I recently had a client come to my office who had been audited by the Internal Revenue Service. Now this wasn’t one of the really high dollar amounts of taxes owed due to the audit. However, it was a lot of money to this particular prospective client. His situation was that the IRS said that he could not take the earned income credit because he could not show that he spent the money he claimed on supporting his child. He didn’t keep all of his receipts or anything.
His question was could he appeal this new tax that he was now responsible for? The answer is “yes, but”. The “but” is you can appeal a decision of the IRS to tax court, however if he wanted to retain representation to go to court he would have to pay a lawyer a retainer that would probably be more than the tax he was trying to avoid. Sometimes the “principal of the matter” is worth more than the actual tax, sometimes, it is easier to go ahead and pay the tax even if you don’t think it is right.