How to appeal an unfavorable audit and get up to a 40% decrease in taxes

form 12203

Tax audits can be rough, especially when you end up having to pay penalties. The IRS may choose to audit an individual’s taxes for a number of reasons. Reporting high income, making clerical errors on your taxes or failing to report taxable income, are common reasons why an audit might be warranted.

Once an audit is complete, the IRS prepares a report outlining all of the changes to a return as well as an itemization of the taxes, interest, and penalties involved. This report is then mailed to the taxpayer. If you believe that the IRS auditor’s ruling to be in error, you have the right to appeal the decision within 30 days after receiving the audit results.

Appealing is a rather simple process and filing one has its advantages. For example, the average appeal usually results in a 40% decrease in taxes, penalties, and interest imposed by the auditor. Moreover, appealing delays the collection of your tax bill for several months, buying you time to consider different payment options. You have the option of filing the appeal yourself, or you may hire a tax professional to do so for you.


What is Form 12203?

Small case requests involve audits where additional tax amounts or penalties, as a result of the audit, do not exceed $25,000. For a small audit, you will need to fill out Form 12203 (Request for Appeals Review) or another form supplied by the IRS. The fastest way to appeal an unfavorable audit is to file Form 12203 to the IRS electronically.

Once your appeal has been filed, your case will be forwarded to the IRS Office of Appeals. The response time from the Office of Appeals depends on the nature of the case. On average, you can expect to hear from an Appeals employee within 90 days of filing your appeal.


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The next step will be an informal appeals hearing in which you present your case to the Appeals Officer in charge of your case. Any settlement of your claim may be negotiated at this time. The success of this negotiation process depends on how well your appeal is prepared and presented.

While you are entitled to represent yourself, a seasoned income tax lawyer who understands the audit process, as well as the process of appealing the adverse effects of an audit, can save you a significant amount of time and money.


How do I Fill out Form 12203?

The form is rather short. First, you are asked to enter your name, detailed contact information and your Taxpayer Identification Number. Then go the section titled “Disagreed Item” where you should list what item(s) you disagree with.

On the right, there is a section titled “Reason Why You Disagree”. Here you can state in detail the reason why you disagree with each item. At the bottom of the page, you will need to provide your signature, the date and the taxpayer’s name and contact information.