You’re stuck in a tax audit. After an IRS examiner receives your documentation and makes a decision regarding proposed changes to your return, there are several options available as follows:
- You can sign the letter stating that you agree with the proposed changes.
- If you disagree with the proposed changes, you can try to negotiate or provide additional documentation to support your position.
- You can request a telephone conference with the examiner, during which you can explain your arguments.
- You may ask for an informal conference with the examiner’s manager.
- You may ask that your case be sent to IRS appeals. The appeals division is devoted to reviewing decisions that taxpayers disagree with.
Almost all decisions made by IRS agents have appeal rights. IRS appeals officers are independent of IRS examinations and collections divisions. They are charged with being fair and impartial while resolving taxpayer disputes with the IRS. They look at cases differently than an IRS auditor or collection agent would. This is the agency’s system of checks and balances. Appeals officers are trained to resolve disputes, not create them. They try to find a better solution, considering your point of view. The appeals office is an unvested third party.
It may be uncomfortable, but it is permissible to disagree with the IRS. There are higher levels of review that can offer a fresh perspective.
The IRS appeals office has jurisdiction to review the following audit or collections decisions:
- Rejected offers in compromise.
- Terminated and denied installment agreements.
- Audit examination reports.
- Notices to levy property, including wages, accounts and real estate.
- Refusals to grant innocent spouse relief.
- Findings of IRS revenue officers about ability to repay taxes, including a notice of intent to seize and sell personal property.
- Determinations of personal liability for employment taxes.
- Disagreements with the IRS about filing a federal tax lien against personal property.
- Refusals to give penalty relief.
The taxpayer should be sure to provide the examiner with all relevant documentation before requesting an appeal. If new information is presented by the taxpayer during the appeals process, the case may be sent back down to the examiner for a re-evaluation.
IRS appeals officers usually will conduct a conference by telephone, but they can perform in-person conferences, if preferred by the taxpayer. The appeals process is free to taxpayers.
If the case is not settled at the appeals level, the IRS will send a notice of deficiency for the assessed tax. This notice of deficiency is also known as a 90-day letter. If the taxpayer still wishes to dispute the tax without paying the tax liability, the taxpayer will have to petition the tax court within 90 days of receiving the letter. The taxpayer can continue to negotiate with the examiner during the 90-day window, but they should be prepared to file their timely petition while negotiations are taking place.
The key takeaway here is that you do not have to do this alone — if you’re just starting or you’re in the middle of an IRS audit, we can help.