When is the right time to appeal?

IF you do not agree of the IRS results of examination, your options are: request a meeting or telephone conference. If after the meeting or conference you still do not agree, appeal your case to the IRS Appeals Office. If you ignore and do nothing, a notice of deficiency will be issued which allows you to go to tax court or IRS will continue collection. Here are some of the benefits and drawback of going to the Appeals.

Benefits of going to Appeals:

1. The Appeals Officer is impartial.

2. The Appeals Officer is independent  from IRS compliance function.

3. The appeals process is faster. The IRS emphasizes quick resolution of tax cases by delegating more authority to frontline Appeals Officers to quickly resolve cases.

4. The goal of every Appeals Officer is to settle tax controversies without litigation.

5. The officer is more open-minded to the merits of your case to avoid litigation disputes.

6. Your bargaining position is enhanced as you will no longer in contact with  the aggressive agent who may have been locked into certain positions on unagreed issues.

7. Moving  to appeals may force a difficult to deal with agent to re-think a position.

8. Compared to government attorneys, the Appeals Officer is more open and candid during formal discovery procedures.

9. The appeals process provides sufficient time to find out about the IRS position.

10. You will have enough time to decide which trial forum you want to exercise – Court of Federal Claims, the Tax Court, or US District Court.

11. Until the case is settled, penalties, tax, and interests need not be paid.

12. You can collect attorney’s fees if a court determines that the IRS position was not justified.

Drawback of going to appeals:

1. New information in  Appeals might result in Appeals discharging jurisdiction and sending off the file to compliance.

2. Interest accrues as your case continues to drag.

3. The strain of an unsettled IRS audit may serve as too much of a burden to you. You may just prefer to pay.

4. An attorney, CPA, or enrolled agent representation incur additional fees. These fees, however, may be offset by savings in reduced tax, penalties, and interest charges when you are adequately represented.

5. Compared to docketed tax court rulings, non-docketed settlements with Appeals Office have less finality.

In our practice, going to Appeals is by far the best forum to settle tax controversies. The Appeals Officer acts as a mediator, not an opponent. Appeals Officers are a welcome sight in comparison to office auditors and field revenue agents. It is quite expensive to litigate in tax court. In our experience, Appeals Officers are usually CPAs or Attorneys with Master’s degrees and are easier to deal with. They have a wider outlook on running a and are more understanding. They understand how we survive to make ends meet. They are more practical in putting your case to rest. Good luck!

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.