The IRS can be quite unforgiving when auditing a taxpayer, especially in instances in which the taxpayer is unable to fully substantiate their business expenses.
We often receive calls from taxpayers who did not receive zealous advocacy through their tax preparer and ultimately end up owing the IRS significantly more than they should. In this instance, the taxpayer was working with their accountant throughout an audit of their personal and business finances when the IRS assessed almost $100,000 in additional tax over a two-year period. The client approached us and upon review of the taxpayer’s documents and records, we quickly determined that the IRS had erred in their examination and the amount assessed by the IRS was incorrect.
Upon completion of an audit, the taxpayer has the right to file an appeal or pursue a tax court petition to challenge the tax assessment. If neither of these paths are taken, the only recourse to reduce the total tax assessment is to purse audit reconsideration, as was the case with our client! This can be a long and extended process as the petition must first go back to the original auditor and, in most instances, the original auditor is not willing to adjust their assessment. In this case, and those similar, an appeal can be filed. After much negotiating, we were able to reduce the total tax assessment by $80,562. In addition, we convinced the appeals officer that she should also reduce the penalties that were assessed in the audit, which resulted in a full abatement of the accuracy penalties to the tune of $18,386.
If you were audited by the IRS and believe that they erred in the additional tax assessment, contact our office so that we can help determine what your best options are moving forward.