Settling audit cases

[joshuakrk]

Eric,

I’ve heard people say that 90 percent of cases get resolved without needing to go to court. My question is, if we were just talking about cases where the IRS was proposing an audit adjustment, about what percentage of specifically just those cases get resolved without needing to go to court?
I imagine I would need to be able to tell up front the likelihood of it going to court if I were to take on that representation work as a CPA.

Thanks,

Josh Kirk

[Eric Green]

Josh, 90% get settled either because the client has the documentation and can get it resolved in their favor or they don’t and realize it is not worth spending tens of thousands of dollars to battle over. I also believe a large percentage is from clients who simply do not have the funds to litigate the matter, or the numbers and adjustments do not justify the expense. I would tell the client you can appeal but their chance of success rests on what the adjustments are and whether they are justified or not. If the client took bad deductions or cannot substantiate what they claimed there is a better than good shot they will lose at appeals too.

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