What Is IRS Appeals
The IRS Office of Appeals is an independent division within the IRS. Appeals officers are not beholden to the examiner who audited you or the revenue officer who is collecting from you. Their job is to resolve tax disputes without litigation. They have broad authority to settle cases, and they use it.
When You Can Appeal
You can appeal after an audit if you disagree with the proposed changes. You can appeal after the IRS rejects your offer in compromise. You can appeal a lien or levy through a Collection Due Process hearing. You can appeal a trust fund recovery penalty assessment. You can appeal a denied innocent spouse claim. Basically, any adverse IRS determination can be appealed.
How to Request an Appeal
For most issues, you file a written protest within 30 days of the IRS determination. The protest must identify the issues you disagree with, state the facts supporting your position, and cite the law or authority you are relying on. For disputed amounts of $25,000 or less, you can file a simplified request using Form 12203.
The Appeals Conference
Appeals conferences are informal. No judge, no courtroom, no rules of evidence. You or your representative sit down with the appeals officer and discuss the case. The appeals officer considers the hazards of litigation, meaning the chance that the IRS would lose if the case went to court. If there is a reasonable chance the IRS could lose, the appeals officer will settle.
This is where a tax attorney shines. I present the legal arguments and factual evidence that maximize the hazards of litigation for the IRS. The stronger my position, the more the appeals officer is willing to concede. It is a negotiation grounded in law.
Why Appeals Works
Appeals resolves about 85 percent of cases without litigation. The appeals officer has authority to compromise on the amount of tax, the amount of penalties, and the terms of collection. They look at the case with fresh eyes and are motivated to settle because their performance is measured by case resolution rates.