An IRS audit is never something people want to go through. Even the simplest of audits can cause anxiety for taxpayers and business owners. One of the more frequent questions I receive from taxpayers who go through IRS audits is what they can do to challenge the audit findings. Perhaps you disagree with the finding itself, or the amount the IRS says that you owe them. Whatever your concern is, it’s important to know that you do have rights throughout the audit process and, generally, when the audit ends. Here’s a look at what you can do to appeal or challenge an IRS audit finding.
The first way to challenge an audit finding is through the appeals process. However, it’s important to understand that not everyone is eligible to appeal an IRS audit. There are generally three rules that determine whether you can appeal, and all three must be present.
- You receive a letter from the IRS stating that you have the right to appeal.
- You do not agree with the IRS’s decision with respect to your audit.
- You did not sign an agreement form sent to you by the IRS.
You’ll also want to consider whether the IRS made an incorrect decision with respect to your audit. If that is a consideration, make sure to identify whether that decision was based on a misinterpretation of the law, or if they didn’t apply the law due to a misunderstanding of the facts. Some taxpayers and business owners may not be able to distinguish this; which is why I recommend always working with an experienced tax attorney or professional who can determine this for you.
If the IRS is taking inappropriate collection action against you or if the facts the IRS used are incorrect, you may request an appeals hearing. In both of these instances, be prepared to clarify and support your position with facts, evidence and sound arguments. You will do this by completing your appeal in the form of a written protest and mail it to the address that is included in the IRS letter you received that explains your appeal rights.
Something you will want to consider when challenging an IRS audit finding is who will represent you in your appeal. Doing it yourself is an option. But I always recommend working with an experienced tax attorney, certified public accountant, or an enrolled agent authorized to practice before the IRS. You have the right to representation; so make sure you use that right.
Remember that you have rights in an IRS auditing finding that can help you in your challenge. One of which is the right to finality. The IRS cannot keep an audit open indefinitely. As a taxpayer, you have the right to know the final outcome of your audit within a reasonable time. The IRS must complete the audit within three years from the date you filed your return, unless there is evidence of fraud or significant underreporting of income. Once the audit is completed, you should receive a final determination, including any proposed changes to your tax liability. If no issues are found, you should receive a letter stating that your return was accepted as filed. You feel your audit is going beyond the scope of this right, then it’s time to challenge that audit finding.
Being audited by the IRS can feel daunting. Yet it’s important to remember that you have rights. One of those is being able to appeal or challenge an IRS audit finding. Be sure to work with an experienced tax attorney or professional who can help you understand these rights and assure you and your San Francisco business are protected.
Allison Soares is a partner and tax attorney at Vanst Law LLP. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits from San Francisco to San Diego.
