Form 12203: Your Key to Challenging an IRS Audit Finding

Introduction 

Receiving a notice from the Internal Revenue Service (IRS) following an audit can be a stressful experience, especially when you disagree with the proposed changes to your tax liability. Fortunately, the IRS has established a process for taxpayers to challenge these findings. One of the primary tools available for this purpose is Form 12203, Request for Appeals Review.  

An IRS audit, or examination, is a review of an individual's or organization's accounts and financial information to ensure information is being reported correctly, according to the tax laws, and to verify the reported amount of tax is correct. If the IRS proposes changes to your tax return and you disagree with those changes, you have the right to an independent review by the IRS Independent Office of Appeals. 

What is Form 12203? 

Form 12203 is a formal request for an Appeals review of an IRS examination decision when the proposed changes for a tax period are $25,000 or less. This is known as a "small case request." The form allows you to state your case to the IRS Independent Office of Appeals, an independent organization within the IRS whose mission is to resolve tax controversies without litigation in a way that is fair and impartial to both the government and the taxpayer. 

It is crucial to distinguish Form 12203 from other appeal forms. For instance, if you are appealing a collection action, such as a lien or levy, you would typically use Form 12153, Request for a Collection Due Process or Equivalent Hearing. Form 12203 is specifically for post-audit (also known as ‘examination’) disagreements. 

When to Use Form 12203 

You should use Form 12203 when you have received a letter from the IRS detailing proposed changes from an audit and you disagree with those changes. The total amount of proposed additional tax, penalties, and interest for each tax period must be $25,000 or less to qualify for the small case request procedure using Form 12203. 

If the amount in dispute exceeds $25,000, you will need to file a formal written protest instead of using Form 12203. The requirements for a formal written protest are more extensive. 

How to Fill Out Form 12203 

Form 12203 is a relatively straightforward, one-page form. Here is a breakdown of the information you will need to provide: 

•Taxpayer Information: This section requires your name, address, Taxpayer Identification Number (such as your Social Security Number), and contact information. 

•Tax Form and Period: You will need to specify the tax form number (e.g., 1040) and the tax period(s) in question. 

•Disagreed Items: This is the most critical part of the form. You must clearly identify each item you disagree with (e.g., deductions, exemptions, filing status) and provide a detailed explanation of why you disagree. Be specific and provide factual arguments. You can attach additional pages if necessary. 

•Signature: You must sign and date the form. If you filed a joint return, both spouses must sign. 

The Appeals Process 

After you submit Form 12203, the IRS Examination office that conducted the audit will first review your protest. If they cannot resolve the issue with you, they will forward your case to the IRS Independent Office of Appeals. 

An Appeals conference is an informal meeting. You can represent yourself or have a qualified representative represent you. If you choose to have a representative, you must also file Form 2848, Power of Attorney and Declaration of Representative. 

The goal of the Appeals conference is to reach a settlement that is fair to both you and the government. The Appeals Officer has the authority to consider the "hazards of litigation," meaning they can weigh the strengths and weaknesses of both sides' arguments and potentially compromise on the amount of tax owed. 

What if You Don't Reach an Agreement? 

If you and the Appeals Office cannot reach an agreement, the IRS will generally send you a Notice of Deficiency, also known as a "90-day letter." This notice gives you 90 days to file a petition with the U.S. Tax Court. If you do not file a petition within the 90-day period, the IRS will proceed with billing you for the amount it believes you owe. 

Conclusion 

Form 12203 is a valuable tool for taxpayers who disagree with the outcome of an IRS audit. By understanding its purpose and how to use it effectively, you can ensure that your voice is heard and that you have a fair opportunity to resolve your tax dispute. Remember to act promptly, as there are strict time limits for filing an appeal. 

If you found this information helpful, to learn more about fixing your IRS problems, use the QR Code or click the button to watch the free video, “The Ultimate Guide to Solving Your IRS Tax Problems” for more tips and insights on navigating the complexities of the tax world: 

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