You don’t necessarily have to file an expensive and time-consuming lawsuit to settle a tax dispute with the U.S. Internal Revenue Service (IRS). Your first step should be to request a meeting or a telephone conference with the supervisor of the person who issued the findings.1 If you don’t agree with the supervisor’s decision, the IRS actually has local appeals offices which are separate and independent from those that conduct tax examinations.2
In fact, most tax disputes can be settled outside of the courts, using the IRS appeals process, but the appeals office is the only level of appeal within the IRS.3
The appeals process can be done via mail, over the telephone or in person.
What are the criteria for eligibility?
To determine if you are eligible to participate in the IRS appeals process all of the following must apply to your situation. First, you need to have received a letter from the IRS explaining your right to appeal the IRS decision. Second, you have to disagree with the IRS’s decision on your tax issue and third, you must not be willing to sign the IRS agreement form that was sent to you. If all three conditions are met, you are a candidate for the appeals process.4
You can represent yourself at an appeals conference, which is usually informal. However you also have the option to have an attorney, certified public accountant, or an individual enrolled to practice before the IRS represent you. If you do not want to attend the appeals conference, but want to send a representative, you have to submit IRS Form 2848, Power of Attorney and Declaration of Representative, or another properly written power of attorney or authorization.
What are the steps to appeal a tax dispute?
The first step in the appeals process is to follow the instruction in the letter that the IRS sent you explaining the appeals process. You will need to also file a formal written protest or a small case request with the office named in the letter that was sent to you. (If you disagree with a lien, levy, seizure, or denial or termination of an installment agreement you need to follow the special request procedures outlined in IRS Publication 1660, Collection Appeal Rights.)
A small case request should be filed if the entire amount of additional tax and penalty stipulated by the IRS for each tax year is $25,000 or less. In a situation where you have an offer in compromise, the entire amount for each tax period includes total unpaid tax, penalty and interest due. To file a Small Case Request follow the instructions in the letter that the IRS sent you explaining the appeals process. Fill out and submit IRS Form 12203, Request for Appeals Review, or the form referenced in the letter to file your appeal, or prepare a brief written statement listing the item(s) that you disagree with and the reason(s) you disagree.5
What are the specific requirements for the appeal?
If the amount exceeds that of a small case request you should follow the instructions in the letter that the IRS sent to you explaining the appeals process. There are specific requirements to preparing a protest and you must mail it within the time limit specified in the letter you received. Include in your protest: 1) Your name and address, and a daytime telephone number; 2) A statement that you want to appeal the IRS findings to the Appeals Office; 3) A copy of the letter showing the proposed changes and findings you don’t agree with (or the date and symbols from the letter); 4) The tax periods or years involved; 5) A list of the changes that you don’t agree with, and why you don’t agree; 6) The facts supporting your position on any issue that you don’t agree with; 7) The law or authority, if any, on which you are relying; 8) You must sign the written protest, stating that it is true, under the penalties of perjury as follows:
“Under the penalties of perjury, I declare that I examined the facts stated in this protest, including any accompanying documents, and, to the best of my knowledge and belief, they are true, correct, and complete.”
If your representative prepares and signs the protest for you, he or she must substitute a declaration stating: 1) That he or she submitted the protest and accompanying documents and 2) Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct.6
You should provide as much information as you can in your written protest, as this will help the IRS speed up your appeal, saving you time and money. It is important to note that protests should be based on tax law. Appeals are not considered if your disagreement is solely on moral, religious, political, constitutional, conscientious or similar grounds.7
IRS tax disputes require immediate action. Seeking advice and help from a reputable tax attorney is wise. You need to know your rights and protect yourself against potential financial penalties. Your liability can become worse over time, so it is imperative that you begin the appeals process in a timely manner.
The Law Office of Peter C Rageas specializes in tax resolution and has been protecting hard-working individuals from IRS liens, garnishments, bank levies and more for over 20 years! Call today for a case evaluation and achieve peace of mind by successfully negotiating the best possible resolution to your tax dispute.
1,6,7 Your Appeal Rights and How to Prepare a Protest if You Don’t Agree, www.irs.gov
2,3 Appeals Process, www.irs.gov
4,5 Is Appeals the Place for You?, www.irs.gov