AFTER an audit of your tax returns by the IRS, pay if you are happy with the results or don’t want to extend the agony of dealing with the IRS. Appeal if you are not happy or feel that you have not been treated fairly. Let’s explore the benefits & drawbacks of going to the Appeals.
Benefits Of Going To Appeals:
1. The Appeals Officer is neutral.
2. The appeals process is quicker.
3. The Appeals Officer is independent and does not communicate with auditors.
4. The Appeals Officer has a mission: to settle tax controversies without litigation.
5. The officer is more open-minded to the merits of your case to avoid hazards of litigation.
6. You no longer have to deal with a combative agent.
7. It may force an unreasonable agent to rethink a position if you signify your plans to appeal.
8. The appeals process gives you more time to find out about the IRS’ position.
9. Tax, penalties, and interests need not be paid until the case is settled.
10. It buys you time to decide on which trial forum you eventually want to use – the Tax Court, Court of Federal Claims, or US District Court.
Drawbacks Of Going To Appeals:
1. The Appeals Officer may raise new issues that were overlooked, ignored, or deemed irrelevant by the prior agent. If there are issues that are critical against you, stay away from appeals.
2. Interest accrues as your case drags on.
3. The strain of an unsettled IRS audit may be too heavy for you.
4. There are additional fees for representation by an attorney, CPA, or enrolled agent.
5. Non-docketed settlements with Appeals Office have less finality than docketed tax court rulings.
My Suggestion: Go to appeals. In my 50 years of dealing with government agencies, it is by far the best forum to settle tax controversies. The Appeals Officer is a mediator, not an opponent. Compared to office auditors and field revenue agents, Appeals Officers are a welcome sight. It is quite challenging sometimes to deal with young or overzealous examiners who wear police badges to enforce the law. It is quite expensive to litigate in tax court. I have found Appeals Officers (usually CPAs or attorneys with master’s degrees) to be reasonable, level headed, and easier to deal with. They have more understanding, wider perspective on running a business. They understand how we survive, how we make ends meet. They are just more sensible to deal with in putting your case to rest. Hopefully, I sounded convincing enough. Good luck! n
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].