In 2021, the IRS had more than 72,000 pending Appeals cases. When taxpayers disagree with the IRS’s decisions, they often have the right to request an appeal and resolve the issue outside of the courtroom.
If you have a disagreement with the IRS, you have a right to resolve the issue with an IRS appeal. However, you need to follow procedures properly to have your issue heard and, hopefully, resolved.
IRS Appeals – What You Need to Know
Taxpayers may disagree with a decision from the IRS for a variety of reasons.
They may believe that the IRS:
- Used incorrect facts when making its decision
- Misinterpreted the law and, therefore, made an incorrect decision.
- Failed to apply the law properly because they didn’t have an appropriate understanding of the facts.
- Is taking collection action inappropriately.
- Has inappropriately denied an offer in compromise request.
If you disagree with a tax decision from the IRS, you may have the right to appeal the decision and settle the dispute through the appeals system. It’s important to understand your appeals rights and whether disputing the decision is the best option for you.
Here’s what you need to know:
- Your reasons for disagreement must be within the scope of tax laws. You cannot base your appeal on religious, moral, political, conscientious or constitutional grounds.
- You must have received a letter from the IRS stating that you have the right to appeal and explaining this right.
- You must disagree with the IRS’s decision
- You must not be signing an agreement form
If you meet all of the criteria above, then you may find it best to proceed with the appeals process.
But before you proceed, it’s important to consider whether you have any proof or evidence to back up your claims against the IRS. For example, if you believe the IRS has misinterpreted the law, then you should be prepared to demonstrate which laws were misinterpreted and how.
The appeals process isn’t for everyone. You may find that this process isn’t appropriate for you if:
- Your letter or correspondence from the IRS was a bill and does not mention an appeal.
- You did not provide your audit examiner with all of the information needed to support your position.
- Your only concern is being unable to afford what is owed.
If you do qualify for an appeal and want to proceed, you will need to go through the formal appeals process.
How to Request an Appeal
To request an appeal, you must file a written IRS formal protest and mail it to the address listed on the letter that explains your right to appeal.
It is crucial to ensure that you send your written protest to the appropriate location. Sending it to the Independent Office of Appeals will only delay the process or even prevent the agency from hearing your case.
Here are a few important things to know about the appeals process:
- The IRS office that initiated collections or made the tax assessment will first review your protest and try to resolve the issue before sending your request to Appeals.
- When going to Appeals, you have the right to represent yourself or have a professional representative.
- You may only be represented by a CPA, an attorney or an enrolled agent who is authorized to practice before the IRS.
- You can have your representative speak with the IRS on your behalf without you being present.
To request an Appeals conference, you must submit a formal written protest. Your protest must be submitted by the deadline specified in the letter you received from the IRS. In most cases, that deadline is 30 days from the date on the letter.
If you are appealing a collection, then you will need to follow the procedures for your type of case:
- Collection Appeals Program
- Offer in Compromise
- Collection Due Process
- Trust Fund Recovery Penalty
Each of these has its own eligibility requirements and procedures for appealing the collection decision.
The IRS Appeals Process
Disagreements on tax issues are common. If you disagree with a decision from the Internal Revenue Service, you have a right to request an appeal. IRS appeals are outlined by the IRS (here) and are a means of coming to an agreement with the agency before going to court.
However, you do have a right not to go through the IRS appeals process and go to tax court if you wish. The appeals process will require you to either make a small case request or to file a formal protest.
Make a Small Case Request
The small case request can be made if the following combined is less than $25,000:
- Taxes owed
- Interest owed
However, if you owe taxes for more than one period and any period exceeds $25,000, you’ll need to file a formal request.
Note: Even if you exceed the $25,000 threshold for a single tax period, you’ll need to file a formal protest.
File a Formal Protect
A formal request for an IRS appeal must be filed if the amount of your taxes, penalties and interest exceeds the $25,000 threshold. You will have only a limited time to file a protest, and this information is found in the letter you received from the IRS.
You’ll need to provide the following information when filing a formal protest:
- Name, address and contact information
- Taxpayer statement stating that you want to appeal the IRS’ findings
- Copy of tax adjustment letter
- Tax periods(s) and year(s) involved
- List of changes that you disagree with and why you do not agree with them
- Facts supporting your stance
- Signature and agreement that your statements are true
If you’re relying on certain laws or authorities for filing the appeal, you’ll also want to list them. Filing the protest will allow you to proceed with the appeals process and have your disagreement heard.
The appeals officer may disagree with your claims and be on the side of the IRS. In this case, you have the right to bring the case to the Federal Claims court or the U.S. District Court.
Working with a tax attorney to review your case and ensure that you have legal grounds to file an appeal can help you fight back against the IRS.