IRS appeals rules differ, depending on the amount of taxes you are disputing from an audit. It’s important to know at which thresholds the IRS separates requests.
Smaller cases allow for a less formal appeal request while larger cases require more in-depth communication. Below, you’ll find an overview of these two case determinations and how the IRS assesses them.
Under $25,000: Small Case Request
If the total amount you’re disputing for any one tax year is not more than $25,000, fill in and send Form 12203, Request for Appeals Review,(see sample below) instead of filing a formal protest letter.
Over $25,000: Formal Protest letter
If your proposed audit bill is over $25,000, you must send a letter containing the following eight things:
- Your name (and your spouse’s, too, if your joint tax return was audited), along with your address and a daytime phone number.
- A statement that you want to appeal particular IRS findings to the appeals office.
- A copy of the IRS letter and examination report showing the IRS’s proposed changes.
- The tax year (or years) involved.
- The specific changes that you disagree with.
- A brief statement of the facts supporting your position. (See the sample below for suggestions.)
- The law or authority, if any, on which you are relying—if you have it. The IRS asks for this, but don’t let that throw you; it really isn’t necessary to cite any legal authority in your protest.
- Your signature (and your spouse’s too, if your joint tax return is the subject of the audit). You’ll notice from the sample that you should sign under penalty of perjury, meaning you’ll be guilty of a crime if you’re found to have lied.
The sample below will show you how to weave all this information together. Your entire letter should fit nicely onto one page—unless the IRS examination contains rafts of proposed changes that you disagree with.
CAUTION:
Note that the sample letter is short and to the point. Don’t mention IRS changes, if any, that you’re not contesting. Resist the urge to call the auditor names, like “idiot,” or refer to the IRS as “Big Brother” or “the Gestapo.”
Hurling insults is the surest way to get on the wrong side of the appeals officer and may get you pegged in the computer system as what the IRS calls an “irate.”
The sample below is a skeleton-type protest letter, meaning it provides only a brief statement of your disagreement. Some tax pros write detailed protest letters with copies of all supporting documents.
For a layperson, that can be difficult to do correctly in a short period of time. Because you are not a tax expert, go with the bare-bones approach. You will have plenty of time later to provide the appeals officer with the details.
TIP:
Consult an appeals-experienced tax pro if you are unsure about the appeals process. Ask for advice on drafting the letter and documents to attach. While you’re talking to the tax pro, ask for tips on preparing for the appeals hearing. They have been there and know what kinds of evidence— documents and statements—the appeals officer looks for.
Filing a Protest Letter
Mail your protest letter by certified mail, return receipt requested, to the address on the examination report or 30-day letter. Also send or give a copy to the auditor, just to make sure that everyone knows that you are filing an appeal.
Correspondence sometimes gets lost within the IRS.
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