IRS audits are a perennially important topic for U.S. taxpayers. Knowing your rights following an audit is equally important.
According to the IRS, approximately 738,959 tax return examinations were completed in 2021. From these civil audits, the agency assessed additional taxes of approximately $26.8 billion.
What begins with a letter from the IRS can end up with a finding that your tax liability is higher than you anticipated. Or, an audit conducted following a failure to file may have led the IRS to create and file a tax return for you and additional money is now due. What to do?
Within a few weeks following your audit, you will receive an audit examination report which provides background and explanation on the findings of the auditor. Take a close look at the report and its attachments. Evaluate your position on the points noted by the auditor, collect and double-check your records on the issue. Was there really an error in the audit process? Make a frank decision on whether pursuing an appeal is worth time and possibly more money.
If you determine an appeal is appropriate, there are steps you can take. In certain circumstances, the Taxpayer Advocate Service (TAS) may be able to assist you. When you have gathered documents and new information to address your concern about the audit report, respond to the office that sent you the audit report. Include copies of relevant documents and a straightforward letter requesting reconsideration of your audit. Explain your position and how the documents you have included apply.
Within about 30 days you should receive a reply from the IRS letting you know the tax assessment has been removed, partially removed, or whether payment of additional taxes is still expected. There are some instances when reconsideration is not an option, those include:
- If you have overpaid taxes, you will need to file an amended income tax return to claim the additional refund.
- Individuals who earlier signed payment agreements with the IRS, such as an Offer in Compromise usually cannot apply for reconsideration.
- If a court or the U.S. Tax Court has ruled that tax is owed, reconsideration is not an option.
If you disagree with the ruling on reconsideration, you can request an Appeals Conference. You can attend with your tax attorney, certified public accountant, or an agent enrolled to represent clients before the IRS. You can always represent yourself as the appeal moves forward. That said, the assistance of knowledgeable professionals may speed your appeal and help you avoid errors along the way.
Reputable tax lawyers help you with tax litigation and matters before the IRS
The legal team at Robert J. Fedor, Esq., LLC delivers experienced legal representation to clients throughout the U.S. and abroad on matters of tax audits, tax crime, and bankruptcy. When you have tax questions, call us at 800-579-0997 or contact us. We have offices in Cleveland and Chicago.