When An Audit Doesn’t Go Your Way



The IRS reports that they closed 509,917 tax return audits in Fiscal Year 2020, resulting in more than $12.9 billion in recommended additional tax.

How can you help your clients dispute liability when an IRS audit doesn’t go their way? When a taxpayer disagrees with changes to their tax return proposed by the IRS, they have three basic responses available. Two of them can be handled by most tax professionals.

  1. Appealing an Audit Determination is exactly what it sounds like. The IRS determined that the taxpayer owes a certain amount, and the taxpayer disagrees. This appeal is done through the United States Tax Court. While tax professionals can represent taxpayers in Tax Court, it requires that they be admitted to Tax Court first by taking a special exam. This could present a hitch in the defense plan, among a few others.
  2. Audit Reconsideration is a process that the IRS uses to reevaluate the results of a prior audit. The taxpayer essentially disagrees with the findings of the original audit, so it's a great tool to have in one’s arsenal. It can be used in a lot of circumstances and it's a relatively straightforward process, but not without its rules and limitations.
  3. Doubt as to Liability Offers in Compromise (DATL) is when there is a genuine dispute as to the existence or amount of the correct tax debt under the law. These are different from Doubt as to Collectability Offers because we're not saying we can't pay; we're saying we don't think we should have to pay. If anything, they're more like audit reconsiderations, but with a key difference. It's a good tool for when the statute clock runs out, or when your past attempts at appeal have been unsuccessful.

In my December 9th presentation at MICPA’s Learning Showcase session Respectfully Disputing Tax Liability, I’ll cover the ins and outs of an IRS audit and how you can help your clients when an audit outcome is less than favorable. I hope to see you there!

Venar Ayar
Principal Attorney and Founder of Ayar Law
Master of Laws in Taxation

Ayar Law is a boutique Michigan tax law firm located in the Detroit area, representing people and businesses with state and federal tax problems. No two tax problems are the same and unique circumstances may require creative solutions. We favor an individualized approach to minimize our clients’ exposure and protect their assets either in the United States or abroad. Whether your client has millions in assets to protect or no idea how they can pay anything to settle their tax debt, we can help put them in the best possible position relative to their tax problems. Because we are a focused, boutique law firm, our tax attorneys give clients the personal attention and individualized service they will not receive with larger law firms or big tax resolution companies.

Vemar Ayar



30095 Northwestern Hwy., Suite 102, Farmington Hills, Michigan 48334-3284
Phone: (800) 571-7175 Fax (248) 436-8117 Website: Email:

Source: Ayar Law

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