After the Audit

Dealing with the IRS

If you are represented by a tax attorney, typically the Revenue Agent will give a draft of the Audit Report to the Attorney for comment. Negotiating with the examiner is the least expensive and quickest route to resolving the matter. This is the opportunity to straighten out factual issues. Unfortunately, the auditor's job is to increase your taxes. Therefore the Revenue Agent has little discretion to decide more complex issues in your favor.

IRS Appeals

Next, you will receive an Audit Determination Letter, which is also known as the "30 day letter." After you receive an audit report and proposed adjustments, your tax attorney has 30 days to protest it within the IRS. A Protest Letter is a factual and legal brief describing the errors made by the auditor. The Protest Letter frames your entire argument. The matter is sent to the IRS Appeals Office. At Appeals, they have the right to review the facts, and compromise the case based upon the hazards of going to court. Appeals Officers have more experience than auditors and typically want to weigh the strengths of the taxpayer's arguments and negotiate a deal to avoid court.

Internal Revenue Service Appeals Officers frequently claim the IRS' position is better than it is. If the case is Unagreed, you will receive a "Notice of Deficiency" termed a "90 day letter."

Fighting Tax Matters in Court

You have 3 courts to fight the IRS. The Notice of Deficiency is your "ticket" to the US Tax Court. The Tax Court is the only court where you can fight your case without first paying the tax. The other choices are the US Court of Federal Claims and US District Court. Both of these courts require payment of the taxes, interest and penalties as well as filing a special Claim for Refund with the IRS. Your tax lawyer can explain the advantages of each court.