After the Audit
with the IRS
If you are represented by a tax
attorney, typically the Revenue Agent will give a draft of the Audit
Report to the Attorney for comment. Negotiating with the examiner is
the least expensive and quickest route to resolving the matter. This
is the opportunity to straighten out factual issues. Unfortunately,
the auditor's job is to increase your taxes. Therefore the Revenue
Agent has little discretion to decide more complex issues in your
Next, you will receive an Audit
Determination Letter, which is also known as the "30 day letter."
After you receive an audit report and proposed adjustments, your tax
attorney has 30 days to protest it within the IRS. A Protest Letter
is a factual and legal brief describing the errors made by the
auditor. The Protest Letter frames your entire argument. The matter
is sent to the IRS Appeals Office. At Appeals, they have the right
to review the facts, and compromise the case based upon the hazards
of going to court. Appeals Officers have more experience than
auditors and typically want to weigh the strengths of the taxpayer's
arguments and negotiate a deal to avoid court.
Internal Revenue Service
Appeals Officers frequently claim the IRS' position is better than
it is. If the case is Unagreed, you will receive a "Notice of
Deficiency" termed a "90 day letter."
Tax Matters in Court
You have 3 courts to fight the IRS.
The Notice of Deficiency is your "ticket" to the US Tax Court. The
Tax Court is the only court where you can fight your case without
first paying the tax. The other choices are the US Court of
Federal Claims and US District Court. Both of these courts require
payment of the taxes, interest and penalties as well as filing a
special Claim for Refund with the IRS. Your tax lawyer can explain
the advantages of each court.