What to Expect after Requesting an Appeal of a Tax Matter
Appeal of a an IRS decision is a good option if you disagree with the IRS in a tax matter. You may be able to avoid the time and expense of a court trial by asking the IRS Independent Office of Appeals to review the case. This office is separate from the rest of the IRS.
When Appeals officers review cases, they meet with the taxpayer’s CPA or other representative in an informal setting. A Power of Attorney is required and will be signed by both the taxpayer and their CPA or other representative.
It is generally a good idea for the taxpayer to allow the CPA or other representative to manage the Appeal process. It is best if the taxpayer does not attend the meeting with the Appeals officer. Attendance of of the taxpayer is not required.
Appeals will consider both the position of the taxpayer, as presented by their CPA or other representative, and the IRS’s position in a fair and unbiased manner.
Overview of the Appeals Process
Here is a summary of the process when taxpayers appeal their case.
It is important to remember that interest continues to accrue on any unpaid tax balance during the time that Appeals is reviewing a case.
Submission of the Appeal in Writing
To submit an appeal request, the taxpayer’s CPA or other representative will mail a request in writing to the IRS office that sent the taxpayer the letter with their appeal rights. A designated office at the IRS will consider the taxpayer’s protest and attempt to resolve the disputed tax issues. If that office cannot resolve the taxpayer’s issues, they will forward the case to Appeals for consideration.
Scheduling the Appeal
Once the request is with Appeals, the Appeals officer contacts the CPA or other representative by mail within 45 days to schedule an informal conference to review the taxpayer’s situation. Appeals conducts conferences by phone, in person and by video. Taxpayers may choose which type of conference they prefer.
What Happens at the Appeals Conference
At the conference, the Appeals officer will discusses with the CPA or other representative the law as it applies to the facts of the case. This will including court rulings on similar cases.
Status Updates of the Appeal
The Appeals officer should be in contact with your CPA or other representative with updates on the appeal. If it has been more than 120 days since the original request for Appeal was filed, the CPA or other representative may ask for a status update by contacting the IRS exam or collection office they worked with last.
If the CPA or other representative sends new information on the case or additional documents to Appeals, the Appeals officer may need to send the case back to the original IRS function to review the new information.
Appeals will not raise new issues or reopen issues agreed to by the taxpayer or the IRS, except in cases of potential fraud or malfeasance.
Outcome of the Appeal
Before making a final decision, Appeals officers review the facts, the law, the comments of the CPA or other representative, and information presented by the taxpayer and the IRS. Appeals will explain to the taxpayer the reasons for the decision and their options.
Generally, there are three outcomes of an appeal:
- In favor of the IRS: If the facts and laws support the government’s position, the Appeals officer recommends that the taxpayer concede and give up the issue.
- In favor of the taxpayer: If the law and facts support the taxpayer’s position or courts have ruled in favor of taxpayers in similar cases, the Appeals officer recommends that the IRS concede and give up the issue.
- Compromise: The Appeals officer may recommend a compromise when the facts or laws are unclear, or the courts have made different rulings on similar cases. In this situation, Appeals may recommend a settlement where the taxpayer pays a percentage of the tax due.
In Summary: Advantages of the IRS Appeals Process
A number of good things happen when a case goes to IRS Appeals:
- Collection activity ceases while the case is waiting in Appeals. This gives the taxpayer some breathing room.
- The case is forwarded to an Appeals Officer for an impartial review (and a second set of eyes)
- Compromise is a real option
- If the taxpayer disagrees with the findings of the Appeals Officer, the taxpayer still has the right to take their case to the United States Tax Court.
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