Using the FOIAIRS Appeal

Michael Lodge

by Michael Lodge

The story begins with you being audited and the audit is winding down, you don’t like the outcome and wish to appeal the auditors findings.  If your working with a audit representative in the form of a CPA, Enrolled Agent or Tax Attorney you will need to know your opponent’s case.  As the audit administrative efforts are drawing to an unresolved close, obtain as much information as possible about the government’s case:

  1. Hold an informal conference with the IRS agent and their supervisor.
  2. Request a copy of the IRS’s files under the Freedom of Information Act (FOIA) and Privacy Act.
  3. Where the type of tax involved (i.e., income, estate, gift and certain other specified taxes) is subject to the deficiency procedures of the I.R.C, the FOIA request should generally be made shortly after the issuance of the statutory notice of deficiency.
  4. Making a FOIA request nearly immediately after issuance of the notice of deficiency should require the IRS to produce the requested documents prior to the taxpayer’s filing of a Petition in Tax Court or Claims Court, or Complaint in Federal District Court.  Otherwise, the IRS may argue that the taxpayer must rely on Judicial discovery (i.e., two-edged discovery) rather than one-edged FOIA discovery.
  5. Making a FOIA request during audit may offend the agent, who is accustomed to one-edged discovery in his or her favor.
  6. Under FOIA, the IRS has ten days to respond to a formal request, but the IRS Disclosure Office is typically forced to ask for a thirty-day extension.  The taxpayer should agree to the extension, absent extraordinary circumstances, such as a refusal by the IRS to waive its “judicial discovery” objection.
  7. The IRS may raise a number of objections to a formal request, such as disclosure may jeopardize tax investigation, governmental privilege against disclosure of internal thought process, I.R.C. 6103 violation, etc.
  8. Nonetheless, the IRS must product partially privileged documents, albeit in redacted form, and should produce a Vaughn list itemizing the documents withheld and the claimed exemptions.

The issue at hand is that after the IRS has made their determination is for your tax team to be able to look at the auditors work papers as to how they came to their determination.  You have to know what the opponent’s case is.  The government can be tricky and you have to be on the defense to understand their argument and use the tax law to fight against the IRS auditor.

If you have any questions regarding a tax matter send your question to: