8 Steps a Small Business Needs to Take When Appealing an IRS Decision

Running your own small business is a chore. Dealing with the taxes involved is an even bigger chore, because if you get something wrong, then you could end up losing everything.

In the event that the IRS has made a decision against your business, there are steps you can take to appeal their decision so that you can keep your business afloat. Here are eight crucial steps to ensure you’re getting a fair chance.

  1. Appeals or Remedy?

Many business owners first seek out a remedy from the court when they feel an unfair decision has been made by the IRS. This is a legitimate avenue, but it would be wise to consider appeals first. This is because it is much less costly and less formal, plus you don’t give up your rights to seek a remedy afterwards if an appeal doesn’t work out for you.

If you’re still undecided, you may want to consider tax attorneys who handle IRS appeals to get you on the right foot.

  1. Writing a Protest

If you decide than appeal is right for you, then you have to make a protest in writing to the IRS. This protest should be written with very specific details as to what the appeal is about. No new information should be added to the protest, at risk of being returned to the person making the appeal. Stick to the facts.

  1. Details to Include

Because of the very specific nature of this appeal, there are some very important details that have to be included in your protest. These include:

  • Your name, address, and telephone number
  • Statement that you want to appeal the IRS’ findings to the Office of Appeals
  • A copy of the letter you received detailing the proposed changes
  • The tax year involved in the appeal
  • A detailed list of the proposed item(s) you disagree with
  • Reasons you disagree with them and the facts that support your position for each reasoning
  • Law/authority that supports your position
  • A penalty of perjury statement
  • Your signature
  1. Reflecting Style of Writing

Don’t be informal with your protest; it should match the writing style of the IRS so that it comes across as formal and that you have knowledge of the content of your protest.

Another tip is that for each detail listed above, there should be a heading so that your protest is easy to read and understand.

  1. Stating the Facts

Keep the emotion at home; that isn’t going to help your case. Stick with the facts as pertaining to the IRS’ findings, as well as the authority you’re using to support your arguments.

  1. Using the Right Law

Look to the most recent and favorable law to your case. For unfavorable law, demonstrate how your circumstances are different from the issue under protest.

  1. Applying Law to the Facts

This is where you get to explain how the law supports the facts of the case and why your position is correct. Focus on the largest issues first with supporting legal arguments, and then write developing arguments for each of the smaller issues.

  1. Conclude On a Strong Note

Conclude your protest letter with a short paragraph, stating the relief being sought and why you’re entitled to it.

Appeals is a much easier process to get through when resolving disputes with the IRS, and you can still choose to seek recovery afterwards.

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Author: Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.