You have the right to appeal when you feel the outcome of your audit was unfair. After the audit concludes, you have 30 days in which to appeal your case to the IRS. To do this, you must write a protest letter to the IRS:
- Identifying yourself, your home phone and your address
- A statement that you wish to contest the decision,
- A copy of the IRS letter with the results of the audit.
- The tax years examined
- The specific details and conclusions you wish to contest
- The facts supporting your position
- The laws regarding the case
During this time you may want to try to settle your case with the IRS since it could as long as a year before your appeals audit is heard.
Why Won’t The IRS Hear My Appeal?
Although the IRS will generally hear appeals based on legal principles, the IRS refuses to hear appeals based on religious, moral, economical or political convictions. The IRS treats such appeals as tax resistance and, as a policy, will not entertain them.
Who Else Can Appeal to if I Cannot Resolve My Problem through Regular IRS Channels?
Yes, you can seek relief through the Taxpayer Advocate Office. The TAO will investigate your claim, report findings, and help to achieve an equitable settlement.
After you get the appeals decision, you will receive a letter in the mail from the IRS that will give you 90 days to file a petition with the U.S. Tax Court if you still feel the IRS made an unfair decision regarding your audit.
Do I Have a Chance to Appeal My Case Even Further If I Do Not Agree with the Tax Court's Decision?
The answer depends on how much money you were originally deemed to owe the IRS. If the amount owed was $50,000 or less for any tax period, there is a simplified procedure used in the U.S. Tax Court. When you go through this simplified procedure, the outcome of your case cannot be appealed any further, so the Tax Court is the end of the road.
However, if you do not go through this simplified procedure, you may be able to appeal your case to U.S. District Court. Keep in mind, though, that your expenses will go up significantly when you appeal to this level. However, it may be worth it if you are being treated unfairly by the IRS or are refuting a large sum of money owed to the IRS.
What Do I Gain By Appealing An Audit?
The first and most obvious benefit to appealing an audit is that an appeal can reduce, if not outright eliminate, many assessed taxes and penalties. Second, appealing the audit will delay when the tax bill will be due. Given that an appeal can last months, if not years, this should help give you time to find the funds to pay the taxes. Appealing the case to the IRS or TAO doesn’t carry any extra fees or costs, so the appeal itself will not add to any financial burdens.
Are There Any Disadvantages to Appealing?
The largest, and often only disadvantage of appealing an audit is that interests on taxes are still incurred. If the appeal reduces or wipes the taxes this isn’t a problem, but if the appeal is unsuccessful, you may end up paying more than before. The good news though, is that most appeals are successful.
The only other concern when filing for an appeal is that the appeal might reveal new damaging facts about your case. However, this is extremely rare, as the original audit must be very incompetent to miss such information.
Will I Need a Tax Attorney?
The tax appeals process can be very complex. You may wish to consult a tax attorney to guide you through the appeals process and let you know what your rights and potential defenses are. In the case that your appeal makes it all the way to the U.S. District Court, you will almost certainly want an experienced tax lawyer, as various federal rules of procedure come into play and make the proceedings even more complex.