It can be terrifying to receive a letter from the Internal Revenue Service tax audits that says your tax return is being examined.
Here’s How To Appeal Your Results Of A Tax Audit (PHOTO: The Motley Fool)
IRS Tax Audits
Tax audits, while infrequent, do happen and are no fun. Failing to comply with a tax audit can have serious consequences, including criminal charges. It is essential that you understand your rights and promptly respond to all requests for information. While tax audits can be frustrating, knowing that the results are not set in stone is important. In many cases, you have the option to appeal the decision. However, you must work on it quickly as you might have just 30 days to contest the decision.
Here’s How To Determine Whether You Want To Appeal
The first step you should do after an audit is to determine whether you want to appeal the judgment. In some cases, the examination may result only in a slight adjustment to your original filing. If the amount is unsubstantial, it might not be worth going through a legal appeal.
However, it is important that several times appeals are successful or at least result in a reduction of the assessment. So, if you disagree with the auditor’s results, you can think about contesting the results.
Consider Hiring a Representative For Your Tax Audits
If you do choose to move forward with an appeal, it may be worth hiring a representative. A representative at an appeal is limited to:
- A tax lawyer
- A certified public accountant (CPA)
- An IRS-authorized enrolled representative
You should always vet the representative you plan to hire. Take advantage of the free consultations provided by many tax attorneys and CPAs. You also might be qualified for free or low-cost representation through a Low Income Taxpayer Clinic (LITC).
Review Your Options
Make sure to follow proper procedures for your plans. In some cases, you will be able to request an “Audit Reconsideration” to help you to look for a way to have the findings of your audit re-evaluated by the IRS. However, it is available only under limited circumstances, including that you had new information or you disagree with what the IRS says you owe. If you disregard the first notice, you may receive what is known as a “30-day letter.” The letter notifies you that you have 30 days to submit a protest letter. The case is then generally sent to the Appeals Division, according to eFile.com.
If you fail to reply to the 30-day letter, you might then receive a 90-day letter or Notice of Deficiency. Once you receive the 90-day letter, your only option to appeal the tax audit is by filing a Tax Court petition. You must respond within 90 days of the notice or you might fail your right to appeal.
Ask for an Extension
Once you finish your right to appeal, you can ask for an extension on the adjusted amount that you owe. It is important to keep in mind that failing to respond to the IRS can result in criminal sanctions. It should be always in your best interest to respond timely to any correspondence obtained from the tax authority and to retain a professional’s help if you believe there was an error.
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