Recent changes in IRS policy, which came about because Congress once again
slashed the agency’s budget, are disturbing. What’s supposed
to happen with an audit is, the auditor will reach their conclusions and
write up an audit report, which will then be sent to the taxpayer, along
with a letter telling the taxpayer that, under IRS Guidelines, they have
30 days to submit an appeal to the auditor’s conclusions. If the
taxpayer files an appeal within that time, the case is then transferred
to the Appeals Division in the IRS, and a fresh set of eyes will reevaluate
from an independent perspective.
If the taxpayer does not file an appeal within the 30 days, the IRS will
issue what’s called a Notice of Deficiency, which tells the taxpayer
they have 90 days to file a petition with the Tax Court, which is their
only recourse, since once a Notice of Deficiency has been filed, they
can no longer appeal within the IRS and must go to Tax Court.
What’s been happening since the huge budget cutback has been a shortage
of IRS personnel, and the IRS has become a bit lax and sloppy when it
comes to the 30-day period; lately, they’ll send out an audit report
with a letter saying the taxpayer needs to respond within 21 days, or
even 10, and when they don’t hear back in that time, they’ll
just go ahead and issue the Notice of Deficiency, which essentially cuts
off the taxpayer’s right to appeal within the IRS.
The IRS appeal is quite valuable and it’s something every taxpayer
should utilize when they’re under audit. What’s been happening
changes the game and it’s unfair to the taxpayer. It’s something
that taxpayers should be aware of; they should insist on the 30-day appeal
window from the time they start dealing with the auditor.
Can the IRS Legally Do This?
Taxpayers have to fight this; if a taxpayer gets a letter that says he
has 10 days to file an appeal, they should contact the auditor right away
and tell them you want that changed, and if they refuse, speak to a supervisor.
Often, when I represent taxpayers, even when they say 30 days I will call
the auditor and ask for more time to consider an appeal, and they’ll
grant that. The 30 day time frame is not a drop-dead date; it’s
not in the statute, it’s just in the IRS Guidelines that, if they
don’t hear from you in 30 days, they’ll file the Notice of
Once the Notice of Deficiency is filed, you only have 90 days to file with
tax court and that time limit is in the law, so there is nothing you can
do about that, but the 30 day rule is not. If you want more time, contact
the auditor and insist. Then, when you get them to agree to it on the
phone, send them something in writing to confirm that, so you have a written
record of that.
For more information on
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