Getting audited by the IRS is never fun, but you do have the right to challenge the results. The length of time you have to file an appeal depends on whether you’re challenging an audit of an original return, whether you agreed to the initial results of the audit, and whether you have new information. Most appeals don’t involve your original auditor, so you’ll have a chance to discuss your case with an agent who has a fresh view of your case.
If your audit covers an original return you filed, you can file a regular appeal within 30 days from the date you receive the auditor’s results in writing. The written statement explains the changes made to your return by the auditor. If you disagree, do not sign the agreement form. Instead, complete IRS Form 12203 and send it to your auditor. This is an appeals request form. If it’s not included with your statement, you can find it on the irs.gov website. Don't forget that 30-day deadline; if it's a day late, the IRS will not consider your appeal. Save proof of when you sent the appeal, either by fax confirmation or certified mail receipt.
Audit Reconsideration Unit
If you have additional information that was not considered during your audit, you need to file a claim with the IRS Audit Reconsideration Unit. This unit will go over that new information and decide if changes should be made to the original audit. Reconsiderations can only be made if you did not agree in writing to the original exam changes, so never sign the agreement sheet from the audit. As long as you don’t agree, and you did not file a case in tax court for the exam, you have up to 10 years to appeal to the audit reconsideration unit. Mail your claim to the address shown in your exam report. If you’ve lost your report, don’t worry – addresses for reconsideration units are also provided in IRS Publication 3598.
Request for Refund
If you already paid taxes due from your audit, you can still challenge the results and request a refund of your payments. Requests for refunds are accepted within three years from the date the return was filed, or two years from the date the tax was paid, whichever is later. You can request a refund on Form 1040X. In most cases, this form is forwarded to the Reconsideration Unit if your exam is already closed. If the IRS disallows your claim, you’ll receive a letter explaining the reason, and a new 30-day timeframe to appeal the denial with an IRS Appeals Office.
If you don’t file a tax return in a year you’re required to, the IRS will prepare a return for you. This "substitute return" is not subject to a traditional exam because the IRS prepared the information with its own sources. Substitute return results are usually pretty nasty because the IRS does not calculate your deductions or credits, and it uses a filing status that creates maximum taxation on your return. You may file an original return to protest the IRS results at any time. However, if your protest shows a refund due to you, you must file within three years from the original due date to have a chance to get that money.
- IRS: Publication 556: Appeal Rights
- IRS: Form 12203 - Request for Appeals Review
- IRS: Need to File a Past Due Return?
- IRS: What You Should Know About the Audit Reconsideration Process
- IRS: Internal Revenue Manual 4.13.6: Appeal Rights
- IRS: Internal Revenue Manual 18.104.22.168 - Addresses for ASFR (Substitute for Return) Processing