Many people come to us shocked at how their audits have turned out. They want to know if there’s anything we can do to help them reduce the $100,000 tax bill they have just received. (We’re never shocked at these audit results; we understand that when taxpayers try to take on the IRS without a tax lawyer, 89% of such audits result in increased tax with an average tax debt of about $5,000.)
Well, there is something we can do. There is a lot we can do, in fact. You must remember, first of all, that the tax auditor’s decision is never final. There is always the possibility of taking a tax audit appeal—but you must act fast to take advantage of this option.
In order to allow people who feel wronged to obtain a review of the auditor’s work, the Congress, through the IRS, has established a division known as the Appeals Office. A good figure for you to keep in mind about audits is that in 85% of all cases appealed there is a satisfactory settlement. Plus, you would be amazed by the mistakes we see auditors make in just about every case that presents itself to us.
Some very common areas where the IRS has made mistakes is in calculating such items as:
- Gross income (they get this wrong over and over)
- Business expenses that are “ordinary and necessary”
- Depreciation expenses
- Corporate distributions
Still, even though appeal is so effective, many people tell us they are afraid to appeal because they think it might enrage the IRS auditor. They are afraid that the Appeals Officer will go into other areas than those plowed up by the IRS auditor. However, know this: Revenue Regulation section 601.106(d) mandates that while the case is up on appeal the Appeals Officer may not reopen an issue previously settled with the IRS auditor and may not raise a new issue.
Of course we would prefer to be in on the case from the very beginning so that appeal might be unnecessary. Still, if you get nailed on a tax audit with an outrageous bill you should call us at once and inquire about appeal. Don’t delay! The clock is ticking.
Be Sure You Have a Tax Lawyer For the Appeals Hearing
During the appeal, you are entitled to be represented by an attorney. It’s extremely important that your attorney knows tax law; otherwise the IRS will try to slip off the hook on a technicality. Appeals officers are quick to back up the IRS auditor and very slow to find in favor of the taxpayer, so you absolutely must have help during this process.
Contact us to schedule a confidential consultation with a tax attorney. As this tax law firm represents individuals and business and is always pleased to meet with you, please call us at 312-471-0126 to discuss your situation in detail.
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