Following an audit from the IRS, you can expect to receive a ruling or decision from the auditor when their audit is complete. If you are not satisfied with the determination or disagree with it, you can appeal that decision. When you appeal an IRS audit, your case goes to an appeals officer who reviews your filing and issues a new ruling. However, there are pros and cons to filing an appeal. Learning about these pros and cons will help you determine whether it is something you should do if you disagree with the ruling.
Disadvantages of Appealing an IRS Audit
- The Appeals Officer May Increase the Amount You Owe
The biggest disadvantage to appealing an IRS audit is that the appeals officer may find additional errors or fines that the original auditor missed. If an appeals officer reviews your case and finds that the auditor missed penalties, fines or other expenses that you should have paid, the amount that you owe the IRS may increase. As such, it is always important to have a tax professional or tax attorney review your case before you appeal an audit decision. The last thing you would want is to appeal the decision and end up owing even more money.
- Interest Continues to Accrue on any Amount You Owe
The second downside to appealing an IRS audit is that the amount of interest you owe continues to accumulate while the appeals process takes place. Because of this, some people think it is better to just pay the amount owed instead of fighting what you owe and running up the interest, especially if the disagreement is over a minor amount of money. Ultimately, only you can decide if it is worth appealing the case and running the risk of owing more in interest if you lose.
Advantages of Appealing an IRS Audit
- You Have the Opportunity to Meet With the Appeals Officer
One of the biggest benefits to appealing an IRS audit is that you have the opportunity to sit down with and discuss your case with an appeals officer. This is not something that happens during the audit process.
When you sit down and meet with the appeals officer, you have the opportunity to explain your position, negotiate a settlement, or work out a variety of other arrangements. An auditor does not have the authority to work out settlement agreements or negotiate, so if the audit finds that you owe a lot of money, sitting down with an appeals officer and explaining what led to the issues may help you reduce the amount you owe.
- Appealing Delays the Due Date of Any Money Due
The second advantage to appealing an audit is that it delays when your IRS payment is due. A payment will not be due until the appeals officer issues a ruling, which can take anywhere from six to 12 weeks, depending on how busy the officer is.
Many people appeal an audit decision even if they don't disagree with the ruling simply because it buys them time to come up with the money they will need to pay off their tax debt. This prevents the IRS from seizing their bank accounts or assets to pay off this debt. If you owe a large amount of money and need time to come up with that money, filing an appeal may provide you with the time you need to get it.
There are pros and cons to appealing the determination issued after an IRS audit. In some cases, filing an appeal can hurt you or cost you more money. In other cases, it can save you money. If you don't agree with the ruling from your IRS audit, if you click here or speak with a tax attorney or other tax professional can help you make an educated decision as to whether you should appeal the decision or not.