The Internal Revenue Service (IRS) may have flagged your account for an audit through a computer screening, another related examination, or a random selection. Whatever the reason for the attention to your account, the fact that the IRS is giving it a closer look is never a comforting thought. This sense of discomfort can rise to serious concern if the IRS finds a problem. This can lead to wage garnishments, tax liens and even levies as well as additional civil penalties. If the IRS believes that your actions were intentional, they may even pursue criminal charges.
You will likely wonder what your options are if the IRS states that there is an issue with your tax returns and requests additional payment. Can you fight back? The answer is often yes. In this first part of a two-part series, we will dive into information about what is likely the most well-known option for recourse, an appeal. In the second, we will explore other options.
How does an appeal work?
The IRS generally concludes their audit in one of three ways. They will either decide that there is no need for any changes, they agree with your returns, or they disagree and propose changes. If they disagree and you believe their findings are erroneous, you can file an appeal.
There are specific protocols to move forward with an appeal. The IRS could refuse to review your appeal if you do not follow their rules. A number of these issues are present at the beginning of the process. If, for example, you mail the request for the appeal to the wrong IRS office, they could decide they will not consider the case. The correct address is listed on the letter sent by the IRS that explains your appeal rights. This letter will contain information about other factors that could impact your case. Some additional points to consider when putting together an appeal include:
- Timeline. There is often a time limit for your claim. If you fail to file your appeal before the time limit you can lose the chance to fight back. The IRS notes that this time limit is often 30 days from the date of the letter.
- Type of appeal. There are different forms of appeals depending on what you are challenging. Examples can include a challenge to the finding that you made a mistake on your tax returns or a challenge to the agency’s collection decision.
- Process. The process may include the use of additional mailings, telephone calls, video calls or even in-person meetings.
It is important to note that this is not the only option if you disagree with the findings of an IRS audit. Other options are available and, depending on your situation, may prove more favorable. We discuss these in more detail in our next post.