Appeals request rejected

[Jack from Ohio]

Final audit report was issued. This was an audit of numbers on Sch C pertaining to her business for 2005 & 2006. At the initial audit we provided all information requested. The auditor rejected some and then asked for additional information. We then provided all the additional information she requested.

Here is where it gets absurd. Final audit report states that the lady has a hobby instead of a business for both 2005 & 2006. There was NO discussion of the question of her having a business in the audit process. She also declared that business claimed in 2007 was disallowed as well. The audit never asked for any info about 2007.

Now it gets outrageous. We filed for consideration by appeals. Filled out all the documentation stating our disagreements with the auditors findings. We were waiting on an appointment time to get this settled. We received in the mail today, a letter from the auditor denying the appeals request on the grounds that there was not enough "disagreement" to go to appeals.

Question 1) Can she arbitrarily audit 2007 without notifying the client?

Question 2) Does she (the original auditor) have the authority to deny the appeals request?

I have several very special names for this lady that are not proper to post here.

Any experience or advice from you seasoned veterans here would be appreciated.

[BulldogTom]

You have the right to ask for a conference with the audtors supervisor. Put the request in writing. If they don't grant the request, ask for an immediate Notice of Deficiency, file the tax court petition, and you will get to appeals right away.

Tom

Lodi, CA

[jainen]

>>ask for a conference with the audtors supervisor<<

Also request a copy of the auditor's workpapers. Give them only a few days to respond, keeping an eye on any time frame stated or implied in the audit report.

When you meet with the supervisor, do not discuss any tax issues, only the procedural ones including your right to appeal and the lack of due process for 2007. Likewise if you end up filing a tax court petition, include only the minimum request without explaining your position until you get a regular hearing. In everything you do from this point, watch the calendar carefully.

Like bureaucrats everywhere, IRS auditors are usually fairly predictable. When they act irrationally, you have to assume something else that you don't know about might be going on. It could be something as ordinary as the employee mentally collapsing under her impossible workload, it could be extra pressure from higher-ups for any number of reasons, or it could be a special study or investigation. In any case, you will not be treated fairly until you get beyond this office, so don't bother trying to convince the supervisor that it isn't a hobby.