When your tax return is pulled for audit by the IRS, you usually cannot pick the auditor. You get who you get.
The temperament and approach by the IRS agent assigned to your tax return can vary widely.
This is the nature of any group of people. Some are agreeable and others are not.
This is also a product of the nature of the audit process. The IRS’s computer systems can screen out most compliant tax returns, leaving mostly problem returns to be reviewed by auditors. IRS auditors expect to find problems.
But what if the auditor is more difficult than he or she should be? What if the auditor is being unreasonable?
The Cause of the Problem
As noted above, there are auditors who are just disagreeable. There are auditors whose approach to audits should not be allowed. There is a difference between these auditors and those who are impatient.
The disagreeable auditor is going to be disagreeable. They are probably going to take a position that you do not like. The good news is that these auditors are like this for everyone. This is good as their manager (and other auditors in their same IRS group) knows this. As described below, the IRS manager can help you with these auditors. The IRS manager probably has had numerous complaints about the same auditor.
The impatient auditor is different. Their unpleasant temperament is usually due to (1) you doing something that is making their job more difficult or (2) difficulties they are having with their job or other cases generally.
With inpatient auditors, you might be able to figure out what the problem is by talking to them. Asking about their caseload, what it is like being an IRS auditor, how they like being an auditor, etc. can get them to open up and give you insight as to what the problem is. This information can help you figure out how you can get the auditor to act reasonably.
Make an Effort, But Have Low Expectations
You should remain cordial with the IRS auditor and respond promptly, even if the auditor does not do the same for you.
You should try to build rapport with the IRS auditor. This means that you should try to talk about things other than your taxes. This small talk should focus on the IRS, the IRS auditor, how long the IRS auditor has until retirement, the weather, sports–anything but you and your circumstances.
This does not mean that you should concede any point or offer more information than just what is asked for. When it comes to information about you or your taxes, you should not do either of those things. Just respond to questions asked. Just provide information asked.
If the IRS auditor will not engage in small talk, leave it be. That is just how some auditors are.
Know Your Rights
When it comes to IRS audits, you do have rights. These rights are described in the IRS’s Taxpayer Bill of Rights.
The IRS’s Taxpayer Bill of Rights say that you have:
- The Right to Be Informed
- The Right to Quality Service
- The Right to Pay No More than the Correct Amount of Tax
- The Right to Challenge the IRS’s Position and Be Heard
- The Right to Appeal an IRS Decision in an Independent Forum
- The Right to Finality
- The Right to Privacy
- The Right to Confidentiality
- The Right to Retain Representation
- The Right to a Fair and Just Tax System
These rights are backed by the so-called “10 Deadly Sins.” The 10-Deadly Sins are part of the Revenue Restructuring Act of 1998 (“RRA 98”). RRA98 was part of the Congressional hearings about IRS abuses. You can read about the 10-Deadly Sins here. Just know that these sins are considered deadly as they require the IRS to terminate the auditors employment if they violate them.
You should read through the Taxpayer Bill of Rights and the 10-Deadly Sins and be ready to mention them to the IRS auditor generally if the IRS auditor even suggests that they are going to violate the rules. Doing this politely and asking for the auditor’s manager’s contact information might get the agent back on track.
Talk to the IRS Manager
The IRS group manager’s job is to make sure cases are processing. They ensure that the conveyer belt of cases is moving. They are often hesitant to get involved in cases, but they can and do so when there is a problem.
It is appropriate to contact the IRS group manager if you do not feel that you are being treated fairly, if there is a personality difference between you and the auditor, etc.
You should also contact the IRS group manager if the IRS auditor is not applying the law correctly. The IRS group manager can overrule their auditor. This is somewhat rare, but it does happen. It is more likely to happen if the auditor in question has a track record of being unreasonable. In this sense, the more unreasonable the position, the better.
When It’s Time to Close the Audit
If all else fails, it may be time to ask that the case be written up and closed. You may need to agree to disagree. If the audit has been open for some time, the IRS auditors will usually close the case if you request it.
When closed, in most cases, you will have the opportunity to have the IRS Office of Appeals consider your case. IRS appeals officers are usually higher-caliber employees. Their focus is also on settling cases, not auditing your return.
You probably also have the opportunity to litigate your case. Not that you really want to litigate a tax case. But filing the case can get the case in front of an IRS or government attorney. Most cases are settled with the attorney outside of court.