The IRS operates under strict statutory timelines and structured dispute‑resolution procedures. Most assessments must occur within three years of the return’s due date or filing date, the Assessment Statute Expiration Date. Dissolving corporations may request prompt assessment, reducing the window to 18 months. Exceptions apply for false returns, fraud, listed transactions, foreign transfer failures, and other statutory triggers. When the IRS proposes additional tax, it issues a 30‑day letter offering appeal rights.
If no agreement is reached, the IRS sends a 90‑day letter (notice of deficiency). Tax Court petitions must be filed within 90 days (150 if abroad). Tax Court hears cases before assessment or payment.
Once assessed, the IRS has ten years to collect, the Collection Statute Expiration Date. The period may be suspended for time abroad, bankruptcy, offers in compromise, installment agreement requests, innocent spouse claims, estate tax extensions, and Collection Due Process hearings. Extensions require written consent, and taxpayers may refuse. Fraud has no statute of limitations.
Filing an amended return does not extend the statute. If received within 60 days of ASED expiration, the IRS has 60 days to assess additional income tax. The IRS may examine books, records, and testimony under its investigative authority.
Taxpayers retain core rights: to disagree, appeal, meet with managers, transfer cases, be represented, and receive receipts. Under FOIA, anyone may request IRS records with proper identification, fee commitments, and record descriptions.
The IRS may require substantiation under penalty of perjury. When hardship or unresolved issues arise, the Taxpayer Advocate Service may intervene.
During examinations, the IRS may contact third parties with required notice. Returns are selected by scoring systems, mismatched information, public sources, or compliance studies. Exams may be by mail or in person. Repeat exams may be discontinued if the same items were examined in the prior two years with no change.
A CP2000 proposes adjustments when payer information does not match the return. It is not a bill and allows agreement, partial agreement, or disagreement. Taxpayers may request extensions and may respond directly or through authorized representatives.
Field examinations occur at the taxpayer’s home, business, IRS office, or representative’s office. Representation requires Form 2848. Exams generally occur where records are kept, and cases may be transferred for convenience.
Exams conclude with a closing conference. If accepted as filed, the taxpayer receives a no‑change letter. If changes are proposed, the taxpayer may agree or appeal. Fast‑track mediation is available for many nondocketed disputes, including audits, offers in compromise, trust fund penalties, and collection issues.
A 30‑day letter includes the Revenue Agent Report, agreement forms, and Publication 5. Taxpayers have 30 days to accept or appeal. Audit reconsideration is available when assessments remain unpaid and new information or missed correspondence exists.
Appeals conferences require disagreements based on tax law, not moral or political objections. Taxpayers may file a written protest or a small case request when the amount is $25,000 or less. This differs from the Tax Court small case procedure for disputes of $50,000 or less.