Publication 556: Examination of Returns, Appeal Rights, and Claims for Refund

Publication 556, issued by the Internal Revenue Service (IRS), is an essential resource for taxpayers who want to understand the IRS examination process, their appeal rights in case of disagreements, and how to claim a refund for taxes already paid.

Key Topics Covered in Publication 556

Examination of Returns (Audit):

  1. Explains why the IRS selects tax returns for examination and the different types of examinations (correspondence, office, and field).
  2. Details the process of an examination, including what documentation might be requested and how to respond to the IRS.
  3. Clarifies taxpayers' rights during the examination, such as the right to representation and confidentiality.

Appeal Rights:

  1. Outlines the options available to taxpayers who disagree with the IRS's findings during an examination.
  2. Explains the steps involved in filing an administrative appeal within the IRS or taking the case to the U.S. Tax Court.
  3. Provides information on alternative dispute resolution methods like mediation.

Claims for Refund:

  1. Guides taxpayers through the process of claiming a refund for overpaid taxes.
  2. Explains eligibility requirements and deadlines for filing a refund claim.
  3. Offers details on how to calculate the amount of refund due.

Why did the IRS select my tax return for examination?

The IRS uses a variety of methods to select returns for examination, including computer screening, random sample selection, and matching income reported to the IRS by third parties (employers, banks, etc.) with what you reported on your tax return.

What happens during an examination?

The IRS will typically initiate contact by mail, requesting additional information or documentation to support the items reported on your return. You can respond by mail or request an in-person interview with the examiner.

What are my rights during an examination?

Publication 556 emphasizes your rights as a taxpayer during the examination. You have the right to representation by an attorney, accountant, or enrolled agent. You can request copies of documents used by the IRS and ask questions about the examination process.

What if I disagree with the IRS's findings?

If you disagree with the proposed changes to your tax return, you can appeal the decision through the IRS Appeals Office. Publication 556 outlines the steps involved in filing a formal protest and the process of appealing the IRS's decision.

How do I claim a tax refund?

Publication 556 explains how to file Form 1040X, Amended U.S. Individual Income Tax Return, to claim a tax refund. It also details the time limits for filing a refund claim (generally three years from the date you filed your original return).