Overview

An IRS examination report (audit report) lists proposed changes to your return. Small businesses should treat the report as a deadline-driven opportunity to preserve rights and avoid unnecessary tax, penalties, or interest. The IRS Office of Appeals exists to resolve disputes without litigation; use it to present facts, law, and equitable arguments (IRS Appeals overview: https://www.irs.gov/appeals).

Quick strategy checklist

  • Read the notice carefully and note the response deadline shown on the notice (do not assume a single standard period; notices commonly show 30 or 90 days). Missing the deadline reduces your administrative options.
  • Gather documentary evidence (ledgers, receipts, contracts, bank records, third-party reports).
  • Consider professional representation—CPAs, enrolled agents, or tax attorneys often improve outcomes. Use Form 2848 (Power of Attorney) if you want a representative to speak for you. See our guide on using a POA: Using a Power of Attorney (Form 2848) During an Audit or Appeal.

Step-by-step: How to file an appeal

  1. Confirm your notice type and deadline. The notice will tell you how to request an Appeals review or your right to petition Tax Court. Respond in writing by the deadline.
  2. Prepare a clear administrative record. Create a short cover letter that states the issues in dispute, the dollar amounts, and the relief you want. Attach organized exhibits labeled A, B, C.
  3. Submit your request. Depending on the case you will either file a written protest (customary for larger corporate adjustments) or a simpler request for review—follow instructions on the notice and the IRS Appeals page (https://www.irs.gov/appeals).
  4. Monitor and follow up. Appeals may set a conference by phone, video, or in-person. Respond promptly to requests for more detail.

What evidence matters most

  • Source documents that directly support a deduction or income position (invoices, bank deposits, contracts, payroll records).
  • Third-party corroboration (vendor statements, processor reports, or certified transcripts).
  • A concise narrative tying documents to tax law or established practice—don’t expect the Appeals officer to assemble your case from raw files.

Appeals conference strategy

  • Be concise and issue-focused. Appeals officers decide on legal and factual issues; present only what matters to the disputed item.
  • Use chronological exhibits and a one-page summary for each issue.
  • If you expect complex technical points, submit an expert report in advance and disclose methodology. Our article on preparing for Appeals conferences explains what officers want to see: Appeals Conference Prep: What Evidence Appeals Officers Want to See.

Timing and next steps if you lose the administrative appeal

If the Office of Appeals upholds the adjustment, you’ll receive a decision letter that explains your remaining options and deadlines. Common next steps include: paying the assessment, requesting abatement of penalties, or litigating in U.S. Tax Court (if you received a statutory notice of deficiency) or a federal district court. For procedural rules and timelines, consult the IRS Appeals pages (https://www.irs.gov/appeals) and the U.S. Tax Court (https://www.ustaxcourt.gov/).

Common mistakes small businesses make

  • Waiting to assemble records until after an appeal is filed.
  • Overloading the record with irrelevant documents—clarity beats quantity.
  • Missing deadlines shown on the notice and failing to file for an extension where allowed.

Practical tips from practice

In my practice representing small businesses, the most effective appeals focus on a single clean narrative supported by a small set of high-value exhibits (bank statements, contracts, and contemporaneous logs). When possible, reconcile third-party reports (merchant processors, 1099-Ks) before the conference; that often resolves income discrepancies without litigation.

Related FinHelp resources

Authoritative sources

Professional disclaimer

This article explains general strategies for appealing an IRS examination report and does not replace personalized legal or tax advice. Consult a qualified tax professional for advice specific to your business.