Basics of IRS appeals process

AFTER an audit of your tax returns by the IRS and you disagree with the determination, you have the option to either accept the assessment and settle the tax you owe by signing the agreement form  or request an appeals conference by writing a protest to Appeals Office. The appeals process is an administrative means to resolve your problems without resorting to court trials. Here are some basics on the appeals process:

1. Go to appeals if an IRS agent with an attitude had just put you through a treadmill. If you feel that there were errors in the handling of your case or that you weren’t adequately represented in the audit, go to appeals. It’s cheaper, faster, and more equitable. You go before an experienced Appeals Officer who has a broader mind and a better understanding than the agent who put you through a ringer.

2. You practically have a nice advantage. The Appeals Officer acts like a mediator. Another advantage that you have: your opponent is not there. It is just you and the Appeals Officer. It frees your senses as a result, from adversarial feelings against the previous agent creating an air that is conducive to settlement.

3. Your objective is to settle and resolve. And your chance to settle increases if a broadminded tax veteran can see it your way.

4. An Appeals Officer in most cases is a CPA, lawyer, or both, who may find critical issues that may have been overlooked by the previous agent. If this is your case, stay away from appeals.

5. After the audit of your returns, you receive a notice from the IRS examination division asking you to agree or disagree. They send a 30-day letter. This is your ticket to appeals.

6. Writing  a protest is your initial step. Be persuasive. Focus on issues in your favor. Counter arguments on matters that are not in your favor.

7. The protest will be forwarded to the original agent who will file a response. Obtain a copy of that response from either the Appeals Officer or through FOIA Freedom of Information Act so you may prepare for rebuttal.

8. Prepare well for the conference. It is critical that all relevant information were provided to the auditor prior to appeals. Any new information will generally result your case back to the auditor for consideration. This could cause delays in resolving your tax matters.

9. The appeals conference is one of negotiation. Up to this point, your forum has been an informal proceeding, one of mediation. It remains as a non-docketed case.

10. If no settlement can be reached, the Appeals Office sends a Notice of Deficiency (also known as a 90-day letter or 150 days if addressed to you outside of the United States). Your case becomes a docketed case. The chief Counsel of the IRS becomes involved. It becomes more costly to defend as your case moves from informal mediation to the formal jurisdiction of a court where lawyers and CPAs fight in trial before a judge.

11. It will be classified as a small case and can remain in appeals if the deficiency is $50,000 or less; otherwise, it will be forwarded to area counsel where it will be calendared for trial in Tax Court.

12. CAUTION: Do not represent yourself unless you know what you are doing. You are no match for the experienced officers. You could be trying to save a few hundred dollars in fees only to lose thousands in potential savings of tax, interests, and penalties.

You may also use appeals for levies, liens, claims for refund, seizures, and rejections of OIC (offers in compromise) or installment agreements (payment plans). It cannot be used for bankruptcy cases or fraud.

In accordance with IRS Circular 230, this communication is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.

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Sy Al-os Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.

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