IRS Appeals Process

  • When we cannot agree with an IRS auditor, or come to a satisfactory conclusion in an audit, and have exhausted all hearings at the group manager level; then we will refuse to settle and will inform the auditor of our intent to appeal the case.  We will then move the audit to the Office of Appeals.

    The appeals process is often needed because many IRS audits cannot be resolved with the auditor.  Often the IRS auditor is newly trained and very inflexible. The newer auditors do not seem to understand reasonable proof.  They seem to think that every small business owner should keep records, like an accountant; even if they are in the building trades, or such.  These newer auditors seem to want exact odometer readings for each business use of a vehicle instead of a reasonable construction of the deduction.

    Another reason many cases go to Appeals is because IRS auditors are now more focused on penalty issues then before. They have been trained to consider the assertion of penalties in every case and that shows in the greater number of penalties being assessed.  This has caused a long backlog for the Appeals Office, due to practitioners, like us, refusing to settle cases worked by inflexible, unreasonable auditors.

    The sole function of this appeals conference is to review examination reports and provide an impartial platform for taxpayers and their representatives to plead their cases to a higher position within the IRS. The purpose is to avoid litigation when possible by resolving tax disputes internally in a way that encourages future voluntary taxpayer compliance with the tax laws.

    We often have better success going to appeals, because appeals agents are more experienced and understand the issues better. These agents are also allowed to consider Court costs in making their decisions. The Appeals Division of the IRS is very effective. The mission of the Appeals Division is to resolve cases, so it rarely makes sense for a taxpayer to skip the opportunity to go to Appeals.  Of course we must weigh the targeted outcome with the additional representation fees to determine the total cost to continue the fight.

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