Where contesting the results of an audit, the taxpayer must file a written protest the basic format of which should include the following:
- a statement that the taxpayer wishes to appeal the findings of the IRS to the Appeals office;
- the taxpayer’s name, address and daytime telephone number;
- a copy of the letter showing the proposed changes and findings that the taxpayer does not agree with or the date and symbols from the letter;
- a list of the changes that the taxpayer does not agree with and why the taxpayer does not agree;
- the tax periods involved;
- a statement of facts supporting the taxpayer’s position; and
- a statement of the law or other authorities that are relied upon.
The taxpayer must swear to the statement of facts under penalties of perjury. The following declaration may be used:
“Under penalties of perjury, I declare that I have examined the statement of facts stated in this protest and in any accompanying documents, and to the best of my knowledge and belief, they are true, correct and complete.”
The function of the protest is to counter the revenue agent’s report and to show that the IRS’s litigation of an issue is either inappropriate or hazardous. The detailed factual statement and legal argument(s) should indicate when the revenue agent has failed to set out the facts accurately or has failed to consider necessary facts.
Where necessary the factual statement should be supported by documents, affidavits or statements of potential witnesses. To be effective, the attachments must demonstrate to the Appeals officer that the representative has a firm grasp of the facts and, if necessary, is ready to proceed to trial. To the advantage of the taxpayer, the attachments do not have to conform to the rules of evidence at this stage of the appeals process.
Unnecessary information contained within the protest may be harmful if it raises issues not originally considered by the examining revenue agent. The representative should not, therefore, make a haphazard submission of documents, but should carefully review each document before submitting it. In some instances, the representative may wish to use excerpts rather than an entire document, such as from minutes of a board of directors.
If a protest fails to set forth the taxpayer’s position, lacks substantive detail, or is otherwise seriously deficient, Appeals may return the case to IRS office of examinations in which the case originated for redetermination of disputed items or with a recommendation to proceed to assessment in an attempt to make the amounts owed permanent. These potential procedural pitfalls are another great reason to engage the Tax Law Offices of David W. Klasing to file for your Appeal.
