Overcome Closed or Signed-Off Audits

Today TaxMama® hears from someone in the TaxQuips Forum who was overwhelmed. Let summarize. “After a grueling audit, and a lot of personal tragedies, the IRS agent went back and reviewed the medical mileage. Despite having detailed evidence to prove the mileage, the reason it was medical mileage, and the reason the treatment needed to be so far from home for an autistic child, the IRS examiner arbitrarily denied 50% of the deductions. Taxpayers were so worn out and depleted, they just gave up and signed the audit agreement, even though they were entitled to the deductions. Now faced with paying $1,900 from funds they don’t have, the taxpayer wants to know if there is a way to fix this?”

 This taxpayer has been through some really tough times, so I won’t be linking to their question.

Well, first of all, I have bad news on this one. Once you sign that IRS audit and accept it, your appeal options, Tax Court, etc are all gone.

HOWEVER! Never give up. TaxMama always finds a way!

You can try to request an Offer in Compromise based on doubt as to liability. If you were bullied by an auditor while you were already dealing with so much trauma in your life, you just might be able to qualify.

There are Three (four) ways to go about this.

1) Try to file an amended return and explain why you are filing it – about signing under duress and not understanding that you WERE correct and entitled to the deductions.
2) Use the Form 656 package for Offers in Compromise and READ the information about Doubt as to Liability. You may be able to do this yourself.
3) You can contact the Taxpayer Advocate Service and ask them if they can help you.
4) File a complaint with the TIGTA (the Treasury Inspector General for Tax Administration) offices about abuse of power.
This is definitely a last resort kind of thing.

See, you do have some options – even after you have signed your rights away.

Meanwhile, insist that IRS put the collections actions on hold while you try to resolve this. Ask nicely and they will.

And remember, you can find answers to all kinds of questions about fixing impossible situations and other tax issues, free. Where? Where else? At www.TaxMama.com.

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