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How Does the IRS Appeals Process Work?

Yes, even the IRS knows that they do not and cannot get everything right. The IRS can make mistakes during audits, collection actions and in other areas. Thankfully, individual and business taxpayers have the right to appeal an IRS decision. In fact, according to the IRS, its Office of Appeals, an independent branch of the IRS, hears more than 100,000 cases each year. Obviously, there are other reasons why an audit or collection case may go to appeals, including but not limited to mere disagreements between taxpayer and IRS representative. 

When can a taxpayer file an appeal?

Taxpayers can bring their claim to the Office of Appeals after the IRS sends a letter announcing its decision. Critically, the letter must inform the taxpayer that he or she has the right to an appeal. If the letter does not discuss the right to appeal, the taxpayer cannot bring a claim to the Office of Appeals. Furthermore, if a taxpayer is appealing the outcome of an audit, the taxpayer must have provided the IRS with all supporting documentation during the audit process. The appeals process is not applicable in situations where the taxpayer does not have the means to pay a tax bill.

The taxpayer must file a written protest to the IRS to initiate an appeal. The IRS will typically respond within 60 to 120 days. The Office of Appeals process is relatively informal, with the taxpayer and legal counsel (not required but strongly recommended in most cases) meeting with a representative of the IRS. This meeting can take place in person, over the phone or via teleconference.

What types of cases does the Office of Appeals hear?

The Office of Appeals takes on a broad range of claims from taxpayers, including:

  • Collection Due Process cases, such as cases involving notice of a tax lien or tax levy
  • Audits relating to income taxes, employment taxes, estate taxes, gift taxes, excise taxes or a company's tax exempt status
  • Appealing tax penalties
  • Offers in Compromise
  • Innocent Spouse claims

The grounds for a tax appeal must be based on existing tax law. Taxpayers cannot attempt to appeal based on only "moral, religious, political, constitutional, conscientious, or similar grounds."

An IRS database reveals the most common types of tax appeals. In 2015, the most recent year of collected statistics, roughly 37% of all appeals involved Collection Due Process cases. Appeals of audit results made up 31% of appeals. Penalty appeals constituted 9% of appeals, with Offers in Compromise involving 8% of appeals. Innocent Spouse claims made up roughly 2% of tax appeals, with other cases making up the remainder of cases.

The Office of Appeals is not the only venue for tax appeals

Taxpayers can also bring a claim to U.S. Tax Court after an unsuccessful claim before the Office of Appeals. Taxpayers can also bypass the Office of Appeals altogether if they would prefer and go straight to U.S. Tax Court. After U.S. Tax Court, it may be possible to bring a case before Federal District Court or the U.S. Court of Federal Claims. There are many strategic and procedural considerations involved when deciding where to bring a tax appeal.

Making IRS appeals more convenient

On August 1, the IRS began piloting a program in which taxpayers can present their case to the Office of Appeals via teleconference. Per the pilot, any taxpayer with internet access will be able to use the IRS's teleconference system to discuss their appeals issues. This technology had been available in a few IRS offices, but is now being rolled out across the nation.

If you believe the IRS made errors in its dealings with you, or simply disagree with the actions or direction that an IRS audit or collection action is taking, a skilled tax attorney will provide tangible value. The Manhattan-based law firm of Goldburd McCone provides exceptional representation in all areas of tax law.

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