Wednesday, December 17, 2008

IRS Appeals – The Right to Appeal Following an IRS Audit.

A taxpayer has the right to request a conference in the IRS Appeals Division following a tax audit and the issuance of an audit report (i.e. a 30-Day Letter or a 90-Day Letter).

A 30-Day Letter constitutes the auditor’s outline of items on a tax return that are under attack. A taxpayer can request an appeals conference after receiving a 30-Day Letter by filing a Protest of the proposed adjustments with the auditor within 30 days of its issuance.

A 90-Day Letter (a.k.a. Statutory Notice of Deficiency) constitutes a formal IRS determination of a tax deficiency. The 90-Day Letter may be appealed by filing a Petition to the United States Tax Court. The Petition begins a proceeding in the Tax Court, however, if the matter has not yet been considered in the Appeals Division (following a 30-Day Letter), the case will first be sent to Appeals. The Petition must be filed within 90 days of the issuance of the 90-Day Letter.

A protest of a 30-Day Letter or Petition following a 90-Day Letter can either be (1) a “skinny” document that simply satisfies the formal requirements of an appeal or (2) or a “fat” document that details a wealth of information and a thorough explanation of why each issue should be decided in favor of the taxpayer. The decision to file a skinny or fat Protest/Petition is largely a strategic decision that turns on the nature of the case and complexity of the issues in the case.

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