How To Handle IRS Audit Appeals

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Audit Appeals – Do not attempt on your own or have an IRS representation company help you with an audit appeal.  Auditors are concerned mostly about the IRS’s ability to win in tax court, not if you are telling the truth and have the document to prove it.  You need a professionally licensed firm.  Let our experienced attorney help you.

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You are being audited and you don’t like the results. How to handle IRS audit appeals to your advantage is often difficult.  You have the right to speak to the audit manager to appeal the audit results. If you don’t get satisfaction, the auditor will complete their Revenue Audit Report (RAR) and you have 30 days to file for IRS audit appeals.

If you miss the deadline, the deadline for filing a tax court petition is 90 days from the date of the notice of deficiency. This is sent sometime after the RAR is turned into the audit manager.

The IRS has a form you can fill out to request an audit appeal. However, you can just write a letter of appeal.

You can also appeal to the Tax Payer Advocates office explaining what a hardship it would be if the IRS disallowed your deductions. This is even though you have some proof for them. This doesn’t extend the appeal or tax court due date.

Try to work with your auditor and their manager. It is rare that I have had appeal an audit I handled from the start. My audit appeals are usually to bail out people who missed audit appointments, or who were not cooperative during the audit. Most auditors (unlike the collection division), tend to be very logical and understanding about your situation. 

Audit appeals are a little more loose than the appeal below for trust fund. They understand that not everyone has an adequate chance to provide the necessary documents to avoid adjustments against them. Do the following…

File a timely appeal. Read the instructions carefully. You have 90 days if issued a notice of deficiency, otherwise you have 30 days.
Look up the tax law involving the items disallowed or added to the return. Become familiar with the reasons why an item may not be accepted and prepare to defend it.
Look up cases that support any items you think may be a problem, and obtain notarized statements from anyone who can support your claims.

IRS Audit Appeals of The Trust Fund or Civil Penalty

If you can’t convince the revenue officer that you are not liable, you must file a trust fund appeal before the 30 days are up. It should cite to the court cases and other documentation that went into your research. If time is running out, you can file a short summary version with a request, stating that a more detailed version will follow later. 

This is an area that relies heavily upon court decisions in your region of the country.  Find out what federal circuit court your state is in, and pay attention to decisions in your favor from that circuit.  Remember that if the revenue officer and manager didn’t agree with you, they feel that they have a case. 

You will have to do the following to win.

Become familiar with exactly what constitutes liability for the trust fund.
Find out how the courts in your circuit feel on distinguishing items that make someone liable.
File your claim, even the short version, on time and with as much detail as you can, so it isn’t turned down.
When the conference is scheduled, call up and request that you look
• at the files they have. This is your right, and they don’t mind, so use it any time you file an appeal. In my earlier days I used to do appeals without examining their records and went blindly to the appeal. Then one day an IRS officer said “Why didn’t you look at my records before, then you would have been aware of my arguments?”. Well from that day forward I did. It makes appeals a lot easier when you know ahead of time what their arguments are!
• Make sure you do a lot of case research. The IRS is looking for you to prove that if they error, you will win in court. That is their main objective, so you may as well know it now. This is not an appeal for sympathy based on hardship. This is a question of you being able to prove to them that if they still want to make you liable, it will be a waste of the IRS’s time and money to take you to court, because you will win! Got it?
• Don’t forget witnesses. Get signed notarized statements from people who worked with you, have witnessed, and have firsthand knowledge, etc. of anything that helps prove your case.