The IRS audit notice is one of the most stressful letters a taxpayer can receive. But what happens if you set it aside — or never respond at all? The short answer: the IRS will not forget, and ignoring an audit notice can lead to severe financial and legal consequences. However, even if you’ve already missed your deadline or the audit has closed, you still have options to fix it — including audit reconsideration, appeals, or settlement negotiations.
📘 Official IRS References:
- Publication 556 — Examination of Returns, Appeal Rights, and Claims for Refund
- Publication 3498 — The Examination Process
- Publication 1 — Your Rights as a Taxpayer
What Is an IRS Audit Notice?
An IRS audit notice is a formal letter notifying you that your tax return has been selected for examination. These letters specify:
- The tax year under review
- The issues in question (income, deductions, credits, etc.)
- The response deadline (usually 30 days)
Ignoring this notice means the IRS proceeds without your input.
Timeline: What Happens When You Ignore an Audit Notice?
Ignoring an IRS audit sets in motion a predictable enforcement chain.
| Stage | IRS Action | Consequence to Taxpayer |
|---|---|---|
| Initial Audit Notice Sent | The IRS sends an initial audit notice (usually by mail) requesting documentation to support specific items on your tax return and providing a deadline (typically 30 days) to respond. | The IRS will make a determination based on the information it already has (e.g., disallowing deductions or adding income) and propose changes to your tax liability |
| 90-Day Notice of Deficiency (Statutory) | IRS issues legal notice before assessment. You have 90 days from the date on this notice to file a petition with the U.S. Tax Court if you disagree with the proposed changes. This is your primary opportunity to dispute the tax liability in court before paying | You lose your right to challenge the assessment in Tax Court. The tax is officially assessed, and a bill for the new amount (plus penalties and interest) is sent. |
| Notice of Assessment and Demand for Payment | A formal bill is issued, and if unpaid, a Demand for Payment follows. | The account is referred to the IRS Collections division, and additional penalties and interest continue to accrue. |
| IRS Collection Actions | The IRS has a general 10-year period from the assessment date to collect the unpaid taxes. The IRS send collection notices. | Collection actions will commence, such as liens, levies, and wage garnishments possible. |
💡 Tip: Once you miss the 90-day Tax Court window, the IRS can begin enforced collection — but a tax attorney can reopen the case through audit reconsideration.
Consequences of Ignoring an IRS Audit
1️⃣ Automatic Tax Assessment
If you don’t respond, the IRS will complete the audit without your participation and issue an arbitrary assessment based on third-party data (W-2s, 1099s, bank reports).
This often excludes your:
- Deductions
- Business expenses
- Dependents
- Credits (Earned Income Credit, Child Tax Credit, etc.)
📘 Reference: Publication 556 — Audit Outcomes
2️⃣ Loss of Appeal Rights
If you ignore both the 30-day and 90-day letters, your case becomes finalized and unappealable administratively. At that point, the only remedies are audit reconsideration, Offer in Compromise (Doubt as to Liability), or Tax Court (if still within the window).
3️⃣ Substitute for Return (SFR)
If you never filed the return, the IRS creates one for you using third-party income data — with no deductions or credits applied.
📘 Reference: Substitute for Return Procedures
4️⃣ Enforced Collection Actions
Once your case becomes collectible, the IRS can issue:
| Collection Action | Description |
|---|---|
| Notice of Federal Tax Lien | Public record claim against assets. |
| Bank Levy | IRS seizes funds from your account. |
| Wage Garnishment | Employer withholds pay for taxes. |
| Asset Seizure | IRS takes vehicles, business assets, etc. |
| Offset of Future Refunds | Refunds applied to old debt. |
💡 Tip: You can stop enforced collection by filing an Appeal (Collection Due Process) or entering a payment plan before levy execution.
Legal Options After Ignoring an IRS Audit
If you’ve already ignored your audit and received assessments or collection notices, you still have multiple remedies — if handled correctly.
Audit Reconsideration
Reopen your case by providing new or previously unavailable evidence. You can:
- Submit documentation that was never reviewed
- File your true return (if the IRS filed an SFR)
- Correct IRS computational or clerical errors
📘 Reference: Publication 3598 — Audit Reconsideration Process
Offer in Compromise (Doubt as to Liability)
If the IRS assessment is clearly incorrect, you can request relief under the “Doubt as to Liability” basis.
📘 Reference: Form 656-L — Offer in Compromise (Doubt as to Liability)
Installment Agreement
If you can’t afford to pay immediately, you can negotiate an installment agreement.
💡 Insight: Entering a payment plan also halts most collection actions, buying time for legal remedies.
Currently Not Collectible (CNC)
If you can’t afford to pay immediately and have financial hardship, you can apply for a Currently Not Collectible (CNC) status.
Penalty Abatement Request
Even if your audit results stand, you can request penalty removal under “reasonable cause.” Accepted reasons include, to name a few:
- Illness or family emergency
- Natural disaster
- Reliance on a professional
- Documented IRS error
📘 Reference: IRM 20.1.1 — Penalty Relief Procedures
Tax Court Petition (if within 90 days)
If you’ve received a Notice of Deficiency (90-day letter) and it’s still within the window, file a petition in U.S. Tax Court to preserve your rights.
📘 Reference: U.S. Tax Court — How to Start a Case
Why Legal Representation Is Essential?
An IRS audit is a legal proceeding — and ignoring it doesn’t make it disappear. A tax attorney ensures you:
- Avoid criminal exposure for misstatements
- Receive fair review under Publication 1 – Taxpayer Bill of Rights
- Access appeal, reconsideration, and collection alternatives strategically
| Attorney Role | How It Helps | Outcome |
|---|---|---|
| IRS notice review | Identify audit scope and missed deadlines | Recover appeal opportunities |
| Transcript analysis | Reveal what IRS assessed and why | Build factual defense |
| Negotiation | Communicate directly with IRS officers | Prevent or reverse liens/levies |
| Legal filings | Submit reconsideration, OIC, or appeal | Formal reopening of case |
| Representation | Protects you from self-incrimination | Controlled resolution process |
💡 Insight: Many ignored audits escalate simply because taxpayers didn’t know they could reopen the case — your lawyer can fix that.
📘 Reference:
Need help with a similar issue? Contact our firm today for a consultation.
Ignoring an IRS audit notice is one of the most expensive mistakes a taxpayer can make. But with legal help, you can still reverse the assessment, stop collection actions, and restore compliance.
Contact Pelham PLLC today for a confidential IRS audit recovery consultation. Our tax attorneys will:
- Review your IRS audit and account transcripts
- File audit reconsideration or appeal
- Negotiate penalty relief or settlement
- Stop liens, levies, and garnishments
- Rebuild compliance and protect your financial future
Don’t wait for the IRS to act first — take back control now. Your best defense starts before the next IRS letter arrives.
FAQs
Can I still fight the IRS after ignoring an audit?
Yes — through audit reconsideration, Offer in Compromise, or Appeals review.
Can a tax attorney stop collection while I fix the audit?
Yes. They can request a collection hold or enter a negotiation status while you provide evidence.
