About An IRS Tax Appeal
If your federal tax return was recently under examination and you received written notification of an adjustment the IRS is making to your tax return, such as disallowing a deduction or credit, you have the right to disagree and the right to appeal its decision. An IRS Tax Appeal is a common way to resolve disagreements you have with the IRS that relate to items you report on your return.
But IRS audits aren’t the only thing taxpayers can appeal. You also have the right to question:
1. IRS collection actions, such as liens, levies, seizures and installment-agreement terminations.
2. Rejected offers in compromise to settle tax bills.
3. Penalties and interest the IRS adds to your tax bill.
4. And more
The audit and collection processes are about the IRS getting as much money as possible. While the IRS Tax Appeal process is about finding a settlement for the matter.
The Role of the IRS Independent Office of Appeals
Founded in 1927, the Independent Office of Appeals works independently from the core operations of the IRS. That is despite it being a working group within the tax enforcement. The goal of the IRS Office of Appeals is to impartially resolve tax disputes following an audit conclusion.
It may seem counterproductive to appeal to the IRS because it’s a tax-collecting agency, but the IRS makes it clear the Office of Appeals is a standalone group. By recognizing the group’s independence, the IRS can boost its agenda of taxpayer compliance.
What Happens at an Appeals Conference
The appeals conference is an informal meeting in which an impartial officer settles the dispute. This is done in the same way a judge does between a plaintiff and defendant in court.
Appeals is a separate and independent IRS office where disagreements concerning the application of tax law can be solved on a fair basis. For both the taxpayer and the government. The mission of Appeals is to settle tax disagreements without having to go to the Courts and a formal trial.
You are entitled to hire a practitioner to represent you at the conference provided they are authorized to practice before the IRS. This includes an enrolled agent, attorney or CPA. If you are unsatisfied with the officer’s decision, you may then file suit in court.
What Can you Appeal?
Generally any type of decision or action taken by the IRS is eligible for an IRS tax appeal such as:
- Audits/Examination Determinations
- Offers in Compromise
- Requests for Penalty Abatement or Removal
- Liens
- Levies
- Innocent Spouse Decisions
- Installment Payment Plans
- Seizures
However, you just have to know the tax code and whether an IRS tax appeal is a viable solution. Tax Samaritan can help you determine if an IRS tax appeal is the best recommendation for your situation.
Is An IRS Tax Appeal The Solution To Your Tax Problem?
IRS tax appeals are a common way to resolve disagreements you have with the IRS. IRS Appeals could be the solution to your tax problem 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 and you have a valid argument to appeal.
If you decide to go this route, there are procedures you must follow to insure you retain your right to an appeal. You must file a Request for Appeals Review within the legal time frame. This is generally within 30 days, and follow the IRS guidelines for an appeals request to be valid.
Who Appeals Is Not For
Appeals is not for you if any of the following apply:
- The correspondence you received from the IRS was a bill and there was no mention of Appeals.
- Your only concern is that you cannot afford to pay the amount you owe.
The objective of the IRS Appeals Division is to resolve disputes between taxpayers and the IRS. The rules governing the appeals process are precise and exacting. The appeal is your chance to restate you case and explain why you should be given another evaluation. A chance that should not be thrown away without professional representation.
When Should You Consider Filing a Tax Appeal to the IRS?
1. If you think the IRS made an incorrect decision
You should check IRS publications and the Tax Code for guidance on your issue if you believe the IRS has misinterpreted the law, resulting in an incorrect decision. Look at your case from another point of view to determine if the IRS’s decision was fair and has a legal basis.
2. If you think the IRS misinterpreted the facts
It’s in your best interests to be prepared to clarify and support your position. For example, if you want to appeal that your claim for a home office deduction is legitimate, you can present copies of relevant documents to support your appeal.
- Bills incurred in your home office
- A floor plan of your space showing the area you use as a home office
- A business diary that proves you spend a significant number of hours working in your home office
3. If you think the IRS is taking inappropriate collection actions against you
Suppose the IRS sends you a Notice of Federal Tax Lien Filing, but you believe you don’t owe them the stated amount. Under the Collection Due Process (CDP), you can request a CDP hearing if you believe the lien is inappropriate.
4. If your Offer in Compromise is denied and you have a valid reason to disagree
If you wanted to settle your tax bills but the IRS denied your Offer in Compromise, you can raise your concern to Appeals. Be prepared to explain and support your disagreement with their decision. The Office of Appeals will hear your reasons why you disagree, given that your grounds aren’t solely due to political, religious, or moral beliefs.
Remember that while you can file for an appeal, this right is only valid for a certain period. You can only file an official protest within 30 days of the date on the IRS audit report or notification letter.
How to File a Tax Appeal to the IRS
If you disagree with an IRS decision, you have the right to request a review through the Office of Appeals. The process gives you an opportunity to resolve your tax issue without going to court. Here’s how to file your appeal correctly.
1. Send your appeal to the correct address
One of the most common mistakes taxpayers make is sending their appeal directly to the IRS Office of Appeals. Always use the mailing address listed on the IRS letter or notice you received. Sending it to the wrong office can delay the process or result in your appeal being rejected.
2. Determine whether you qualify for a Small Case Request
If the total amount you’re disputing (including penalties) is $25,000 or less per tax period, you may file an informal Small Case Request instead of a formal protest.
You can choose either of these options:
- Prepare a written statement that identifies the items you disagree with and briefly explains your reasons.
- File Form 12203, Request for Appeals Review, and list the disputed items from your IRS report with a short explanation of your position.
Be sure to include supporting facts or references to tax laws to strengthen your case. Send the completed form or statement to the contact person indicated in your IRS letter within the specified timeframe.
Note: Partnerships, S corporations, employee plans, and exempt organizations are not eligible to file Small Case Requests.
3. Submit a formal written protest if your dispute exceeds $25,000
If your case doesn’t qualify for the Small Case procedure, you’ll need to file a formal written protest. This document must include:
- Your name, address, and contact details
- A statement that you’re requesting an appeal
- A copy of the IRS letter or notice
- The tax periods or years involved
- A list of the items you disagree with
- An explanation of why you disagree, including facts, legal arguments, and supporting documentation
Attach any records or evidence that support your position. It’s best to have an enrolled agent (EA), CPA, or tax attorney prepare or review your protest to ensure accuracy and completeness.
4. Request a conference with the Office of Appeals
Once your written protest or small-case request is received, an Appeals Officer will independently review your case. If accepted, the Office of Appeals will schedule a conference, usually by phone, video, or in person. These conferences are informal, and most disputes are settled at this stage without going to court.
You may represent yourself or authorize a qualified representative (EA, CPA, or attorney) to handle the process for you. A tax resolution professional can help present your case clearly and negotiate on your behalf.
5. Negotiate a settlement and finalize the agreement
During the conference, you or your representative will have the chance to explain your side, clarify issues, and propose adjustments. If an agreement is reached, the Appeals Officer will issue Form 870, Consent to Proposed Tax Adjustment.
By signing Form 870, you agree to pay the settlement amount and waive your right to challenge the issue further. If no agreement is reached, you can take your case to the U.S. Tax Court, the U.S. District Court, or the Court of Federal Claims, depending on whether you’ve paid the disputed amount.
What If The Appeals Officer Agrees With The IRS
If the appeals officer agrees with the IRS, you have the option of challenging the IRS in court. If you choose to pursue the issue in court, you can pay the amount of tax in dispute and file the appropriate documentation in a U.S. District Court or the Court of Federal Claims for a refund. If you are unable to or refuse to pay the tax, then only the U.S. Tax Court has jurisdiction over your case.
Further information on taxpayer appeals is available in IRS Publication 5, Your Appeal Rights. Keep in mind that during all levels of appeals you must have valid legal reasons based on current tax law for disagreeing with the IRS. You cannot appeal your case based only on moral, religious, political, constitutional or conscientious grounds.
You need expert representation on your side to fight for your rights! If you need to file an appeal with the IRS, let our team of enrolled agents help you settle your tax dispute.
While the IRS tax appeal process may take several months to complete, taxpayers may generally achieve significant savings on their tax bill.
