Let’s say that you have just received the results of an IRS audit and they are not favorable. The auditor has assessed additional back taxes, and now, you are on the hook for additional interest and penalties as well. Do you have any recourse against these findings? The answer is yes. The IRS’s Office of Appeals is an agency within the IRS that handles appeals of audit results and whose mission is to “resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.”
Below, we’ll take a look at the procedures required to appeal your audit and a few reasons why you might wish to do so.
Reasons to Appeal an IRS Audit
Receiving unfavorable results from an audit is often reason enough to seek review by the Office of Appeals, but appeals are available for taxpayers making a variety of accusations against the IRS, including:
- You believe the IRS made an incorrect decision based on a misinterpretation of the law
- You believe the IRS applied the law incorrectly because of a misunderstanding of the facts
- You believe any of the facts used by the IRS in your audit are incorrect
How to Appeal an IRS Audit
If you disagree with the findings of your audit, you may request an appeal in the Office of Appeals by filing a formal written protest. Your protest should include the following items:
- Your name, address, and phone number
- A statement that you want to appeal your audit findings to the Office of Appeals
- A copy of your audit results
- The tax period involved
- A list of each item with which you disagree
- The reasons you disagree with each item
- The facts that support your arguments
- The law or authority that supports your arguments
- A penalty of perjury statement, and
- Your signature
In most cases, identifying the items with which you disagree is easy, but making thoughtful, well-reasoned arguments based in law that support your position can be more difficult. To ensure that you are making the strongest argument possible for your case, you should seek the assistance of a skilled tax audit defense consultant to prepare your protest.
If the proposed tax and penalty for each tax year is $25,000 or less, the IRS provides a simplified method to request an appeal.
Advantages and Disadvantages of Appealing Your Audit Results
There are a number of advantages to appealing the results of your audit. Even though the Office of Appeals is an agency of the IRS, it is similar to a court in that it is objective and impartial, showing no favor to the auditor. Appealing your audit results also delays the due date of your tax assessment during the appeals process, giving you additional time to gather funds. And even if you are unable to reach a favorable settlement, you may still pursue additional appeals in the courts that is why the appeals officer must consider the hazards of litigation. This means the appeals officer will take into account the possibility that the audit results might not be upheld in court.
The primary disadvantage of an appeal is that interest and penalties on the taxes will continue to accrue during the appeals process.
What to Expect During the Appeals Conference
Once an Appeals officer is assigned to a case, he or she will receive the case files, including the protest, audit report, examiner’s work papers and relevant correspondence and then review all documentation to determine whether more information is needed. Then Appeals officer will then schedule a conference with the taxpayer and/or the taxpayer’s representative to discuss the case.
Conferences are informal proceedings and are typically conducted by phone or in person. The appeals conference allows you to present your position and provides you the best opportunity to settle your audit issues.
Contact a Boca Raton Tax Audit Defense Expert
If you have received unfavorable results after an audit, you might want to seek review by the IRS Office of Appeals in order to negotiate a more reasonable settlement. However, in order to reach the most advantageous outcome, you should enlist the help of an experienced tax audit defense professional. To get started, contact the tax consultants at the East Coast Tax Consulting Group by filling out our online form or calling us at 866-550-7655.