Dealing with IRS appeals can be intimidating, especially when you disagree with their findings. But don’t worry – you have options. Learning how to write a disagreement letter to the IRS is a beneficial skill that can help you resolve tax disputes.
In this guide, we’ll walk you through the step-by-step process of how to write a disagreement letter to the IRS, giving you the tools and knowledge you need to effectively communicate your position to the IRS.
When the IRS sends you a notice or makes a decision you don’t agree with, your first instinct might be to pick up the phone. While that’s not necessarily wrong, a well-crafted disagreement letter can often be more effective. It gives you the chance to lay out your arguments, provide supporting evidence, and create a paper trail of your communication with the IRS.
Understanding the Importance of a Disagreement Letter
Before we discuss how to write a disagreement letter to the IRS, let’s talk about why it’s so important. A disagreement letter, also known as a tax refund request or an agreement form, serves several purposes.
Notifying the IRS of Disagreement
The disagreement letter officially communicates your disagreement with the IRS’s decision. This ensures that your position is formally documented and acknowledged by the IRS.
Creating a Written Record
When you submit a disagreement letter, you create a written record of your stance and the arguments supporting your position. This written record can serve as strong evidence in any subsequent proceedings or communications with the IRS.
Prevention of Further IRS Action
Submitting a disagreement letter can effectively halt potential actions by the IRS for tax problems, such as issuing final notices or initiating the process of filing a federal tax lien. It serves as a proactive step in preventing escalation of the issue while your case is under review.
Demonstrating Willingness to Cooperate
The act of submitting a disagreement letter demonstrates your commitment to resolving the issue through voluntary compliance. It shows that you are actively engaged in addressing the matter and willing to cooperate with the IRS to reach a satisfactory resolution.
Remember, the IRS is not infallible. Mistakes can happen, and you have the right to challenge their decisions if you believe they’re incorrect. The Taxpayer Bill of Rights explicitly states that you have the right to challenge the IRS’s position and be heard.
How to Write a Disagreement Letter to the IRS
Now that we understand the importance of a disagreement letter, let’s break down the process of how to write a disagreement letter to the IRS into manageable steps. This process can also be applied to similar situations, like when you receive a recovery penalty notification or penalty notification.
1. Don’t Sign the IRS Report
The first and most important step in the IRS appeal process is to not immediately sign and return your copy of the report. Signing the report indicates that you agree with the findings.
Instead, take the time to review the report thoroughly and prepare your disagreement letter. This is especially important if you’ve received proposed adjustments or a letter proposed by the IRS.
2. Gather Your Information
Before you start writing, collect all relevant documents and information. This should comprise the IRS notice or report that you are disputing, as well as your tax returns for the relevant year(s).
Include any supporting documentation as well, such as receipts or bank statements, that can strengthen your argument. It is also beneficial to have notes from any previous correspondence with the IRS, including details like a contact telephone number or specific instructions they may have provided.
Having all this information at hand will make it easier to craft a comprehensive and accurate letter. This will also be useful if you need to request appeals or file a formal written protest later on.
3. Structure Your Letter Properly
When it comes to how to write a disagreement letter to the IRS, structure is key. The IRS provides clear guidelines on what your letter should include:
- Your name, address, and contact information.
- A statement expressing your desire to appeal the IRS’s findings.
- The tax period(s) in question.
- A list of the items you disagree with and why.
- Facts supporting your position.
- Any relevant law or authority supporting your case.
4. Start with a Clear Statement of Intent
Begin your letter by clearly stating that you’re writing to disagree with the IRS’s findings. This applies even if you only partially disagree with their assessment. For example:
“I am writing to formally disagree with the findings in your notice dated [DATE] regarding my [YEAR] tax return.”
This immediately sets the tone and purpose of your letter. It also provides a clear reference point for the IRS.
5. Address Each Disputed Item Separately
For each item you’re disputing, provide a clear explanation of why you disagree. Use facts and, if possible, cite relevant tax laws or regulations. According to the Journal of Accountancy, it’s a good idea to start with any items you agree with before moving on to the disputed points.
This shows that you’ve carefully reviewed the IRS’s findings and are only contesting specific issues. This approach can be particularly helpful when dealing with issues like a proposed trust or if you’re seeking more than just a simple adjustment.
6. Provide Supporting Evidence
For each disputed item, include any relevant supporting documentation. This could be receipts, bank statements, or other records that support your position. Make sure to reference these documents clearly in your letter.
For instance, you might say, “Please see the attached receipt for [item], which supports my claim.” This helps the IRS easily connect your arguments to the relevant proof.
7. Use a Professional Tone
While it’s natural to feel frustrated or angry, maintain a professional and respectful tone throughout your letter. Stick to the facts and avoid emotional language or personal attacks.
Remember, the person reading your letter is simply doing their job, and a respectful tone is more likely to elicit a positive response. This is particularly important if you’re hoping to schedule an appeals conference or negotiate an installment agreement.
8. Include a Penalties of Perjury Statement
At the end of your letter, include a statement declaring that your information is true to the best of your knowledge. The statement should read something like:
“Under penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct, and complete to the best of my knowledge and belief.”
This statement adds legal weight to your letter and underscores the seriousness of your claims. It also protects you from potential legal ramifications if any information is later found to be inaccurate.
9. Sign and Date Your Letter
Don’t forget to sign and date your letter. This makes it an official document and verifies its authenticity. It also helps the IRS keep track of correspondence and ensures that your letter is properly recorded in their system.
Sample Outline for a Disagreement Letter to the IRS
To help you visualize how to structure your letter, here’s a sample outline:
- Header: Your name, address, contact information, date, and IRS office address.
- Opening: Statement of intent to disagree and reference to IRS notice.
- Body: List of disputed items, explanation for each disputed item, and supporting evidence.
- Closing: Request for appeal, penalties of perjury statement, and signature.
Additional Tips for Writing Your Disagreement Letter
Now that we’ve covered the basics of how to write a disagreement letter to the IRS, here are some additional tips to make your letter as effective as possible:
Maintain Conciseness
Keep your letter brief and to the point while still providing the necessary information. The IRS handles many cases, so concise communication increases the likelihood of your letter being read and understood thoroughly.
Utilize Headers and Bullet Points
Use headers and bullet points to organize your arguments and enhance readability. This format helps ensure that all essential details are presented and that no critical points are missed by the reader.
Conduct a Thorough Proofreading
Thoroughly proofread your letter before submitting it to the IRS, as errors or typos can damage your credibility. Consider having someone else review it for accuracy and clarity.
Keep Copies of Documents
Keep copies of your letter and accompanying documents. Sending your letter via certified mail can provide proof of delivery, which is essential in case of future disputes or inquiries.
Ensure Timely Submission
Respond promptly to IRS notices, as there are often deadlines for submitting documentation or challenging their decisions. Meet the deadline to avoid complications or missed opportunities for resolution.
Consult a Tax Professional
Learning how to write a disagreement letter to the IRS is an important skill that can help you protect your rights as a taxpayer.
With the steps and tips outlined in this guide, you can craft a clear, compelling letter that effectively communicates your position to the IRS. This can be especially important when dealing with issues like excise taxes, where the rules can be complex.
Remember, the key to a successful disagreement letter is to be clear, factual, and professional. Provide as much supporting evidence as possible, and don’t be afraid to cite relevant tax laws or regulations. While dealing with the IRS can be stressful, a well-written disagreement letter can go a long way toward resolving your tax issues.
If you need help understanding the ever-changing landscape of tax law, don’t hesitate to reach out to a qualified tax professional. Creative Tax Solutions can help ensure that your rights are protected and that you’re presenting the strongest possible case to the IRS. For inquiries, feel free to contact us today for a free consultation.
