How to Challenge an IRS Audit at Different Stages of Examination

How to Challenge an IRS Audit at Different Stages of Examination

How (and When) to Challenge an IRS Audit at Different Stages: When it comes to  an IRS audit for domestic or international tax matters, chances are that when the audit is complete, the Taxpayer will not be satisfied with the outcome at the outset of the examination — unless of course, Taxpayer received a refund or NC (no change). Oftentimes, once the taxpayer receives the outcome of the audit by way of an IRS Letter/Notice 4549 proposed examination changes (Income Tax Examination Changes) — they want to dispute or challenge the outcome, which is completely proper. Is every taxpayer’s right to pursue IRS appeal procedures to determine if the examination was fair and proper — and whether the agent was impartial when coming to a conclusion. Let’s go to some of the ways a Taxpayer can challenge the Audit —

4549 Income Tax Examination Changes

Once the examination is complete, the Taxpayer receives a copy of the proposed adjustments resulting from the audit. If the Taxpayer agrees with the balance as proposed on Form 4549, the Taxpayer can simply sign the form and agree to make payments — or seek to enter into a payment plan. If Taxpayer disagrees with the amount stated, they can submit a request for a conference with an Appeals Officer. The response due date is time-sensitive, so it is important that the Taxpayer takes all necessary actions in a diligent matter.

Appeals Officer Conference to Challenge an IRS Audit

When the audit is complete and the 4549 arrives, Taxpayer can request to submit to an Appeals Officer and seek a conference.  In that situation, the Appeals Officer will review the entire matter again to assess if it was handled properly at the audit/examination phase. Taxpayer must provide all necessary information and documentation sufficient for the Appeals Officer to review and evaluate the underlying audit outcome.

Challenging an IRS Audit with an Audit Reconsideration

An Audit reconsideration is equivalent to a “do-over” or a delayed chance at the audit that the Taxpayer may have missed firs time around.

As provided by the IRS:

What is Audit Reconsideration?

An Audit Reconsideration is a process used by the Internal Revenue Service to help you when you disagree with the results of an IRS audit of your tax return, or a return created for you by the IRS because you did not file a tax return as authorized by the Internal Revenue Code 6020(b).

Reasons for a Request You may request audit reconsideration if you:

• • • Did not appear for your audit

    • Moved and did not receive correspondence from the IRS

    • Have additional information to present that you did not provide during your original audit

    • Disagree with the assessment from the audit

30-Day Pre-Assessment Letter CP22E

The 30-day pre-assessment Letter is sent to the Taxpayer before the assessment is made. That is why it is referred to as a pre-assessment letter.  It is essentially a notice or “warning” — letting the Taxpayer know that there is a deficiency, and the Taxpayer has 30-days to accept or appeal.

If the Taxpayer accepts the amount due, then that is essentially the end of the matter. If not — then the Taxpayer can pursue an appeal.

90-Day Notice of Deficiency Letter

This is the final notice and starts the clock for Taxpayers considering filing a Tax Court Matter.

As provided by the IRS: 

• • • The CP3219N is a Notice of Deficiency (90-day letter). Once you receive your notice, you have 90 days (150 days if the notice is addressed to a person who is outside the country) from the date of the notice to file a petition with the Tax Court, if you want to challenge the tax we proposed.

If you want to challenge the deficiency determination, file a petition with the U.S. Tax Court.

• • • File your tax return immediately (no later than 90 days from the date of the CP3219N), or accept our proposed assessment by signing and returning the Response form.

    • Call us if you think you don’t have to file.

If you want to file a petition with the U.S. Tax Court

• • • You can download a petition form PDF and rules from the U.S. Tax Court.

    • Mail your petition to:United States Tax Court400 Second Street, NW Washington, DC 20217

    • You have 90 calendar days from the date of your CP3219N to file a petition with the Tax Court. The last day to file a petition is stated in your CP3219N. If the CP3219N is addressed to a person who is outside of the United States, the deadline to file a petition with the Tax Court is extended to 150 days from the date of the CP3219N.

    • If you file a petition, attach an entire copy of the CP3219N to the petition.

    • The Tax Court has simplified procedures for taxpayers whose amount in dispute, including applicable penalties, is $50,000 or less per tax year. You can find these simplified small tax case procedures from the U.S. Tax Court.

Golding & Golding: International Tax Lawyers  Worldwide

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm for assistance.