IRS Audits and Appeals
Most tax assessments begin at the Tax Audit phase. An Audit occurs generally as a result of a computer program by the IRS targeting the taxpayer’s return as having some financial information that fits the criteria as established by the computer as being subject to a high risk of noncompliance by taxpayers.
Once an audit is concluded by an agent, the next process is a meeting with the manager of the agent to negotiate with the manager to resolve the differences.
In the event that an IRS Audit cannot be resolved successfully for a taxpayer at the local level, there is an Appeals procedure whose job is to try and settle cases prior to litigation. Most Appeals are done via correspondence with telephone conferences but sometimes it is more advantageous for the taxpayer to appear in person.
Tax Court Litigation
After the Appeals process, there is the U.S. Tax Court or the U.S. District Court in which the issue can be litigated. To go to District Court, the tax must be paid and the taxpayer must sue for a refund. At the Tax Court, no tax has to be paid before the assessment can be contested.