How to appeal the results of an IRS audit

Before you start

An audit ends with the IRS proposing changes, or none. If you disagree with proposed changes, the letter that arrives with the proposed adjustments is usually your path to Appeals, and that letter contains the date and address you must use. Read it first, because the instructions in your letter control over general descriptions like this one.

Appeals is a separate part of the IRS. The IRS describes it as independent from Examination and Collection, and its job is to resolve disputes without litigation. Using Appeals is optional and does not give up your right to go to court later.

Small case request or formal protest

Which document you file depends on the amount. Publication 5 says a small case request is available when the total tax and penalties for each tax period in the letter are $25,000 or less. It can be a brief statement or the form that came with the letter. If any period is over that amount, a formal written protest is required, and you protest all periods. Cases involving partnerships, S corporations, employee plans and exempt organizations need a formal protest regardless of amount.

A formal protest includes a statement that you want to appeal, your name, address and phone number, a list of the disputed issues and periods, the facts, the law or authority you rely on, and a statement made under penalties of perjury. Because this is a more formal document, many people choose to have a tax professional prepare it, though you may represent yourself.

What an Appeals conference is like

Appeals considers examination adjustments, penalties, and several collection matters. You can take part yourself or with an authorized representative. Bring the same organized records you gave the examiner, plus anything new that supports your position.

IRS Appeals also offers mediation programs, and it restricts certain private communications with other IRS functions. If you want to know what applies to your case, ask the Appeals officer assigned to it.

Common snags

The most common problem is a missed date. The IRS says the response time is generally 30 days from the date of the letter, and the exact date is in the letter itself. Another is mailing to Appeals directly; the instructions say to send your request to the address in the letter. A third is vague disagreement. Naming each adjustment you dispute, and why, lets the reviewer see what the dispute is.

If Appeals does not resolve your case and the IRS issues a notice of deficiency, the Tax Court is a further option. A petition is due by the 90th day after the notice was mailed, or the 150th day if it is addressed outside the United States, and the court cannot extend that time. IRS Audit Defense Pro is software that helps you organize your facts and draft a response letter you review and send yourself. It is not a law firm, CPA or enrolled agent, and it gives no legal or tax advice.

Step by step

1. Find the date and address in your letterLocate the response date, the person or office to contact, and the mailing address. The IRS says to send an Appeals request to the address in the letter, not to Appeals directly.
2. List each adjustment you disagree withGo through the examiner's report line by line. Mark which changes you accept and which you contest, and write one sentence on why for each contested item.
3. Add up the amounts per tax periodTotal the proposed tax and penalties for each period in the letter. If every period is $25,000 or less, a small case request may be available. If any period is higher, plan a formal protest covering all periods.
4. Collect your supporting recordsGather receipts, statements, contracts or logs that support the contested items. Make clean copies. Do not send originals.
5. Draft the request or protestFor a small case request, write a short statement or use the included form. For a formal protest, include each element Publication 5 lists. Keep your facts in date order and cite only documents you are enclosing.
6. Send it with proof of deliveryMail it by the date in the letter using a method that gives a receipt. Keep a copy of the whole package.
7. Prepare for the Appeals conferenceWhen Appeals contacts you, review your file, decide whether you will attend alone or with a representative, and be ready to explain each disputed item concisely.
8. Know what comes nextIf you reach an agreement, you sign it. If not, review any notice of deficiency you receive and note its petition deadline. The Tax Court is independent of the IRS, and you can represent yourself or hire a practitioner.

Frequently asked questions

Sources

• IRS Publication 5: Your Appeal Rights
• IRS: Preparing a request for Appeals
• IRS: Appeals, an independent organization
• U.S. Tax Court: Starting a case

Related guides

• IRS appeal request letter sample: asking for an Appeals conferenceAn appeal request letter states that you want to appeal, identifies the letter and tax periods, lists each change you disagree with and the reason, and is signed.
• Correspondence audit: how an IRS audit by mail worksA correspondence audit is an IRS audit handled entirely by mail.
• IRS office audit: what to expect at the interviewAn office audit is an in-person interview at an IRS office about specific items on your return.
• CP3219A: your notice of deficiency and the deadline printed on itA CP3219A is a Statutory Notice of Deficiency.
• Letter 525 and Letter 950: what a 30-day letter asks of youLetter 525 and Letter 950 are 30-day letters sent after an audit.
• Handling an IRS Notice Yourself or Hiring a ProfessionalYou can respond to many IRS notices yourself.