Appealing the IRS Audit

When thinking about filing an IRS audit appeal, there are pros and cons though I think you will find that the benefits certainly outweigh the drawbacks. Remember too, that in the majority of the cases, the IRS will still get some of the penalty or fine. It may still be advantageous however, because many times, the tax bill is significantly reduced.

Out of all the research you can do, it boils down to three major reasons why filing an appeal is a “pro”. First of all, filing an appeal is simple and usually costs nothing, unless you enlist the help of a professional, which is not required, though your individual circumstance may warrant such an act. Secondly, appealing the IRS audit will delay your tax bill as long as the appellate process is in still in process. This may buy you the time needed to save or earn the money required to pay off the tax bill or allot you the time needed to make other payment arrangements. Lastly, appealing the decision generally does result in some tax savings. While this is not guaranteed, you don’t have much to lose in the attempt.

On the reverse there are some “cons”. One of the major implications to consider is that the appeals officer may find more issues that the auditor missed. If you know that there are more issues than the one that you are being fined for, and the auditor missed those all together, you will need to decide whether filing for an appeal will be worth it. Try considering which would be of greater value. Since there isn’t any set guarantee or amount, this may be a difficult guess and even a gamble. With that said, the likely hood that the appeals officer will discover more issues is slim. This rarely ever happens. If you feel that you are a candidate for more undiscovered issues to surface, go directly to tax court where the other mistakes will not be looked for or uncovered. If you decide to go straight to tax court, you may want to enlist the help of a professional, which can get expensive as well. Here you will need to consider the savings vs. the cost of such action. On the other hand if you know that you are a candidate for more fines and penalties, you may want that tax attorney anyway.

Additionally, interest will continue to accrue while you are in the appeals process. Again, consider the amount of interest being charged and the amount that you would likely save. Remember that it is not guaranteed, but usually the savings is around 50%. Figure the savings at only 20% just to be on the safe side while thinking through your options.