You tried your best during the audit to provide the auditor with all the information he or she wanted. You answered all the questions truthfully but still after all the soul-searching you did to bring out the best taxpayer within you, you still got a tax bill and a penalty. You feel that you have been unjustly audited and you demand a recount like a president who lost by ten thousand votes. Now you must write a concise and straightforward letter to the IRS appeals office. Dont try to spill your heart out but get all the facts in there.
Always keep the option of going to the tax court alive in your mind. Maybe your appeal might get turned down or you just dont want to deal with the appeal to the IRS appeals office.
Appeals are always worth a good shot. They usually lower your liabilities plus the IRS agents want to dissuade you from going to the tax court. If you can make the agent believe in your story and he thinks you might have a chance, even a slim one of you winning in court, he will try to pay attention to what you have to say. If you were unable to get receipts or documents to support your claims during the audit, now is a good time to reconstruct them. Remember try to present all your claims in the best light and try to stick to the truth as close as possible. And if at the end of the day you are not successful dont despair this is not end of the road. Get all your paperwork in order again and the next day, file the case in the tax court.