Andrew Bosserman, founder of Boss Tax Law, professional headshot in navy suit and patterned tie Andrew Bosserman Founder, Boss Tax Law

How to Disagree With the IRS: The Administrative Ways to Fight Back

Andrew Bosserman, founder of Boss Tax Law, professional headshot in navy suit and patterned tie

By Andrew Bosserman

Founder, Boss Tax Law

Chapter six: why a significant share of IRS assessments are wrong, and the administrative steps that fix them before a court is ever involved.

An 88-year-old woman called me in tears. The IRS had sent a letter saying she owed hundreds of thousands of dollars on a house she sold, a home she had lived in for over 40 years.

The IRS was wrong. But she had been too scared to respond to the notices, and by the time she called me the debt was legally assessed.

I was able to fix it. Chapter six of my book, The IRS Survival Guide, is about the right that would have saved her months of trouble: the right to disagree.

Video

Watch my full video on this topic below, or watch on YouTube.

The IRS is not infallible

Their systems process hundreds of millions of returns and notices. Errors happen more often than people assume, and a significant share of assessments are incorrect or based on incomplete information.

There are four good reasons to push back:

  • You may simply be right. The IRS makes plain mistakes.
  • Even a partial win helps. Where there is a gray area, appealing often reduces or removes the assessment.
  • Documentation changes everything. If you did not provide it before, providing it now can end the matter.
  • Your rights are time sensitive. Miss a deadline and you can permanently waive your right to appeal or go to court. Even where you do not lose the right outright, the process gets much harder.

How the dispute process works

Step one, respond to the notice. It might be a CP2000 saying the IRS thinks you owe more, or a report issued after an audit. Whatever it is, this is your easiest chance to resolve the matter. A clear, documented response often closes the case here.

If you are in an audit, you can also request a conference with the agent's manager. In practice I find supervisors often back their agents, so set your expectations accordingly.

Step two, file a protest and go to IRS Appeals. The IRS Independent Office of Appeals is a separate part of the IRS designed to be neutral. Most cases that reach Appeals settle without going to court. Their goal is to keep cases out of court and save time and money on both sides.

Audit reconsideration is the other route. If tax was assessed and you have new information, or you believe the audit process was flawed, you can request reconsideration even after the fact.

If all of that fails, you still have the right to challenge the IRS in court. That is the subject of the next chapter.

Back to the woman who sold her home

She had lived in the house as her primary residence for over 40 years, which meant she qualified for the primary residence exclusion from capital gains. She likely owed nothing.

The IRS system saw a 1099 reporting a property sale and flagged it as taxable. She put the notices in a drawer. By the time she reached me the tax was legally assessed, and we had to work through audit reconsideration and months of back and forth to fix something a single letter would probably have resolved at the start.

The takeaway is simple. When the IRS contacts you, respond. Every time. Especially if you think they are wrong.

Go to TheIRSSurvivalGuide.com to get your free PDF copy of my book today.