What Is the IRS Appeals Process Like?

So, the IRS appeals process is actually reasonably friendly to taxpayers and let me explain why. First of all the function of Appeals technically is to be an independent body of the IRS away from examinations and collections. The sole function of appeals is to resolve disputes between the taxpayers and the government and to do so in a mutually beneficial way. The most common time we run into appeals is usually with respect to when we're filing a Tax Court petition and trying to work things out. Most of our audits that we do at the firm we will file a tax court petition for and then we'll try and negotiate with appeals. The benefit of dealing with Appeals is most of the Appeals officers are either former collection agents or they're formal auditors so they understand what you're talking about. You're dealing with professional people who know the same playing field as you and that are a representative that we can communicate with on a high level and get a lot done. Number two is with Appeals you're dealing with a very high volume of cases, so Appeals is trying to screen cases out prior to litigation. Because it's trying to resolve disputes, it has a lot more flexibility. They're dealing with so many cases that if, for example, you're taking an audit into appeals, appeals isn't going to go through bank statements. They're not going to go through receipts but appeals will take a look at the presentation of information and they will make an objective decision independently of the author.

The way the appeals process works is it's kind of like an informal mediation. The auditor isn't there if the collection agent isn't there but it's you and the appeals officer. You state your case, the government's case has been written through the audit report or through the collections report, and appeals tries to negotiate a resolution. By and large we've had a really positive experience within IRS appeals. IRS Appeals is generally more flexible - they don't get so emotional about the result because it's not really Appeals function. You know if Appeals lets an audit go for less than a liability that's less of a big deal then.  Appeals is removed from the situation and it may be that separation between the collections or examination function and the appeals division oftentimes really helps particularly in the context of a Tax Court case because the Appeals team manager is essentially removed from the ultimate decision and the decision goes to district counsel. We found that is a very effective way to resolve cases because if you've ever been into Tax Court, they're trying to resolve all these things in a short period of time. Tax court rotates - it goes for like two weeks and so when District Council comes in for the IRS, they're usually dealing with like four or five different cases so to the extent that they can get things off the docket and they can resolve issues, it's usually a very good negotiating platform for taxpayers. It gives you an opportunity to negotiate and hopefully strike up a mutually beneficial resolution to a case without having to go through your examination or collections. If you've had a problem with data, we recommend the appeals process. We think it's a great process but obviously it depends on what the issue is. You're certainly going to want an attorney to guide you through that process. Because the implication is if the process breaks down, you're presumably either going to litigate or you're going to take your shot in appeals and that's it so you want to involve an attorney in the appeals process. You want to negotiate with appeals and then you can go from there.


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law