We have represented clients in IRS audits and Florida Department of Revenue audits, defending them with our vast experience and superb credentials: Attorney, CPA, & Former Prosecutor–only a handful of people have such credentials in the country.
The IRS can be bureaucratic in its decision-making. Unlike tax preparers, I possess the wherewithal to vigorously advocate your case at the audit/examination level, at the IRS Office of Appeals, and in the US Tax Court, District Court, or Federal Court of Claims. I have also defended individuals, businesses, and even tax return preparers in promoter penalty cases.
Taxpayers have the right to review their case with a manager of the examiner and then the IRS independent office of appeals. The ability to pay is generally not considered in an audit, rather arriving at the proper assessment is critical.
The IRS process works as follows:
(1) Examination Level / Audit – This is where the IRS examines an income tax return or other type of tax return, to determine whether the numbers on the return match the transactions and dealings of the taxpayer.
You can discover more about this process by reading IRS Publication 1. A quick note, when researching IRS publications and forms, its best not to choose the first .pdf that pops up in search results from Google or Yahoo. Go to the publication’s official home page, which will have the most recent version. The reason is that the IRS updates the publications and forms frequently, and Google may just have the most searched form that was recently updated. Click on Publication 1 for an example of a publication’s homepage. If the Form does not have a homepage, search it through www.irs.gov and look for the most recent revision date under forms. If you are looking for prior year forms, then search accordingly at www.irs.gov.
At the exam level, the examiner has authority but less. His or her function is to determine whether the return is correct and whether any additional tax is due or you are entitled to a refund, which they will give you. Generally speaking, we would never agree to the imposition of a penalty after an audit. So never sign an audit report unless you have agreed to the report and findings and there is no penalty.
2. Appeals – If you do not agree with the outcome of the audit, you can go to appeals. The IRS Office of Appeals is actually an independent office separate from the examination level and the appeals officer will have no involvement in your prior audit. So you get a fresh start. Appeals have more discretion to resolve matters. This is your best chance to resolve your case.
3. Tax Court – If you disagree with appeals, you can timely petition the tax court. In tax court, there is not a jury, but a judge who has experience in tax matters. The IRS is represented by counsel as well. It could be tougher to get a settlement in tax court, but since you have preserved your rights, you have the opportunity to present your case to an appointed Judge. In the case of Collection Due Process Appeals, you would have the right to present another collection alternative to the IRS and go back to appeals in some cases.
What is important: From our perspective, it is important to preserve your rights. Some people think by filing an appeal they are offending the IRS. Not true. You are trying to preserve your rights and work administratively through a process that was designed to allow you to resolve your differences with the IRS in a professional and courteous manner. One of the biggest misnomers is that the IRS is hunting you down and trying to destroy you are bankrupt you. We have found this to be far from the truth. The truth is, if you navigate their system, they will help you resolve your tax matters, with opportunities at the exam level, the appeals level, and beyond.