Understanding and Crafting an IRS Formal Protest Letter Sample

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Notice [Notice Number] Dated [Date of Notice] - Tax Year(s) [Tax Year(s)]

Dear Sir or Madam,

This letter is a formal protest against the additional tax assessment of $[Amount] for the tax year(s) [Tax Year(s)], as detailed in your Notice [Notice Number] dated [Date of Notice]. I disagree with this assessment because [briefly state your main reason, e.g., I believe the income reported was inaccurate due to a clerical error].

I am requesting a review of this decision by the IRS Appeals office. The basis for my disagreement is as follows:

1. [Specific Reason 1]: [Explain in detail why you disagree. For example, if the IRS claims you had unreported income, explain why this income was either reported elsewhere, is not taxable, or was a mistake in their records. Provide specific dates, amounts, and any relevant account numbers.]
2. [Specific Reason 2, if applicable]: [Continue with further points of disagreement. If there were deductions you claimed that the IRS disallowed, explain why you believe they should be allowed, referencing IRS publications or your own records.]

I have attached copies of the following supporting documents:

• [List of supporting documents, e.g., Bank statements for the relevant period, corrected income statements, receipts for claimed expenses, relevant correspondence]
• [Document 2]
• [Document 3]

I request that you reconsider the assessment based on the information provided. Please contact me at your earliest convenience to discuss this matter further. I am available by phone at [Your Phone Number] or via email at [Your Email Address].

Thank you for your time and attention to this important matter.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Penalty Assessment in Notice [Notice Number] Dated [Date of Notice] - Tax Year(s) [Tax Year(s)]

Dear Sir or Madam,

I am writing to formally protest the penalty of $[Amount] assessed in your Notice [Notice Number] dated [Date of Notice] for tax year(s) [Tax Year(s)]. I believe this penalty was assessed in error because [briefly state your reason, e.g., I made a good faith effort to comply with tax laws and the failure was due to reasonable cause].

The penalty in question is for [state the reason for the penalty, e.g., failure to pay on time, failure to file on time, etc.]. I understand the importance of timely and accurate tax filings, but in this instance, I believe there are mitigating circumstances that warrant the removal or reduction of this penalty.

Specifically, the circumstances that led to [the issue, e.g., the late payment] were:

1. [Detail the reasonable cause. For example, if you were ill, explain the nature of the illness and how it prevented you from meeting the deadline. If there was a natural disaster, explain its impact.]
2. [Explain any steps you took to rectify the situation once you were able.]

I have attached copies of documentation that supports my claim of reasonable cause, including:

• [List of supporting documents, e.g., Doctor's notes, evidence of a natural disaster, proof of attempts to pay before the deadline, relevant correspondence]

I respectfully request that you waive or abate this penalty. I have since [explain what you have done to resolve the underlying tax issue, e.g., filed the overdue return and paid the tax due]. Please let me know if you require any further information from my end.

Thank you for your consideration.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest of Audit Findings - Tax Year(s) [Tax Year(s)]

Dear Sir or Madam,

This letter constitutes my formal protest concerning the findings of the recent IRS audit for tax year(s) [Tax Year(s)], as outlined in the [Audit Report Name/Number] dated [Date of Report] and Notice [Notice Number] dated [Date of Notice]. I disagree with several aspects of the audit’s conclusions, particularly regarding [mention the key areas of disagreement, e.g., the classification of certain business expenses and the valuation of assets].

During the audit, I provided all requested documentation. However, I believe the auditor may have misinterpreted certain information or overlooked critical details. My specific points of contention are:

1. [Specific Area of Disagreement 1]: [Explain your argument clearly. For example, if the auditor disallowed a business expense, explain why it is a legitimate business expense according to IRS guidelines, referencing specific publications if possible. Provide copies of receipts, invoices, or other proof.]
2. [Specific Area of Disagreement 2]: [Address another point of contention, such as the valuation of an asset. Explain your valuation method and why it is more appropriate than the auditor’s.]

I have enclosed copies of documents that further support my position, including:

• [List of supporting documents, e.g., Detailed ledgers, contracts, appraisals, expert opinions, relevant IRS publications]
• [Document 2]

I request that my case be transferred to the IRS Appeals office for a thorough review. I am confident that a closer examination of the facts and evidence will lead to a different conclusion. I am available to discuss this matter further and provide any additional clarification needed.

Thank you for your attention to this critical issue.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Incorrect Income Reporting - Tax Year(s) [Tax Year(s)]

Dear Sir or Madam,

I am writing to formally protest the income reported on Notice [Notice Number] dated [Date of Notice] for tax year(s) [Tax Year(s)]. The notice indicates an income of $[Amount], which I believe is incorrect due to [briefly state the reason, e.g., an error in reporting from a third-party source].

The specific income item in question is [describe the income, e.g., a 1099-MISC from Company X, or a deposit that was a loan repayment]. I received a Form [Form Type, e.g., 1099-MISC] from [Payer's Name] reporting $[Amount] in income. However, this amount is inaccurate because [explain the reason for inaccuracy, e.g., it was a gross amount and included deductible expenses, or it was a reimbursement for expenses incurred].

To support my claim, I have attached the following documents:

• A copy of the Form [Form Type] issued by [Payer's Name].
• [Explanation of why the reported amount is incorrect, e.g., A corrected Form 1099-MISC if available, or documentation showing the nature of the payment like a loan agreement or expense reports.]
• Bank statements showing the actual transaction if relevant.

I respectfully request that the IRS revise the income assessment for tax year(s) [Tax Year(s)] to reflect the accurate amount of taxable income. I am prepared to provide further documentation or clarification as needed.

Thank you for your prompt attention to this matter.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Partnership/S-Corp Income Allocation - Tax Year [Tax Year]

Dear Sir or Madam,

This letter is a formal protest concerning the IRS's determination of income allocation for the partnership/S-corporation [Partnership/S-Corp Name], Tax Identification Number [TIN], for the tax year [Tax Year]. The notice received, [Notice Number] dated [Date of Notice], indicates a discrepancy in the allocation of income/loss as reported on Form [Form Type, e.g., K-1] and the IRS's assessment.

I believe the IRS's proposed reallocation is incorrect based on the partnership/S-corp agreement and IRS regulations. The allocation of income and losses among partners/shareholders is governed by [mention the specific section of the partnership/S-corp agreement or the relevant tax code section, e.g., Section X of the Operating Agreement or Internal Revenue Code Section 704(b)].

Specifically, the IRS's adjustment [describe the adjustment, e.g., reallocates X% of the profits to me] which is not consistent with:

• The terms of our partnership/S-corporation agreement, which clearly outlines the profit and loss distribution based on [explain the basis, e.g., capital contributions, services rendered].
• The actual economic benefit/burden received by each partner/shareholder during the tax year.

I have attached the following documentation to support my protest:

• A copy of the partnership/S-corporation agreement.
• Schedules showing the original and proposed income/loss allocations.
• Relevant financial statements and documentation supporting the economic reality of the allocations.

I kindly request that the IRS Appeals office review this matter and uphold the income/loss allocations as determined by the partnership/S-corporation agreement. Please contact me if further information is required.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Asset Basis Adjustment - Tax Year [Tax Year]

Dear Sir or Madam,

I am writing to formally protest the adjustment to the basis of an asset, as detailed in Notice [Notice Number] dated [Date of Notice], concerning tax year [Tax Year]. The IRS has adjusted the basis of [describe the asset, e.g., my business property at 123 Main Street] from $[Your Original Basis] to $[IRS Determined Basis], which I believe is incorrect.

My original basis in this asset was established at the time of acquisition on [Date of Acquisition] through [explain how basis was established, e.g., purchase price, inheritance, or exchange]. I have consistently reported depreciation and any subsequent gains or losses based on this original basis.

The IRS's adjustment appears to have overlooked or misinterpreted the following:

• [Explain why the IRS's adjustment is incorrect. For example, if the IRS failed to include costs that should have been added to the basis (like capital improvements), list those costs and provide documentation.]
• [If the IRS incorrectly reduced the basis (e.g., due to improper depreciation calculations), explain why your depreciation calculation was correct.]

Attached for your review are copies of documents substantiating my original basis and subsequent adjustments:

• Purchase agreement or deed for the asset.
• Records of capital improvements made to the asset, including invoices and receipts.
• Depreciation schedules and calculations for prior years.
• Any appraisals or valuations that support your basis.

I request that the IRS Appeals office review these documents and reinstate the original, correct basis for the asset. I am available to provide further details and answer any questions you may have.

Thank you for your consideration.

Sincerely,

[Your Signature]

[Your Typed Name]

[Your Name/Trustee/Executor Name] [Your Address] [Your Phone Number] [Your Email Address]

[Date]

Internal Revenue Service [IRS Address from the Notice]

Subject: Formal Protest Regarding Trust/Estate Income - Tax Year [Tax Year]

Dear Sir or Madam,

This letter is a formal protest regarding the income assessment for the trust/estate [Name of Trust/Estate], Employer Identification Number (EIN) [EIN], for the tax year [Tax Year], as outlined in Notice [Notice Number] dated [Date of Notice]. I, as the [Trustee/Executor], believe the assessment is incorrect due to [briefly state reason, e.g., an improper characterization of income or an overlooked deduction].

The notice proposes adjustments to the income reported on Form [Form Type, e.g., 1041, Fiduciary Income Tax Return]. My disagreement stems from:

1. [Specific Area of Disagreement 1]: [Explain the issue. For example, if the IRS treated a capital gain as ordinary income, explain why it should be treated as a capital gain, referencing trust documents or tax law.]
2. [Specific Area of Disagreement 2, if applicable]: [If the IRS disallowed a deduction that the trust/estate was entitled to, explain the deduction and provide justification. For instance, trustee fees or expenses related to managing trust assets.]

To support our position, I have attached the following relevant documents:

• A copy of the trust instrument or will.
• The filed Form [Form Type] for the tax year in question.
• Documentation related to the disputed income, such as investment statements or transaction records.
• Receipts and invoices for any disallowed expenses.

I respectfully request that the IRS Appeals office review the details of this case and the provided documentation. I am confident that a thorough review will demonstrate the accuracy of the originally reported income and deductions. Please inform me if any further information is needed.

Sincerely,

[Your Signature]

[Your Typed Name] [Your Title, e.g., Trustee, Executor]