What are the typical stages of the IRS examination and appeals process?

• A. Case selection, examination, proposed adjustments, taxpayer response, and if unresolved, review by Appeals and potential litigation.
• B. Filing, audit, settlement, court trial.
• C. Random checks with no appeal.
• D. Only assessment and collection; no appeals.

Answer: (A)

The process starts with case selection, where IRS uses data and risk indicators to choose returns for audit. During the examination, the taxpayer’s records are reviewed and any issues are investigated to determine if there are underreports or other discrepancies. When problems are found, the IRS issues proposed adjustments and the taxpayer is given a chance to respond with explanations and supporting documents. If the taxpayer and IRS can’t resolve the differences, the case goes to the Office of Appeals for independent review to try to settle the matter without going to court. If Appeals can’t reach a resolution, the matter may proceed to litigation in the courts. This sequence reflects the typical flow of an IRS audit and dispute resolution, including the right to appeal and the potential for litigation.