Introduction to the IRS Appeals Office
The IRS Appeals Office is responsible for resolving tax controversies between the taxpayer and the other functions without the taxpayer having to resort litigation. Appeals will normally get involved in case (upon taxpayer petition) after the completion of an audit, when collection action is being threatened, or when a proposed offer in compromise has been rejected. The stated mission of the IRS Appeals Office that the IRS Appeals Office is to “resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.” IRS Appeals officers are charged with applying their knowledge of tax law, policy, and the general Internal Revenue Code fairly and accurately.
The IRS Appeals process begins when a taxpayer initiates and files a petition in response to an IRS determination. Often times, the taxpayer’s matter will go directly into the IRS Appeals Office’s caseload. However, if a taxpayer files a petition in US Tax Court, the taxpayer (or their representative) will be give the option of taking their matter to appeals first. In either circumstance, the IRS Appeals Office will conduct a review of the determination previously made by IRS Examination or IRS Collections. The IRS Appeals officer will review all pertinent information, including the taxpayer’s previous case file.
The IRS Appeals Office has additional powers in addition to arbitrating matters between the taxpayer and the IRS. These include re-opening a closed case as well as raising new issues that require investigation. The IRS Appeals Office tends to re-open cases that are substantial and especially when it believes that tax liability is material. Therefore, taxpayers need to be cautious about statements made to the appeals officer, especially those that may provide damaging information about the taxpayer and/or their position. False statements given the to IRS appeals officer are also taken very seriously and all statements made are subject to the penalty of perjury (which carries potential jail time) if found to be untrue.
The IRS Appeals process usually begins with a conference between the taxpayer (and/or their representative) and the IRS Appeals officer. Here, it is important to note that when appealing, only certified public accountants and enrolled agents are allowed to represent taxpayers before the IRS Appeals Office. Some appeals officers prefer to have a preliminary telephonic conference with the taxpayer prior to the formal appeals conference and determination. This is preferable for the taxpayer because it gives them the opportunity to state their side of case, which the appeals officer might not be aware of, and gather any additional substantiating documentation that the appeals officer is going to request. The IRS appeals officer will then weigh all the facts and legal arguments in a formal appeals conference, which may be either over the phone or in person. The appeals process ends when the appeals office determines whether to settle a claim. The decision following the appeals process represents a final determination with regard to the taxpayer’s tax liability. If the taxpayer is unsatisfied with the result determined by the IRS Appeals Office, they must take legal action against the IRS, either in US Tax Court, US Federal District or Court, or the US Court of Claims.