Audit Reconsideration & Appeals: Even the IRS gives you a second chance
Let’s assume you’ve been hit with an audit, and the IRS presents you with a higher tax bill than you believe you should pay. It’s not the end of the story. Only about 1 person in 10 actually appeals their audit, but if more people did so there would be a lot of audit reconsideration.
In fact, the odds of having your audit reconsidered in your favor are fairly high. The IRS themselves admit that on the average, an audit reconsideration can cut out 40% of your taxes, interest, and penalties.
Appealing your audit and making a request under the Freedom of Information Act (FOIA) allows you to read the auditor’s file. This could give you an idea of what went on in the auditor’s mind, and why they reached a decision against you. It will pinpoint the specific items that resulted in a higher tax bill. Then you can attack these issues one by one.
With the help of an experienced tax attorney you can put up your audit for reconsideration—and you really do have a chance to win your audit appeal.
Why Audit Reconsideration and Appeals May Put the Odds in Your Favor
When you undergo an IRS audit, the auditor may believe he has a duty to adjust your tax bill upwards as far as possible. Auditors look for errors, omissions, and misinterpretations that can be used against you.
But when you appeal your audit, the case goes to an entirely different office. The Appeals Officer who will reconsider your audit has a different job description—to settle the case as painlessly as possible. The IRS Appeals Officers have more discretion than auditors, and they’re trained to be flexible.
When the issues in question aren’t black and white, an audit reconsideration may lead to an adjustment in your favor.
One key to gaining the most from audit reconsideration is to speak the language of the Appeals Officer. Instead of talking about dollars, talk about percentages, disallowances, and adjustments. Focus on facts that would help you win in court, because the Appeals Officer will generally try to avoid taking your case to the courtroom.
Most Appeals Officers are very respectful, and even grateful, if you bring in a tax professional. A tax attorney, for example, can make the issues clear and simple. If you have a tax attorney for your audit reconsideration or appeal, the Appeals Officer won’t need to spend time explaining the issues to you in detail. This can speed up the process, and may increase the Appeals Officer’s willingness to work with you.
More importantly, a tax attorney knows your rights and won’t let the IRS ignore them. Appeals Officers know and respect this, so they may be more likely to give you tax adjustments.
Remember that once you appeal your audit, your case practically changes color. The audit is based on numbers, rules, and cold facts. But audit reconsideration is more of an art, with a lot of compromise and strategy involved.
A tax attorney can help you benefit from the audit reconsideration and appeal process. If you’re deliberating whether or not to appeal your audit, this is one area where taxpayers may find relief.
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