Understanding How to Dispute an IRS Notice

It is not unusual for the Internal Revenue Service (IRS) to question a tax return or note an adjustment if you have been through an IRS audit. If you do not agree with a correction on your returns, you can dispute the finding through the IRS appeals process.

Many taxpayers are unaware of the basic rights that they have in working with the IRS on a dispute. Most consumers expect, and then hope, to be treated fairly. One of those rights is the opportunity to appeal a decision of the IRS in an independent forum.

If you do not agree with an action or a penalty applied by the IRS, you may dispute the action with the IRS Office of Appeals. While you are not required to use the appeals process, you may find exercising your right to appeal to the IRS is easier and less expensive than tax litigation. That said, you can still take the matter to court if you choose. 

The appeal process is initiated by a letter, often called a 30-day letter, sent to you by the IRS that describes a decision following an audit or other action. The letter will also include an agreement for you to sign if you agree with the decision. If you do not agree with the decision, you can consider an appeal.

When appealing, the IRS suggests taxpayers clarify their reasons for the appeal. A few points in that regard include:

• An appeal is not appropriate if the only concern is a lack of money to pay for the decision.
• Considering reviewing the at-issue IRS publication to ensure you can describe and support your position. Similarly, if you believe a law was misapplied, be ready during your appeal to carefully describe your concern and provide evidence on your behalf.
• Put together appropriate records if you believe the IRS did not have accurate facts when making their decision.
• If the dispute involves a collection action on an offer-in-compromise, be sure you can support your position.

Consider speaking with an experienced tax attorney prior to protesting the IRS decision. Your tax lawyer can review your documents and give you straightforward feedback on preparing your letter.  Your written request, also called a protest, should be sent to the address referenced in the letter you received from the IRS.

Be sure to forward the letter within 30 days from the date of the original letter from the IRS. The IRS Examination office will review your letter and try to resolve the conflict. Barring that, the office will forward your letter to the IRS Office of Appeals.

If you do not respond to the 30-day letter, either by protesting the decision or returning the signed, written agreement, the IRS will then send you a Notice of Deficiency. 

When appearing for your appeal, your tax attorney can represent you, or you can represent yourself. The Appeals Officer will work with you and your attorney and the IRS to attempt to resolve the matter in the interest of both parties.

Despite the complexity of matters involving the IRS, experienced legal help can help you move your matter toward resolution. You can also reach out to the federal Taxpayer Advocate Service with questions.