Have you received a notice from the IRS informing you that you owe more in taxes? These “30-day letters” can result from an audit, underpaying your taxes when filing a return or many other reasons.
While receiving one of these notices can be unsettling, it doesn’t necessarily mean you have to pay the amount the IRS says you owe. If you believe the agency made an error, you have the right to appeal its decision.
The letter will include instructions on how to file an appeal, which you must do within 30 days of the notice date. You can initiate the process by calling the IRS Independent Office of Appeals or submitting a Collection Appeal Request form.
Should You Initiate an IRS Appeal?
Although you may have the right to appeal an IRS decision, you’ll need to weigh the pros and cons before moving forward.
Benefits of Appealing an IRS Decision
Appealing can be advantageous for several reasons:
- No cost: The IRS doesn’t require taxpayers to pay a fee when initiating the process, which can be helpful if the agency already claims you owe money. However, you may want to hire a CPA or another tax professional to represent you.
- No litigation: An IRS appeal isn’t like filing a lawsuit. The process is more informal and enables you to discuss your situation with the appeals officer and attempt to resolve it without going to tax court.
- Potential reduction in tax liability: Too many taxpayers dismiss the appeal process because they feel they have no chance of winning against the federal government. In reality, taxpayers can often reduce what they owe by negotiating a lower amount. While it might not be a total victory, the savings can be significant.
- Delay of payment: Even if you end up owing money, the appeal process postpones the deadline and gives you more time to explore your payment options.
Disadvantages of Appealing an IRS Decision
Potential downsides of appealing include:
- Additional tax liability: An appeal gives the IRS an opportunity to take another look at your situation. It’s possible that this second review will uncover other tax liabilities.
- Interest accumulates: The interest and penalties on your unpaid tax balance will continue to accrue during the appeals process. However, the reduction in the amount you owe, which can occur if you attain a successful outcome, can more than offset this additional cost.
- Might not be worth it: An appeal may not be worth the time and effort if the additional amount that the IRS claims you owe is small. For example, you’ll need to consider if you should take a day off work to meet with an appeals officer if you only need to pay an extra $75.
Contact Polston Tax for Assistance
Do you need help deciding whether appealing an IRS decision makes sense in your situation? Polston Tax Resolution & Accounting can point you in the right direction. Contact us to request a free consultation today.
