What This Form Is

Form 886-A, Explanation of Items, is the IRS's written explanation of proposed audit changes. It usually comes attached to an audit report such as Form 4549, Income Tax Examination Changes. The report gives the numbers. Form 886-A explains them.

You may see it with an audit report sent during the exam, a 30-day letter, a notice of deficiency, or a partnership audit package. Examiners also use it to respond to new arguments you raise when a case goes to Appeals.

What It Contains

Each issue gets its own explanation. In a field audit it is usually laid out like this:

  • Title matching the line on the audit report, with the amount per return, the amount per audit, and the adjustment
  • Conclusion stating the IRS position
  • Facts the adjustment is based on
  • Law the IRS is relying on
  • Taxpayer's position, if you gave one

Office audits often use standard explanations instead. The form is also where the examiner explains penalties.

What to Do

  • Read every item. This is where you find out why an expense was disallowed or income was added. Often it's a documentation problem, not a legal one.
  • Check the facts. If the examiner got something wrong, that is your opening.
  • Answer each item you disagree with using documents, and explain why the IRS position is wrong.
  • Look at the cover letter for your response date and your appeal options.

If You Disagree

Your rights depend on the letter Form 886-A came with. A 30-day letter generally explains how to request an Appeals conference. A notice of deficiency explains how to petition the Tax Court. Follow the instructions and dates in that letter. Form 886-A does not have its own deadline.

If you received an audit report with Form 886-A and disagree with the changes, call us at (813) 229-7100.