IRS Tax Appeals

The IRS appeals process function has the mission of attempting to resolve tax disputes between taxpayers and the IRS by negotiated settlement discussions rather than litigation. Since tax litigation is very expensive, the IRS appeals process is a very useful tool to help resolve tax disputes. Today, in our society, using means other than litigation has caught on in the form of mediation and arbitration.

The IRS Appeals Process

The ability to utilize the IRS appeals function can sometimes be a tricky process. I have used the IRS appeals process many times to try to avoid tax liens, for collection and exam issues, and penalty abatement cases. If you desire, the appeal can be heard in person, or over the phone.

Fast Track Mediation

Fast Track Mediation is geared mostly to the small business and self-employed taxpayers that are disputing tax assessments as a result of an income tax audit, the imposition of a Trust Fund Recovery Penalty (for unpaid payroll taxes), offers in compromise settlements, or IRS collection actions where a Revenue Officer is involved. The trained mediator (who does not force either party to accept his or her decision), listens to both sides to understand the tax issues involved and tries to formulate a solution that both parties can accept. This process is usually complete in about 30 to 40 days. The mediation process is started when the IRS and the taxpayer both sign a Form 13369, for the case to transferred to the mediation group. With the form, you also provide a written explanation of your position, with legal support (tax law, court cases), that supports your position. The mediator reviews all the evidence, speaks to each party, and then renders a decision. Fast Track Settlements is also available by filing form 14017. The purpose of this proceeding is to resolve tax disputes while they are still in the examination phase. If the exam phase is over, the audit reconsideration process should be used.  The process is usually complete in about 60 to 120 days, which is short when compared to other IRS proceedings.


Lastly, arbitration is another appeal function. If settlement negotiations between the IRS and taxpayer are not successful, the parties may decide to jointly file for an arbitration proceeding. I have used this process mostly for exam issues for matters the IRS would rather not litigate. Some cases that are excluded from arbitration are purely legal issue disputes, some collection issues, and frivolous arguments. The IRS appeals process function is independent from the IRS so it can make decisions that are not clouded by the IRS. The IRS appeals group needs to decide the cases it gets on their own merits and cannot communicate with the remainder of the IRS if that would give the appearance of lacking independence. The prohibition against communications does not apply to Fast Track mediation of settlements since the appeals function is meant to bring to two sides together which obviously takes a certain level of communication to accomplish. The Internal Revenue Service and Appeals can propose tax adjustments or take collection action against you, and then hear why you disagree. If you disagree with the proposed or actual actions, you have the right to appeal the decision made by the IRS.

Taxpayers can dispute:

  • 1. Assessed tax penalties.
  • 2. Interest accrued.
  • 3. Rejection for an Offer in Compromise of a tax debt.
  • 4. Results of tax audits.
  • 5. Seizures of Assets (Notice of Intent to Levy).
  • 6. IRS tax liens.
  • 7. IRS tax levies.
  • 8. Substitute Return
If you find that you do not agree with the IRS decision, you have the right to appeal, and can ask for a hearing for your appeal. There is an administrative appeals process that works with the taxpayer to settle all tax disputes. This is often done to avoid court hearings and a formal trial. An Appeal is an independent review of a tax dispute where the Appeals unit tries to resolve a tax dispute fairly and impartial for both parties involved. If you are facing a serious tax problem, the IRS will send you a report or letter that will explain any adjustments or actions that they have taken. This letter will also inform you of your right to request a conference with an Appeals or Settlement Officer. This letter will also explain how to make a request for a conference. If you have received correspondence with the IRS explaining your right go to Appeals to dispute the IRS decision AND you do not agree and will not be signing the agreement, Appeals is the area you should be to resolve the issue. Besides examination adjustments, there are other things that can be appealed, such as penalties, offers in compromise, IRS tax liens, levies on properties, and interest paid.

What Happens at the Appeals Meeting

The Internal Revenue Service and Appeals conferences are informal meetings. Though as a taxpayer you have the right to represent yourself, it would be a good idea to have an experienced IRS Tax Attorney who can provide legal representation before the IRS. For an Appeals conference, you will need to be prepared with records and documentations to prove your position. You must be able to justify why you are disagreeing with the IRS decision and must show your rational with supporting documents. If you are unable to reach an agreement with the Internal Revenue Service and Appeals or Settlement Officer, you may be able to appeal certain aspects through the courts. You may also choose not to appeal within the IRS and only seek action through the tax court system. In either case, you will want to have an experienced IRS Tax Attorney to represent you throughout the process. The tax code is a complex document, and even if you believe that you do not need representation, having an experienced tax attorney to lead your case can only benefit you.

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]