WHEN an audit is completed, you will be notified of the Agency’s determination:
1. No change: IRS accepts your returns as filed. You will be asked to sign the examination report. That concludes your pain and suffering. About 11% of correspondent audits and 8% of field audits end with a no change verdict, a win for taxpayers.
2. Changes: The Agency recommends adjustments to your return. If you agree with the bill, that concludes your audit. The IRS will bill you for additional taxes and any applicable penalties and interest. If it’s a refund, I’m sure you will agree right away, sign, and wait for your check. If not, go to Appeals described below.
3. Appeals: If you disagree with their findings, you have the right to talk to an IRS manager (which I never do since manager almost always backs his/her compliance technician) or file an appeal (da best) with the independent Office of Appeals. Send a protest letter via certified mail. Note that the appeals process is less formal and cheaper. You have your best shot at resolving your tax problems with Appeals. Historically, Appeals has been able to settle the majority of the cases that come within its jurisdiction. I love Appeals because they are independent. Independence is the most important of their core values. Independence from their own compliance function (auditors) is critical for Appeals to accomplish its mission. To resolve disputes effectively, Appeals must show itself to be objective, impartial, and neutral in fact and in appearance. If taxpayers perceive they will not get a fair hearing in Appeals, more tax controversies would be litigated in Tax Court, which would increase the cost and burden to both the taxpayer and the Federal Government.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].