(1) If you do disagree with the IRS assessment of your taxes after an audit, you can choose to meet or speak face-to-face with the supervisor of the person who issued the findings. (2) The Appeals Office of the IRS is where most differences are settled with the IRS. For cases under $25,000 in tax, it may be possible to settle for a lessening in the tax liability while at this level. (3) However, if the case is more substantial and the Appeals Office does not reach what we feel is a fair decision, it is possible to take the case to a United States Tax Court.

Your Argument Must Have Merit – Or Pay a Stiff Penalty. The IRS will not consider your disagreement valid if made solely on “moral, religious, political, constitutional, conscientious, or similar grounds”. Be forewarned, if your appeal is seen as frivolous and you end up taking it to Federal Tax Court, it could end up costing you big time. The IRS doesn’t have much patience with delaying tactics.

The IRS gives this warning: “Frivolous Filing Penalty Caution: If the Tax Court determines that your case is intended primarily to cause a delay, or that your position is frivolous or groundless, the Tax Court may award a penalty of up to $25,000 to the United States in its decision.”

It can be very confusing and frustrating. There are so many boxes to check and spaces to fill out that it can be overwhelming for many people. Scrabbling through shoe boxes full of receipts and invoices, digging through filing cabinets stuffed haphazardly with uncollated paperwork, and trying to keep everything organized on the desk is more than most people are willing to do, legal requirement or not.

Things can get even more delicate and confusing when the federal revenue service gets involved. The Internal Revenue Service in the United States of America is viewed with suspicion and a degree of hatred by many people who have had direct dealings with them. While this opinion may not be one hundred percent warranted, it exists and is so entrenched in the culture that it is the frequent subject of comedy material.

There seem to be many reasons why the IRS would want to audit someone. This may be the seed of the confusion and fear that the average citizen feels toward the organization. In truth, there is only one common reason and it has to do with the perception of incomplete or fraudulent entries on a federal income tax return. Other situations in which the Internal Revenue Service might choose to perform an audit include taxpayers whose annual income fluctuates wildly, returns which claim unusual or conveniently rounded off deductions, and people who are paid in cash or receive considerable outside tips.

So while the lurking threat of an audit without reason or warning can be unsettling to people, the fear is largely unfounded. The IRS will make every attempt to verify and corroborate the reported incomes and deductions, as is their responsibility, and only in cases where fraud is suspected or highly probable will they actually bother to perform the audit.

That having been said, there is no guarantee against audit which can be offered to a business owner or an individual taxpayer. Even in the most conscientious cases where the return has been carefully and expertly prepared, there is still the possibility of the Internal Revenue Service deciding to closely inspect the supporting documentation for the return.

This can be a traumatic event. Not only is there the feeling of suspicion and mistrust towards the IRS on the part of the taxpayer, the initiation of an audit often implies a similar scepticism on the part of the auditors. The thought that they would not have looked so closely at the tax return if it had not been a bit suspicious is a powerful idea to overcome, and many people immediately assume that they have made a mistake and the audit is their fault.

This of course only applies to honest people who have not manipulated their financial information or misrepresented their employment to the Internal Revenue Service. People who submit deliberately fraudulent documentation have absolutely called the audit down upon their own heads, and they really don’t have anything to blame but their arrogance.

Even so, an audit is a major event and it is absolutely important to make sure that the auditors behave in a fair manner. Any monies which are determined to be owing should be review and verified carefully. Just because they work for the IRS, that doesn’t necessarily imply that the individual auditor assigned to a case is incapable of making mistakes themselves. Under no circumstances is it a good idea to accept the statements of the Internal revenue Service without verification, just as they would not think of accepting unverified statements themselves.

Proper protection for businesses and individuals is most appropriately provided by dedicated professionals with significant experience in the legal aspects of the federal taxation system. From the outset it is a good idea to have an annual tax return looked at by an accountant if not prepared entirely by them. In this way the risk of audit can be reduced by making sure that no overtly problematic or potentially suspicious entries exist. An accountant is no good once the audit has been called, however. The government accountants will do it themselves, and any discrepancies will be noted and referred for later investigation.

In the case of an audit it is usually a very good idea to secure the representation of a tax attorney. These are lawyers who are experienced in protecting their clients from the legal pitfalls which can be problematic for small business owners or other individuals who run afoul of the tax officials. These lawyers are skilled in litigation and negotiation, both of which are necessary to determine if the Internal Revenue Service’s claims of owed money is legitimate. These professionals may also be helpful in negotiating achievable payment schedules if the amount owing cannot be reduced.

It is important to remember and understand the difference between a tax attorney and an accountant. A Certified Public Accountant is responsible for making sure their clients do not submit fraudulent or misrepresentative returns in the first place. They are the taxpayer’s first line of defense against an audit. A lawyer skilled in taxation, debt management, and litigation will not make sure your tax forms are submitted properly, without error, and on time. They will, however, protect their clients to the best of their ability and with all due zeal should the IRS choose to audit their client.

Obviously, the best course of action is probably to employ a certified public accountant to help prepare and evaluate the initial tax return. If this step is attended to carefully and no deliberate fraud is perpetrated, the likelihood of an audit becomes very small. “Very small” is not a synonym for “non-existent” however, and there may be eventual dealings with the tax collectors even by the most honest of business owners. Anyone can be the subject of increased IRS scrutiny, and those who find themselves under audit have discovered when to hire a tax attorney.