IRS, State, and Local Tax Notices, Audits, and Appeals FAQs

Read the entire notice promptly, identify the tax year and issue involved, and confirm the response or payment deadline shown on the notice.

A tax notice does not always mean that the government’s position is correct or that the proposed amount is final. The notice may request information, explain a change, propose additional tax, deny a credit, or describe collection or appeal rights.

You should:

• Keep the complete notice and envelope
• Identify the tax year, form, and issue involved
• Compare the notice with the filed return and available records
• Note all response, protest, appeal, and payment deadlines
• Gather relevant supporting documents
• Follow the response instructions stated in the notice

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IRS / State / Local Tax Audits & Appeals

Contacting ABC CPAs does not extend or suspend any deadline. Until ABC CPAs accepts the engagement in writing, the taxpayer remains responsible for protecting all applicable deadlines.

The answer depends on the type of notice, whether the amount is proposed or already assessed, the available appeal rights, and the effect of payment on interest, penalties, and procedural options.

Some notices propose changes and are not yet final bills. Others reflect assessed balances or collection activity. A taxpayer should not assume that every notice requires immediate full payment or that payment eliminates the right to dispute the matter.

Before deciding, review:

• Whether the amount is proposed or assessed
• The deadline to respond or protest
• Whether interest continues to accrue
• Whether payment affects appeal or court rights
• Whether the taxpayer agrees with any portion of the notice

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The appropriate response should be determined from the specific notice and the taxpayer’s facts.

The requested records depend on the return, tax type, issues under examination, and the government agency’s information request.

Records may include:

• Filed and amended tax returns
• General ledgers and trial balances
• Bank and credit card statements
• Sales, revenue, and deposit records
• Invoices, receipts, and canceled checks
• Payroll reports and employment tax filings
• Forms W-2, 1099, K-1, and related schedules
• Fixed asset and depreciation records
• Loan, capital contribution, and distribution records
• Inventory records
• Contracts, leases, and intercompany agreements
• Electronic accounting data
• Documents supporting deductions, credits, or tax positions

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Records should be reviewed and organized before submission. Taxpayers should respond to the actual request and avoid submitting unrelated or unexplained material without understanding its relevance.

Incomplete documentation may limit the taxpayer’s ability to support a reported position.

A taxpayer may have administrative appeal or protest rights, but the available procedure and deadline depend on the agency, procedural stage, and type of notice issued.

Different notices may provide different methods and deadlines for:

• Responding to proposed adjustments
• Filing a formal protest
• Requesting an administrative appeal
• Challenging collection action
• Filing a refund claim
• Seeking judicial review

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The taxpayer should rely on the exact notice received and act before the stated deadline. Missing a deadline may limit or change the available options.

Tax laws, agency procedures, forms, and appeal requirements may change. Applicable requirements should be confirmed for the relevant period and the specific notice received.

ABC CPAs may assist individuals, businesses, nonprofit organizations, U.S. subsidiaries, and foreign-parented companies with federal, state, and local tax matters.

Depending on the engagement, assistance may include:

• Reviewing the notice and applicable deadlines
• Comparing the notice with filed returns and accounting records
• Identifying the issues and information requested
• Organizing supporting documentation
• Preparing written responses
• Communicating with the tax authority under appropriate authorization
• Assisting with examinations and information requests
• Evaluating proposed adjustments
• Supporting administrative protests and appeals
• Reviewing penalty relief or remediation options
• Coordinating amended returns or related filings
• Working with legal counsel when needed

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ABC CPAs does not guarantee that a notice will be withdrawn, a penalty will be removed, an audit will result in no change, or an appeal will be successful.

The available options depend on the agency, tax type, procedural stage, deadline, records, and specific facts.

Prior government tax audit experience can provide practical insight into how tax authorities evaluate records, identify issues, prepare information requests, and assess a taxpayer’s explanations and supporting documents.

Jenny You, CPA, has distinctive professional experience as a former government tax auditor. Her background strengthens ABC CPAs’ understanding of the examination process and the documentation and procedural issues that may arise during a tax audit.

This experience may help ABC CPAs:

• Evaluate issues raised by the tax authority
• Anticipate likely questions and document requests
• Organize records clearly and effectively
• Identify gaps or inconsistencies before submission
• Communicate effectively with auditors
• Help clients understand the examination process
• Support responses, protests, and administrative appeals when appropriate

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IRS / State / Local Tax Audits & Appeals; Our Professionals

Prior audit experience does not guarantee a favorable result. The outcome of any examination depends on the applicable law, facts, records, procedural stage, and position taken by the tax authority.