Upon receipt of an IRS audit letter, many people are filled with dread. However, it is possible to fight the IRS and win, or at least reduce your bill. Follow these steps.
Prepare for battle. Gather together all your tax records and review them. Determine how much money is at stake and whether it would be worthwhile to consult a tax expert for advice.
Comply with all deadlines. Be aware that if you receive a notice from the IRS stating that you owe money, you have 30 days to file an appeal. The IRS Appeals Division is a separate unit that evaluates the decisions of the IRS. Missing the deadline will put an end to your fight against the IRS and could result in an IRS tax lien or levy.
Request a hearing. You have the right to be represented by counsel or your certified public accountant at a hearing.
Argue your case before the court. Be prepared to respond to any discrepancies in your tax records or returns and present any evidence in your favor.
Negotiate. The IRS has discretion to settle tax cases for less than the full demand. You can also request payment to be made in installments. Remember that interest will still accrue during the duration of the installment plan.
- Consult with a tax attorney if you have any questions regarding your rights.
- There are also organizations designed to assist low income taxpayers in disputes with the IRS, as well as advocacy groups in each state that could provide information on your rights in a fight with the IRS. Visit the IRS website for more information on these organizations.
- Remember that a good defense is usually the best offense in a fight with the IRS. Maintaining accurate records and being honest in your dealings with the IRS goes a long way towards winning your fight with the IRS.