Is an audit decision the final word?

No, an audit is by no means the final word or decision on your tax year in question. There are many alternatives when it comes to getting what is fair in the eyes of the law and the Internal Revenue Manual (IRM). Some other possibilities are listed below.

A Conference

You may request a conference with a manager or more senior officer if you want a different opinion or feel a manger may be more versed in the IRM. Sometimes asking for a new view on the previous officer’s take of the law and the situation can result in a more favorable outcome. Other times the manager may see something his junior officer may have missed. You must be careful using this as a negotiating tool. When being represented by our firm we usually suggest our client not be a part of this or any other meetings. If conducting an audit on your own, remember to be agreeable and just state the facts. Try to keep calm and this should result in the best possible outcome.

An Appeal

If after speaking with the revenue officers and no agreeable terms can be met, you may next try an appeal. You will receive a 30-day notice outlining your rights to appeal. This is a great step for tax relief opposed to audits; the appeals division loves to make settlements. They have a very full caseload and try and move quickly and settle.

Tax Court

If you do not reply to your 30-day appeal notice within the allotted time, you will then be issued a 90-day notice. This letter will outline instructions to petition the United States Tax Court. Tax Court is another great opportunity for attorneys to help taxpayers to get their side of the story told at the highest appeal level. Tax Court sometimes has less favorable outcomes and often times side with the IRS. I have heard something like 50% of cases result in favor of the IRS.

District Court or US Claims Court

Still another option of having your case reviewed is paying the amount owed, and later within the allowable time, taking the case to District or Claims court and filing a refund. This is not often used but can provide an option for clients who need to move things along and can worry about the tax after the fact.

Bottom Line:

While the IRS does have guidelines and protocols to resolve tax controversies through legal proceeds, it is our experience that with a skilled tax attorney, most cases can be solved at the administrative level. If you are facing an audit and need guidance, the IRS provides a series of videos about audits on www.irs.gov. If you find you do not have the time or level of knowledge to represent yourself in an audit, we highly suggest you consult with tax resolution attorney. Also, if you have recently completed an audit but not signed off, it may be in your best interest to have an attorney review the findings before you sign.