You’ve received the dreaded IRS audit letter — and now the results are in. But what if you strongly disagree with the findings?

Many people automatically assume they’ll need to pay whatever tax bill the IRS demands, but that’s simply not true. I’m Venar Ayar, a tax attorney with over a decade of experience defending clients against the IRS, and I can tell you that audit findings represent starting points for negotiation, not final judgments.

Introduction to IRS Audits

A client came to me after receiving a $43,000 tax assessment from an IRS audit. After we gathered supporting documentation and filed for audit reconsideration, that amount dropped to just $3,200. This happens more often than you might think.

The Internal Revenue Service conducts audits to verify tax compliance, but its findings can be challenged in court. You have legal rights throughout this process, and understanding them can save you thousands of dollars in tax liability.

Understanding the Audit Process

The IRS initiates audits through formal written notification, never by phone or email. This IRS notice explains what tax year is under review and what documentation you’ll need. Audits fall into four categories based on complexity and scope:

• Those conducted entirely by mail
• Those requiring you to bring documents to a local IRS office
• Those involving IRS employees visiting your home or business
• Taxpayer Compliance Measurement Program (TCMP). TCMP audits were once used for research and compliance measurement, but are now rare, with elements incorporated into the IRS’s National Research Program (NRP).

During the audit appointment, a revenue agent reviews your financial records to identify discrepancies between what you reported on your tax return and what the IRS believes is correct. The audit process concludes with a final report detailing any proposed changes to your tax liability.

Many taxpayers make the critical mistake of accepting the IRS audit findings without question. This can be costly.

Preparing for Reconsideration

If you disagree with the IRS’s findings, your first step is to gather compelling evidence. This requires proving the IRS position is incorrect through further documentation.

Essential supporting documentation includes:

• Bank and credit card statements
• Receipts for business expenses
• Proof of charitable contributions
• Evidence of medical expenses
• Property tax records
• Loan interest documentation

Remember, the burden of proof falls on you, not the Internal Revenue Service. Without supporting documentation, your chances of a successful reconsideration request diminish dramatically.

The Reconsideration Process

Audit reconsideration is the formal process of asking the IRS to review your tax case again. To request reconsideration, submit:

1. A detailed letter explaining why you disagree with specific findings
2. Supporting documentation for each disputed item
3. Copies of the original audit report and tax return

Address your package to the IRS office that conducted your audit. Include your name, taxpayer ID number, and the tax year in question on every document. Send everything via certified mail to create a paper trail.

The reconsideration process begins when the IRS receives your formal claim. The IRS will review your submission and may contact you for additional information. Patience matters here. The process can take several months, but the potential for a more favorable outcome makes it worthwhile.

Understanding Your Appeal Rights

If the reconsideration process doesn’t resolve your tax problem, you have additional appeal rights:

• The independent Office of Appeals within the IRS reviews cases impartially
• You can petition the Tax Court if you still disagree after receiving the Notice of Deficiency (the 90-day letter)
• Judicial review is available through federal courts

To initiate the IRS audit appeal process, file a formal protest within 30 days of receiving the examination report.

Your written protest must include:

• Your name, address, and phone number
• A statement that you want to appeal the IRS audit decision
• The tax periods involved
• A list of each disputed item
• The facts supporting your position
• The tax law or authority supporting your position
• A perjury statement certifying that your information is true

Working with the IRS

Despite what you might think, most IRS employees aren’t out to get you. They’re professionals doing their job, often with overwhelming caseloads. A respectful, professional approach goes a long way.

When communicating with the IRS:

• Be prompt with responses
• Be organized and prepared for your appeals conference
• Stay calm and factual
• Document all communication with any IRS employee
• Follow up in writing after phone conversations

I once had a client who transformed his case by simply organizing his receipts chronologically and creating a clear index for the auditor’s file. The revenue agent actually thanked him for making the review process easier.

Remember, IRS employees have significant discretion in how they handle your tax disputes. Making their job easier through cooperation and organization can work in your favor.

Resolving the Audit

The final determination can take several forms:

• The IRS agrees with your evidence and cancels the proposed changes
• The IRS accepts some of your arguments but maintains others
• You negotiate a settlement for less than the full additional tax
• You arrange an installment agreement to pay the agreed amount over time
• The IRS temporarily halts the collection process due to financial hardship

Even with strong evidence, reaching a compromise is often more realistic than expecting the Internal Revenue Service to completely reverse its position on previously assessed taxes.

Post-Audit Procedures

Once your tax case resolves, take these critical steps:

1. Get everything in writing from the IRS
2. Pay any agreed-upon amounts promptly
3. File any required amended tax return
4. Keep all documentation for future reference
5. Implement systems to avoid similar tax issues in the future

If the audit resulted in substantial changes, consider having a tax professional, like an experienced tax attorney or a CPA, review your returns for recent tax years. Similar errors might exist that could trigger additional audits.

Challenging an Audit

Successfully challenging an IRS audit decision requires strategic thinking. Focus on these principles:

• Address specifics, not generalizations. Don’t argue “the IRS created an error.” Show exactly where and how.
• Hire a tax attorney who knows the tax law relevant to your case. 
• Consider partial concessions. Sometimes, giving ground on minor issues can strengthen your position on major ones.
• Understand the statute of limitations. Generally, the IRS has three years from filing to assess additional tax.
• Document everything. Keep detailed records of all communications with the IRS Appeals Division.

The strength of your challenge often depends less on what you say than on what you can prove to the Appeals Account Resolution Specialist assigned to your case.

Tax Professionals to Assist You

While you can represent yourself, professional assistance significantly increases your chances of a favorable outcome. Consider these options:

• Tax attorneys for complex legal issues, potential criminal matters, or Tax Court representation
• Certified Public Accountants for accounting-related disputes and detailed financial analysis

When selecting representation, look for:

• Specific experience with IRS audit reconsideration
• Knowledge of your particular tax issues
• Clear fee structure
• Realistic assessment of your case

At Ayar Law, we specialize in helping taxpayers effectively dispute IRS audit findings. We understand that what seems like minor details to you can make or break your case during the appeals review, and we know exactly how to present your position for maximum impact.

Remember: An IRS notice of audit isn’t a final verdict. It’s the beginning of a process where you have appeal rights, options, and the opportunity to significantly reduce or eliminate proposed assessments through the Office of Appeals, an independent organization within the IRS. Don’t pay a penny more than you legally owe.

Request a free case evaluation today and let us help you fight back against the Internal Revenue Service.