local IRS Office of Appeals. You can also appeal to the US District Court, the US Court of Federal Claims or the US Tax Court. Consulting with an attorney, a Certified Public Accountant (CPA) or a tax professional representing taxpayers could give a clear picture as to which venue your case is most suitable for.

How to Choose the Right Representation

Now here are some things to consider when choosing your representation. If your returns were prepared by a CPA, representation by a CPA is the right choice since the person already knows your financial state of affairs. If there are complicated matters involved in your IRS tax audit appeal, it would be better to hire a tax attorney who is more capable and better equipped to interpret tax laws.

You must decide the kind of professional representation you need. IRS appeals or Tax Court petitions require representation by an attorney, an enrolled agent or a CPA. If the appeal is made to the District Court or Federal Claims, it is essential that a licensed attorney represent your appeal.

The Appeal Process

There are two ways to appeal – filing a written protest or going the small case review route. A written protest is necessary if the taxpayer is running an S corporation, partnership, or an exempt organization, or if he/she qualifies for special procedures. But if the total tax amount due for a particular period does not exceed $25,000 and the taxpayer does not run an S corporation or partnership, the Request for Appeals Review must be filled out and mailed to the address mentioned on the form.

Whether appeal negotiations are carried out by mail or in person, they are informal. The IRS would consider the particular facts involved in your case, the chances the IRS and you, the taxpayer, have in proving their point at a trial, the convincing capability of your arguments, and the presence or absence of practical issues in taking the matter to court.

IRS Appeals Office Can Help

The officers at the Appeals Office are endowed with greater flexibility and authority in dealing with cases, unlike auditors. Their focus is always on coming up with a deal that is acceptable to taxpayers and helps reach a compromise. In most cases, an audit appeal can help reduce or, in some cases, even eliminate taxes as well as penalties levied by auditors. Unless a tax professional is enlisted, audit appeals are not expensive.

On average, a taxpayer appealing an audit can get his/her total auditor-assessed amount brought down by up to 40%. The other advantage of appealing is that the due date of the tax bill gets extended for as long as the appeals process goes on, which in some cases could be months, and this gives the taxpayer adequate time to gather funds for paying the assessment or to come up with a payment plan. The other major advantage of the IRS appeals process is that all services are rendered in an impartial and timely manner.

So next time, don’t hesitate to appeal an IRS tax audit!

As a former public defender, Michael has defended the poor, the forgotten, and the damned against a gov. that has seemingly unlimited resources to investigate and prosecute crimes. He has spent the last six years cutting his teeth on some of the most serious felony cases, obtaining favorable results for his clients. He knows what it’s like to go toe to toe with the government. In an adversarial environment that is akin to trench warfare, Michael has developed a reputation as a fearless litigator.

Michael graduated from the Thomas M. Cooley Law School. He then earned his LLM in International Tax. Michael’s unique background in tax law puts him into an elite category of criminal defense attorneys who specialize in criminal tax defense. His extensive trial experience and solid grounding in all major areas of taxation make him uniquely qualified to handle any white-collar case.

   

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1 comment on “How To Appeal An IRS Tax Audit”

  • Michael McDermott

    Michael – you always have good advice and I enjoy reading your articles. I’d like to take this opportunity, as I usually do, to plug Enrolled Agents. In your article you state if a CPA did the taxes then the CPA should do the representation. That is not always the best case – and shouldn’t be a default. Confidentiality is lost during the tax prep process. A CPA can refer the client to an Enrolled Agent who can consult with the CPA as needed yet, doesn’t have to open a can of worms.
    In times of CPA/client disagreement an Enrolled Agent may serve as an intermediary with the IRS. There are scenarios when a 3rd party would be useful.
    As an Enrolled Agent I completed the NAEA 3 year Tax Representation program. I would highly recommend it to anyone wanting to do representation work.

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