Question

FACTS: Bret and Samantha Woodley have been our clients for many years. We have recently concluded an IRS audit of their 2017 income tax returns and the result was an increase in taxable income of $43,750. In our opinion the IRS auditors have ignored the facts in this case and have incorrectly applied the internal revenue code in their conclusions.

ISSUE: Bret and Samantha Woodley are very upset and worried that they can not afford to pay the increased tax of $16,188. We have told them that this is only the first step. We can always go to appeals and then court if necessary. They have said that appeals is just another arm of the IRS and will just agree with the auditors findings and this amount is too small to incur the costs of litigation. What can we tell them so they are not so worried about fighting this assessment?

CONCLUSION:

BASIS FOR CONCLUSION:

What is your conclusion?

What is the basis for your conclusion?

Answer 1

CONCLUSION

IF YOU DISAGREE WITH THE RESULTS,YOU HAVE THE RIGHT TO FILE AN APPEAL. YOU HAVE THE RIGHT TO FILE AN APPEAL IN RESPONSE TO

1. A TAX LEIN

2. TAX LEVY

3. A REJECTION OF AN OFFER IN COMPROMISE

4. A PENALTY

5. DISAGREE WITH A TAX LIABILITY

ABOUT APPEALING AN IRS AUDIT

AFTER FILING A TAX RETURN, RECEIVE A NOTICE FROM IRS STATING THAT YOU DID NOT REPORT SPECIFIC INFORMATION ON YOUR RETURN. SUCH NOTICE MUST BE SIGNED AND MAILED IT BACK IF YOU AGREE OR DISAGREE. IT MUST BE SENT WITH IN THE DATE LISTED IN THE NOTICE.

            IF YOU RECEIVE EXAMINATION REPORT FROM IRS, WRITE A PROTEST LETTER, SIGN IT AND MAIL IT TO THE IRS BEFORE THE DEADLINE LISTED IN THE REPORT. THEN YOU WILL GET A RESPONSES FROM THE IRS INFORMING THAT THEY WILL TRANSFER YOUR CASE TO THE IRS APPEALS DIVISION. YOU CAN EITHER EMPLOY A TAX LAWYER, ACCOUNTANT, OR ENROLLED AGENT AUTHORIZED TO PRACTICE BEFORE IRS TO HELP YOU. OTHERWISE YOU CAN DO APPEAL YOURSELF. BUT IT IS NOT EFFECTIVE.

          YOU WILL RECEIVE A NOTICE OF DEFICIENCY. IT IS A 90 DAYS LETTER. SO YOU MUST REPORT IT WITHIN 90 DAYS. IT IS BEST TO HIRE A TAX LAWYER TO HANDLE THESE NOTICES. WHEN YOU FILED YOUR TAX COURT PETITION, YOU CAN PICK THE CITY WHERE YOU WANT YOUR CASE TO BE HEARD.

       IF YOU DON'T RESPONSE TO A NOTICE OF DEFICIENCY WITHIN 90 DAYS, BUT HAVE AN ASSESSMENT, YOU CAN STILL APPEAL AGAINST YOUR TAXES OWED AMOUNT. USUALLY YOU ARE REQUIRED TO PAY THE TAXES FIRST AND THEN FILE A REFUND CLAIM.