The IRS Office of Appeals
People sometimes disagree on tax matters, and the decision of a tax examiner may not always be the final word. For this reason, the Internal Revenue Service created an independent appeal system that seeks to settle differences without going to court.
Every year, this Office of Appeals helps over 100,000 taxpayers resolve their tax disputes. In addition, it provides mediation services through Fast Track Settlement, Early Referral, and other programs designed to help resolve disputes at the earliest possible stage in the audit or collection process. The Office of Appeals does not take sides in a dispute; rather, they offer an objective point of view on each individual case.
Reasons for disagreeing must come within the scope of tax laws. For example, an appeal of a case cannot be based only on moral, religious, political, constitutional, or similar grounds.
A case may be taken directly to tax court if the taxpayer does not want to appeal within the IRS.
When To Appeal
The Appeal process is appropriate if all of the following apply:
- You received a letter from the IRS explaining your right to appeal the IRS’s decision.
- You do not agree with the IRS’s decision.
- You are not signing an agreement form sent to you.
Appeals is not appropriate if any of the following apply:
- The correspondence you received from the IRS was a bill and there was no mention of Appeals.
- You did not provide all information to support your position to the examiner during the audit.
- Your only concern is that you cannot afford to pay the amount you owe.
The Appeals Process
An appeals office is the only level of appeal within the IRS. Conferences with appeals office personnel may be conducted in person, through correspondence, or by telephone with the taxpayer or its authorized representative.
Instructions for requesting a conference with an appeals officer are provided in the letter of proposed tax adjustment, the Letter 950. It states that to request a conference with an appeals officer, the taxpayer will need to file either a small case request or a formal written protest with the contact person named in the letter. Whether you file a small case request or a formal written protest depends on several factors.
If a conference is requested the examiner will send the conference request letter to the appeals office to arrange for a conference at a convenient time and place. The taxpayer or a qualified representative should be prepared to discuss all disputed issues at the conference. Most differences are settled at this level.
Only attorneys, certified public accountants or enrolled agents are allowed to represent a taxpayer before Appeals. An unenrolled preparer may be a witness at the conference, but not a representative.
Making a Small Case Request
A small case request is appropriate if the total amount of tax, penalties, and interest for each tax period involved is $25,000 or less. If more than one tax period is involved and any tax period exceeds the $25,000 threshold, a formal written protest for all periods involved must be filed. The total amount includes the proposed increase or decrease in tax and penalties or claimed refund.
To make a small case request, the instructions in the letter of proposed tax adjustment provide that the taxpayer should send a brief written statement requesting an appeals conference and indicate the changes with which it does not agree with and the reasons it does not agree with them.
Be sure to send the protest within the time limit specified in the letter you received, which is generally 30 days.
Filing a Formal Protest
When a formal protest is required, it should be sent within the time limit specified in the letter. The following should be provided in the protest:
- Taxpayer’s name and address, and a daytime telephone number.
- A statement that taxpayer wants to appeal the IRS findings to the Appeals Office.
- A copy of the letter proposed tax adjustment.
- The tax periods or years involved.
- A list of the changes that the taxpayer does not agree with, and reason for disagreement.
- The facts supporting the taxpayer’s position on any issue that it does not agree with.
- The law or authority, if any, on which the taxpayer is relying.
- The taxpayer must sign the written protest, stating that it is true, under the penalties of perjury as follows: “Under the penalties of perjury, I declare that I examined the facts stated in this protest, including any accompanying documents, and, to the best of my knowledge and belief, they are true, correct, and complete.”
If the taxpayer’s representative prepares and signs the protest for the taxpayer, he or she must substitute a declaration stating:
- That he or she submitted the protest and accompanying documents and;
- Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct.
Additional information about the Appeals process may be found in Publication 5, Your Appeals Rights and How to Prepare a Protest if you Don’t Agree.
Source: Internal Revenue Service at http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/Appeals-Process