Receiving a notice that the IRS says your business owes more in taxes is unsettling. However, an IRS assessment is not always the final word. You have the right to challenge what the IRS says you owe, and there is a formal process for doing exactly that. Understanding your options before the deadlines pass can make a significant difference in the outcome.
Why IRS tax assessments are not always correct
IRS assessments can result from calculation errors, missing information or audit findings that did not fully account for your documentation. Paying is not your only option. The IRS has a structured appeals process that gives you a fair opportunity to present your case before a neutral party without going to court.
Keep in mind that this process covers federal taxes only — Nevada state business taxes are handled separately through the Nevada Department of Taxation.
What your options are for disputing an IRS tax assessment
The right path depends on where your case stands:
- Audit reconsideration: If you have new information or missed the original audit deadline, submit a written request with supporting documentation. No form or fee required.
- IRS appeals: If you received a 30-day letter after an audit, you have 30 days to request a review by the IRS Independent Office of Appeals. Disputes of $25,000 or less use a Small Case Request. Larger disputes require a formal written protest.
- U.S. Tax Court: If the IRS issues a Notice of Deficiency, you have 90 days to petition the Tax Court without paying the disputed amount first.
- Collection Due Process hearing: If the IRS files a lien or issues a levy notice, file Form 12153 within 30 days. This stops levy action while your case is under review.
Missing any of these deadlines can permanently limit your options, so respond to every IRS notice before the stated deadline.
What to do to protect your position
Strong documentation is the foundation of any successful dispute. Business records, bank statements, receipts, prior tax returns and IRS correspondence all become critical. The stronger your paper trail, the harder it is for the IRS to sustain its position.
Disputing an IRS assessment on your own is possible in straightforward cases, but the stakes rise quickly when amounts are significant or the IRS has moved toward collection. A tax attorney can identify the strongest arguments, prepare a formal protest, represent you in Appeals conferences and take your case to Tax Court if necessary.
Getting legal counsel involved early typically leads to better outcomes than waiting until the situation has escalated.