Revenue Agent’s Report (RAR)

What it is

A Revenue Agent’s Report (RAR) is the detailed document an IRS examiner issues after an audit. It explains the examination’s findings, shows the calculations behind any proposed changes to income, credits, deductions, taxes, penalties, and interest, and indicates whether the taxpayer underpaid, overpaid, or paid the correct amount.

Common forms:
* Form 4549 — Income Tax Examination Changes (summary of proposed adjustments).
* Form 886A — Explains the reasons and supporting detail for the adjustments.

What the RAR contains

• A description of procedures, tests, and information the agent used.
• Itemized adjustments to income, credits, and deductions.
• The proposed additional tax or refund amount, plus penalties and interest.
• The examiner’s conclusions and the report’s bottom-line determination.

How it works

• After an audit, the IRS issues the RAR and, if changes are proposed, a notice of final determination.
• The IRS will notify state tax authorities of federal changes. Many states require taxpayers to amend state returns to reflect federal adjustments.

Responding and appeals

If you disagree with the RAR you can:
* File a formal protest and seek resolution with the IRS Office of Appeals.
* Petition the U.S. Tax Court or pursue other judicial remedies (procedures and eligibility depend on the type of IRS notice).
* Pay the assessed amount and later sue for a refund in federal court.

Timeframes:
* After a notice of final determination, taxpayers generally have a limited window to request an appeal—commonly 30 days to contact the IRS Office of Appeals (verify the exact deadline on the notice you receive).

Consequences of an unresolved RAR

• If the RAR is unchallenged or the taxpayer fails to resolve the matter, additional taxes, penalties, and interest become payable.
• The IRS reports adjustments to state tax authorities; many states require amended filings within 30–90 days of the final federal determination.
• Continued noncompliance can lead to escalating civil penalties and, in serious cases, criminal enforcement.

Practical steps if you receive an RAR

1. Read the RAR and any accompanying forms (e.g., Form 886A) carefully.
2. Verify the IRS calculations and gather supporting records.
3. Respond within the deadline shown on the notice.
4. Consider engaging a tax professional to prepare a formal protest or represent you in Appeals.
5. If federal liability changes, determine whether you must file amended state returns and notify relevant state tax agencies.

Key takeaways

• The RAR is the IRS’s written record of audit findings and the basis for any proposed additional tax or refund.
• Taxpayers have the right to contest RAR findings through the IRS Appeals process or in court.
• Act promptly: deadlines matter, and federal changes often affect state tax obligations.