There are two options available when the IRS audit is complete and you have been assessed additional taxes, penalties and/or fines:
- Accept the demands of the IRS and pay the tax debt in full.
- Appeal the demands of the IRS in court.
Recently there have been thousands of taxpayers who have filed petitions in court after the IRS fined them as a result of an audit. Appealing your case in court is an easy process even without a tax counselor, but what are your chances of winning a case against the IRS without the help of a seasoned tax negotiator? This is the question to consider. Do you have confidence in your knowledge of tax law and your negotiation skills? Remember the IRS has audit documentation they believe proves you owe additional taxes.
It is possible your tax problem can be resolved without going to court. Once the IRS learns you will be questioning their finding in court, they will often offer you a payment option for less than your owe. If you are in agreement with the adjusted amount, you can accept and pay the tax debt.
However, if the IRS does not offer a reduction, you may still be able to obtain a lesser tax debt once the judge hears your plea. Almost 50% of taxpayers filing for a court appeal end up reducing their tax debt. Be cautious when filing your petition. If the court finds you have no case, you can be fined for trying to use the system to gain a tax debt reduction. Nevertheless, do not let this frighten you. To ensure you have a legitimate case, you can benefit from having a tax expert help you.
Once you petition your case in court, you will have some time to find a resolution for your tax debt. Filing in court gives you a year to look for a settlement plan you can handle. Tax professionals can assist you in learning what IRS tax debt relief programs are available to you. Use your time wisely to get your finances in order.
On a final note, even though you delay the IRS from collecting your tax debt by filing a petition in court, remember that your tax liability continues to increase daily with added interest and penalties. It is best to settle your tax debt out of court.