Stages of a federal dispute
Most federal disputes start with an examination, which may be handled by mail, at an IRS office, or at your business. If the examiner proposes changes you disagree with, you can usually ask for review by the IRS Independent Office of Appeals, which weighs the hazards of litigation and can settle. If no agreement is reached, the IRS issues a notice of deficiency, and the window to petition the Tax Court is short; missing it can close off that route. Alternatively, you can pay and seek a refund in court. Collection disputes, such as those over liens and levies, have their own hearing rights, which also come with deadlines.
Records, statements, and timing
Controversies are often shaped by the record built early. Respond to information requests on time, but review what is being produced before it goes out, and keep copies of everything you submit. Statements made during an audit become part of the file, and inconsistent explanations can raise questions about penalties or, in serious cases, fraud. The IRS may ask you to sign an agreement extending the time it has to assess tax; whether to sign, and on what terms, is a strategic decision. If an examiner suspends an audit without explanation or starts asking about intent, that can signal a criminal referral and calls for prompt advice.
Choosing where to stand
Not every dispute belongs in court, and not every proposed adjustment should be accepted. We weigh the size of the issue, the strength of the documents, the cost of each stage, and whether penalties are involved. State disputes, such as New York income or sales tax audits, follow a separate path with their own agencies and deadlines. We also consider whether the issue will recur in later years, since a resolution for one year can affect positions in others. Then we decide whether to resolve the matter at the audit level, go to Appeals, or prepare for litigation.
