Last Updated on 05/15/2024 by Christian Collins

Receiving a notice from the IRS that you’re being audited can be a stressful experience. However, it’s important to know that you have options, and one of them is the appeals process. Here, we’ll explore how to navigate the appeals process effectively when facing an IRS audit. 

Understanding the IRS Audit Process 

Before we dive into the appeals process, let’s briefly understand the IRS audit process: 

1. Audit Notice:

You’ll receive an audit notice from the IRS, explaining the reasons for the audit and requesting specific documentation and records. 

2. Audit Examination:

IRS auditors will review your tax returns and financial documents to ensure accuracy and compliance with tax laws. 

3. Audit Report:

After the examination, the IRS will issue an audit report outlining any discrepancies or changes they propose to your tax return. 

Why You Might Appeal an Audit 

There are various reasons why you might consider appealing an IRS audit: 

1. Disagreement with Findings:

If you disagree with the audit’s findings and believe they are inaccurate, an appeal can provide a second review. 

2. Misinterpretation of the Law:

If you believe the IRS has misinterpreted the tax laws and regulations, you can appeal the decision. 

3. Procedural Errors:

Appeals can also address procedural errors or due process violations during the audit. 

Initiating the Appeals Process 

To appeal an IRS audit, follow these steps: 

1. Notice of Deficiency:

If you disagree with the audit results, you’ll receive a Notice of Deficiency, which provides instructions on how to appeal. 

2. Filing a Protest:

To initiate the appeals process, you must file a written protest outlining your disagreement with the audit findings. Be clear and concise in your protest. 

3. Timely Filing:

File your protest within the specified timeframe, typically within 30 days of receiving the Notice of Deficiency. 

Preparing Your Appeal 

To increase your chances of a successful appeal, take these steps: 

1. Consult a Tax Professional:

Consider working with a tax professional, such as a certified public accountant (CPA) or tax attorney, who can help you prepare a strong appeal. 

2. Gather Supporting Documentation:

Compile all necessary documents and records to support your position. This may include tax returns, financial statements, and correspondence with the IRS. 

3. Construct a Compelling Argument:

In your protest, provide a well-structured argument that addresses the audit findings and explains why you disagree with them. Cite relevant tax laws and regulations to support your case. 

The Appeals Conference 

Once your appeal is filed, you may have an appeals conference with an IRS appeals officer: 

1. Presentation:

During the conference, you’ll present your case, explaining your position and presenting your supporting documentation. 

2. IRS Presentation:

The IRS will also present its side of the case, explaining why they conducted the audit and the basis for their findings. 

3. Mediation:

The appeals officer acts as a mediator, facilitating communication between you and the IRS to find a potential resolution. 

The Appeals Officer’s Decision 

After the appeals conference, the appeals officer will issue a written decision: 

1. Findings:

The decision will outline the appeals officer’s findings and conclusions after reviewing your case. 

2. Recommendations:

The appeals officer may recommend changes to the audit findings, adjustments to your tax liability, or other actions to resolve the dispute. 

3. Accept or Reject:

You have the right to accept or reject the appeals officer’s decision. If you accept, the case is considered resolved. If you reject, you can explore further options. 

Post-Appeals Resolution Options 

If you disagree with the appeals officer’s decision, you still have additional steps you can take: 

1. Tax Court:

You can file a petition with the U.S. Tax Court to have your case heard by a judge. 

2. Mediation:

Consider mediation as a way to resolve the dispute outside of court. Mediation involves a neutral third party who assists in reaching a settlement. 

3. Litigation:

If all else fails, you may choose to pursue litigation in federal court. This is typically a last resort due to its time-consuming and costly nature. 

The Importance of Professional Assistance 

Navigating an appeal of an IRS audit can be complex and challenging. Seeking professional assistance can significantly improve your chances of a successful resolution: 

1. Tax Professionals:

Consult with tax professionals who specialize in IRS appeals. They can provide expert guidance, represent your interests effectively, and help you build a strong case. 

2. Legal Representation:

For more complex cases or those involving litigation, consider working with a tax attorney who can provide legal representation. 

Conclusion 

The appeals process is a valuable tool for individuals facing an IRS audit and disagreeing with the findings. By following the correct steps, preparing a strong appeal, and seeking professional guidance when needed, you can increase your chances of a successful resolution and a fair outcome. Remember that seeking professional assistance is often key to navigating the appeals process effectively and ensuring your rights are protected throughout the negotiation process.