If you haven’t read Part 1 of this blogpost, you might appreciate the background in that post. That post dealt primarily with the concepts of communication during the audit. However, the concepts below should be helpful even without the benefit of Part 1. This post focuses on the concepts of preparation and presentation during the audit.
Fully develop the facts and law after learning from the Revenue Agent what issues are being audited. Before negotiating with the IRS, consider doing at least the following.
After accomplishing all of the above, the next step is making the presentation to the Revenue Agent.
If the taxpayer cannot settle with the Revenue Agent, the taxpayer will be sent a 30-day letter, at which time the taxpayer may request an appeals conference. This action requires preparing a protest to fully set forth the client’s case. If the case has been properly prepared at the examination level, much of the work necessary to prepare the protest will be completed. Since IRS Appeals has broad authority to settle cases, it is likely at least some concessions will be received by the client at IRS Appeals. Should the client be unsuccessful at IRS Appeals, then the client may file a petition in the United States Tax Court without first paying the tax. In the alternative, the client may pay the tax, file a claim for refund, and sue the United States for a refund in either the United States District Court or United States Claims Court.