Responding to Adverse IRS Audit Assessments: Audit Reconsideration Requests, IRS Appeals, Settlement Strategies

Few events are as stress-inducing and potentially costly for a taxpayer as an adverse tax audit finding. While some IRS adjustments are justified, often adverse results arise from insufficient documentation, failure to appropriately respond to an information document request (IDR), failure to file a required return or lack of understanding by the IRS of its own rules and regulations. The Internal Revenue Code provides many avenues for appeal and reconsideration, and tax advisers should know the various forums and procedures for challenging an audit determination.

Under certain circumstances, an audit reconsideration request can be an appropriate and effective means of resolving a dispute with the IRS. Audit reconsiderations involve requesting the IRS to evaluate prior audit results by a revenue agent. Audit reconsiderations generally require that a taxpayer have new evidence in the form of a new or corrected filing or additional documentation not previously submitted to the examining agent. An alternative approach to achieving a similar result is by filing an offer in compromise based on doubt as to liability or filing a request for a collection due process hearing.

The IRS appeals process can also provide a more beneficial and cost-effective way of resolving an adverse audit finding. Because appeals officers must consider the "hazards of litigation" when reviewing a taxpayer's appeal, taxpayers often have a greater chance of achieving a favorable settlement in an IRS appeal due to the appeals officer's mandate to consider the assessment's defensibility in court.

Listen as our authoritative panel reviews the IRS audit process and discusses best practices for advisers to determine the best course of action in responding to an adverse audit finding.

1. Responses to initial IRS examination contact
2. Responding to IDRs, and requests for taxpayer interviews
3. Statute of limitations issues during the audit process
4. IRS appeals process: strategies and requirements
5. Offers in compromise based upon doubt as to liability
6. Audit reconsideration requests
7. Contesting notices of deficiency: litigation alternatives
8. Collection due process hearings

The panel will discuss these and other vital questions:

• How to respond to Information Document Request Form 4564
• How to respond to IRS requests for taxpayer interviews
• Strategies and requirements for audit reconsideration
• Under what circumstances should a representative advise the taxpayer to extend the statute of limitations?
• When is the IRS appeals process beneficial for taxpayers?
• What belongs in an appeals protest?
• When should a representative advise filing a petition with the U.S. Tax Court?

Learning Objectives

After completing this course, you will be able to:

• Identify IDR general procedures
• Determine factors in favor of an appeals conference
• Ascertain contents of a written protest under IRS Publication No. 5 (Rev. 1/99)
• Recognize how IRS notices of deficiency must be delivered to the taxpayer
• Select the circumstances under which collection due process procedures are available to a taxpayer

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).