How Do I Dispute My Tax Notice?
Every business receives IRS notices. Your organization might have an outstanding balance, you may be due a smaller refund than anticipated, or you may need to attach a schedule to your tax filing. Often, these notices may indicate the IRS made a mistake or didn't receive paperwork before the notice went out. In these circumstances, especially, it pays to be vigilant. You don't want your organization paying penalties or larger-than-necessary tax amounts.
When you receive a tax notice, it's best to respond as promptly and thoroughly as possible. If you believe the IRS notice is in error or the penalty or amount due is wrong, it's even more important to act fast and follow the IRS processes for disputing a tax notice properly.
This quick guide outlines different steps for disputing your tax notice, what to do if the initial dispute doesn't solve the problem, and some of the most common disputes with IRS tax notices.
How to Dispute a Tax Notice
When you receive a tax notice you think is incorrect, don't simply ignore it or wait until your next financial internal audit. Instead, your organization should contact the Internal Revenue Service (IRS) offices. The IRS has created several different methods for addressing tax notice questions and appealing notices that recipients think are incorrect.
It's important to act quickly. The IRS imposes deadlines for appealing tax notices. Depending on the specific notice, you may have either a certain number of days after the notice is issued or a hard calendar deadline.
Follow these processes to navigate through the system and get a resolution as you dispute your IRS notice.
Contact the IRS Supervisor
Inform the IRS about a disputed notice by mailing them a letter explaining why you dispute it, along with any information and documents for the IRS to consider. Use that letter to describe the IRS penalty outlined in your tax notice and explain why it is incorrect. Each notice includes instructions on how to dispute the notice, and you should send it to the address on the notice’s included contact stub.
An IRS Supervisor will receive your form, review your case, and contact your organization's appointed representative.
For instance, when dealing with a Corporate Tax Error, you can file Form 12009, Request for an Informal Conference and Appeals Review within 30 days after an IRS supervisor reviews your dispuet. That will request a meeting with them to discuss its circumstances.
Filing an Official Appeal
Beyond disputing the notice is the appeals process, if the issue is not quickly resolved. Filing an appeal escalates the situation and occurs if an IRS supervisor is not able to fix your dispute.
You have 30 days from when the IRS Supervisor notifies you that they cannot resolve the issue to complete this step. Most notices will outline the specific process for filing an appeal, depending on the issue at hand.
For example, receiving a Letter 11, Final Notice of Intent to Levy and Notice of Your Right to a Hearing outlines the process for filing Form 12153, Request for a Collection Due Process Hearing.
On the other hand, a Letter 525, General 30-Day Letter, will list various IRS resources for how to file the specific type of appeal required. Refer to your original tax notice to ensure you file the correct form within the required time frame.
Understanding the Appeals Office
As you navigate the process, it's important to remember that the IRS office handling your appeal is separate from the office that sent you the initial tax notice, which, in turn, may be separate from the office with the IRS Supervisor. Therefore, being clear, specific, and courteous is important throughout the entire process.
Once you schedule your appeal, the actual review itself is generally informal. You may speak to representatives via email, by letter, in person, or over a phone or video call.
It's common for most issues to resolve themselves at this stage without further action or legal proceedings in a courtroom. However, it may be advisable to have a corporate or tax attorney present.
Appealing Your Case
At the appeal, you and your organization may have representation by an attorney, a third-party or internal CPA, or an enrolled agent with the proper IRS authorization. If you fill out Form 2848, you can give an appointed representative power of attorney and full authority to represent you in this matter.
Results of Appeal
After the appeal, you will receive a decision from the IRS. In the event the dispute continues, you do have additional options available.
However, you should first pay the penalty or modified amount due under the terms of the tax notice, as your appeal includes a reimbursement request. That way, you can continue to pursue the appeal process without worrying about compliance issues and late penalties, which could lead to you filing a future dispute.
Once doing so, file Form 843, Claim for Refund and Request for Abatement, to pursue a refund for the amount you believe you were incorrectly required to pay.
If the case continues, the next step is litigation. The matter may escalate to either of the following:
- The US District Court: This generalist court will hear claims about both the Internal Revenue Code and the United States Code.
- The US Court of Federal Claims: This court allows citizens to pursue the federal government and make a claim for money owed. The court will provide a judicial review.
Common Disputes With IRS Notices
Your business may encounter several different types of IRS notices over the years, with some of the most common involving:
- Adjusted tax return amounts
- Adjusted tax bills of money due
- Notices regarding penalties or compliance violations
- Notices requesting additional information or clarity
However, the informal appeals and meetings process will resolve most IRS notices quickly.
It's crucial to remember that any appeal to the IRS must focus on facts and be within the scope of the IRS Code and applicable tax laws. Appeals cannot be based on (or only based on) moral, political, constitutional, religious, or conscientious objections.
Stay on Top of Taxes to Avoid Penalties, Stay Compliant, and Dispute Tax Notices Within the Allowed Period
Knowing how to navigate the IRS appeals process is just as important as navigating taxes themselves. But if you stay organized, regularly audit and update your financial information, and act quickly, you can mitigate the risks of non-compliance and penalties.
At NoticeNinja, we help you navigate your notices and protect your organization. Contact us today to learn more about developing a process for compliance and organized documentation or tax notice tacking.