Disagree with How Much You Owe to the IRS? Here's How to Contest It

Disagree with How Much You Owe to the IRS? Here's How to Contest It

• Jan 29, 2022

More often than not, if you file and pay your taxes, you don’t have to worry about the IRS contacting you about paying more. But sometimes, the IRS will audit your account or otherwise determine that you owe more than what you calculated on your return. Or, you may have back taxes that have accumulated fees and penalties you want to contest. Whatever the reason, if you disagree with what the IRS says you owe in taxes, you do have options to contest it. Keep reading to learn more.

A Compliance Check Comes First

Before you can begin to appeal the IRS’s tax decision, you’ll need to fully work your case with IRS Compliance. This is not an audit or investigation. Rather, this is the IRS’s way of ensuring you understand and have used all of the relevant tax forms correctly. This is their way of making you double check your math, to see if there was some sort of error on your forms that can account for the difference between what you think you owe and what the IRS says you owe.

They won’t review your financials with you or ask to see your records or even your taxes. They’ll simply ask if you understand the forms and go over any questions you may have about them. Sometimes, this can be helpful for individuals who filed their own tax returns, as some mistakes can be brought to light. If you’re working with a CPA, however, it’s unlikely that IRS Compliance will resolve the issue.

Once you’ve fully worked with IRS Compliance, you can begin the appeals process.

How to Request an Appeal

It’s important to note that you only have the right to appeal the IRS’s decision if you have received a letter stating that you can appeal. When the IRS makes a tax decision, they will send a correspondence to you explaining your right to appeal that decision. If what you received from the IRS was simply a bill, and there was no mention of your right to appeal, then the appeals process would not apply. You also cannot appeal the decision if the deadline for doing so has passed; that deadline would also have been mentioned in the IRS correspondence regarding your right to appeal.

Barring these factors, you are entitled to a fair and impartial administrative appeal of most IRS decisions, including penalties, through the IRS Office of Appeals. This entity is an independent function within the IRS that provides an impartial review of your tax dispute. Whenever possible, you should provide all supporting information to the IRS before appealing the decision. If you provide new information to the Office of Appeals after requesting an appeal, your case could be delayed or may even be returned to Compliance.

The appeals process is typically as simple as requesting the appeal. The Office of Appeals will review your dispute and make a determination regarding your tax case. However, it is a lengthy process, so don’t expect a decision any time soon.

Mediation Options for Appealing Your Case

You can also opt to use one of their mediation programs, which can help accelerate the resolution of your case. Also known as Alternative Dispute Resolution, mediation is voluntary for both you and the IRS. In this process, an Appeals office who is trained in mediation techniques will work with you and the IRS employee assigned to your case.

The Appeals mediator will facilitate communication between both parties, help identify possible settlement terms, and ensure a level playing field during the process. This informal and confidential setting can be very beneficial to taxpayers, who often feel that the balance of power in these situations is strongly in the IRS’s favor. It can allow you to resolve your dispute without the lengthy appeal process or costly litigation.

Going to the U.S. Tax Court

This is a step that we prefer not to take, but it’s important that you know it’s an option for you. If you cannot reach an agreement with the Office of Appeals (either through the appeals process or through mediation), you generally have the right to take your dispute to the U.S. Tax Court or another federal court. However, we do our best to settle tax disputes for our clients long before this step becomes necessary.

Appealing a tax decision can be a daunting process, and you shouldn’t try to do it alone. Contact the IRS Advocates to ensure you have the support you deserve when going through the appeals process.