In the event you are selected for audit, there are typically three steps of review:
1. Help With IRS Audits
The IRS has a complicated structure for dealing with tax audits. In my experience, the process has often been adversarial, hostile and time consuming. An auditor will almost always use the harshest interpretation of federal tax law in order to generate the largest possible tax liability.
Having an advocate is a real benefit here. If you are being audited by the IRS, much needs to be done — and carefully. These cases are not for the faint of heart. Issues must be addressed and evidence organized quickly with an experienced tax representative who is familiar with both your legal rights and the IRS administrative and judicial processes.
2. IRS Appeals
Many IRS auditors believe their decisions to be final — but they’re wrong. There are several levels of administrative appeals that are heard by much more educated and experienced appeals agents, who frequently are seeking the right result. Don’t be intimidated by an IRS auditor.
There are two ways to litigate a tax case. If you haven’t paid the tax you owe, you can file suit in the United States Tax Court. Or, if you have already paid the taxes, you can file suit in the United States District Court.
A. U.S. Tax Court
If you are audited and dissatisfied with the audit results, you can appeal your case to an IRS appeals agent. If you are dissatisfied with the appeals agent’s decision, you can appeal it to the U.S. Tax Court, and attempt to resolve your case with an IRS attorney. These cases are frequently settled without the expense of a trial, and are often reviewed by an impartial and competent attorney. The IRS cannot collect taxes while you pursue these appeals and litigation. Again, the taxes don’t have to be paid until these proceedings are concluded.
B. U.S. District Court
If you were audited in the past and consented to an audit liability — and perhaps have even paid part of it — you should know that the original audit can still be reopened. If the new auditor fails to correct an erroneous audit report, you may appeal to the IRS appeals division for relief and, if necessary, file suit in the U.S. District Court.