IRS Office of Appeals

What is the Purpose of the IRS Office of Appeals?

The IRS office of Appeals serves within the IRS as an administrative dispute resolution forum for taxpayers who wish to contest IRS compliance actions. If a taxpayer is unable to resolve a tax controversy at the audit level, the IRS office of appeals (sometimes referred to as “Appeals”) allows taxpayers to file a formal protest with its office for an independent review. The mission of Appeals is to “resolve tax controversies, without litigation, on a basis that 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.” See IRS Notice 2011-62

Independence of the IRS Office of Appeals

The Internal Revenue Service Restructuring and Reform Act of 1998 required the Commissioner to ensure an independent appeals function within the IRS. There were many legislative proposals regarding how to structure Appeals, including some proposals that suggested a completely separate body to ensure independence. Despite these suggestions, Congress decided to maintain Appeals within the IRS, but to satisfy opponents prohibited appeals officers from engaging in ex parte communications with IRS employees.

Prohibition against Ex Parte Communications

An ex parte communication is a communication between an appeals officer and employees of other IRS functions, without the taxpayer being present, or receiving an opportunity to participate in the communication. This prohibition does not restrict appeals officers from reviewing computer databases, such as transcript records, however appeals officers are not allowed to view the administrative file.

What to Expect from Appeals

An appeals officer will take a fresh look at the case and evaluate it for its strengths and weaknesses. Taxpayers, or their representative, will receive the opportunity to communicate with the appeals officer using informal means. Communication is accomplished by using the telephone, sending letters, or in person meetings.

How to File an Appeal if the Amount is under $25,000

If you owe less than $25,000 you may file IRS form 12203, Request for Appeals Review. This is a relatively straight forward form that allows you to list the items that you and the IRS examiner disagree on and to provide a brief explanation of your position. It is difficult to properly advocate for your position on this form because there is not enough space provided to fully develop your arguments, so extra pages are often needed.

How to File an Appeal if the Amount is over $25,000

If you wish to appeal a matter where the amount in controversy exceeds $25,000 you must file a formal protest. You must include, your name, address, telephone number and a statement that you wish to appeal the auditor’s findings to the Appeals office. You must include a copy of the IRS letter showing the proposed changes, the tax periods involved, and your explanation as to why you don’t agree with the IRS changes. You must provide both facts and law that support your position and finally you are required to sign the protest under penalty of perjury.

Advocacy for a Formal Protest

Hiring an advocate for the appeals process is critical to a successful conclusion of your appeal. Firstly, an advocate is unemotional about the issue and will only use his or her best judgment in deciding how to argue your position. An advocate will also insulate the taxpayer from direct questions from the appeals officer. Further, an advocate knows the law and can demonstrate it to an appeals officer through the use of statutes, precedents, revenue rulings, revenue procedures, notices, manuals, chief counsel memorandum, and other IRS advice. Also, an advocate can present the facts in a light that is most favorable to the taxpayer, as an advocate has experience with the IRS and is aware of what they respond positively to.