In dealing with the Internal Revenue Service (IRS) or the South Carolina Department of Revenue (SCDOR), you may not achieve all of the desired outcomes during the audit phase of a case. There are many reasons for this, including the inability of the auditor or examiner to take “hazards of litigation” into consideration during the audit phase. Disagreements may occur between the auditor or examiner and the taxpayer or her representative over interpretations of the tax laws. For these reasons and others, it is often necessary for the taxpayer or his representative to formally disagree with the auditor or examiner and move the case on to the appeals function of the IRS or SCDOR.
The Appeals function is primarily geared toward resolving disagreements about particular legal issues and generally provides the taxpayer with a review of the important issues by a government settlement officer. Many cases are settled on favorable terms to both the government and the taxpayer during the appeals process. The entire process is designed to avoid, where possible, expensive court proceedings or litigation. Even in cases where litigation is not avoidable, the appeals procedure can assist in resolving secondary issues and in identifying specific issues for litigation, thus saving time in court.
When you request an Appeals conference, you may also need to file a formal written protest. This is required in all employee plan and exempt organization cases and in all partnership and S corporation cases. In all other cases, unless the taxpayer qualifies for the small case request procedure or other special appeal procedures, the taxpayer must submit a formal written protest within the time limit specified in the letter it received.
If you or your business has been through an audit or examination by the IRS or SCDOR and you are not satisfied with the results, do not give up until you have been though the Appeals process. There is a specific time period in which you must request Appeals to review your case, so do not delay.