People often mix up an IRS audit with the IRS appeals process. An audit is the IRS's review of a tax return, records, or reported income to decide whether more tax is owed. The IRS appeals process comes later: it is the formal chance to ask an independent IRS Office of Appeals reviewer to reconsider a proposed tax bill, penalty, lien action, or other decision without going straight to court.

The point of an appeal is to resolve a dispute based on facts, tax law, and fairness in administration. It is less combative than filing a lawsuit, but it still runs on deadlines, documents, and careful arguments. A taxpayer may challenge audit findings, certain penalties, or collection actions, sometimes through a written protest or a request for a Collection Due Process hearing. If Appeals does not resolve the matter, the next stop may be U.S. Tax Court or another court.

For someone handling an injury claim, this can matter more than expected. Parts of a settlement may be taxable while others are not, and a tax dispute can affect refunds, payment plans, or an IRS lien. If a person is already dealing with lost wages, hospital bills, or a crash on I-94 in winter conditions, an IRS notice is one more pressure point. In Michigan, this process is separate from disputes with the Michigan Department of Treasury.