There are as many tax issues as there are taxpayers. Everyone’s situation is unique.
But taxpayers who find themselves disagreeing with the Internal Revenue Service share a common bond. Each has the right to appeal the agency’s findings.
The IRS appeals system is used most commonly by people questioning the results of a tax-return examination and subsequent tax bill adjustments. But audits aren’t the only thing taxpayers can appeal. You also have the right to question:
- IRS collection actions, such as liens, levies, seizures and installment-agreement terminations.
- Rejected offers in compromise to settle tax bills.
- Penalties and interest the IRS adds to your tax bill.
In some cases, an appeal of a tax decision can begin — and be settled — immediately. If examination of your return is at an IRS office, you can request an on-the-spot meeting with the examiner’s supervisor to explain your position. If an agreement is reached, your case will be closed.
If that fails or the examination took place outside of an IRS office, the tax examiner will write up the case explaining your and the IRS’ positions and send the report to the district office for processing. Within a few weeks, you should receive the IRS’ findings on your case. If you don’t agree with this, your next step is to go to an IRS Appeals Office.
A local Appeals Office is a separate and independent IRS office. Its tax-dispute conferences are informal, and can be conducted by correspondence, telephone or in person. Get in touch with an appeals office when you:
- Need help in determining that the IRS made an incorrect decision due to misinterpreting the law. Check IRS and other tax publications discussing your issue or issues.
- Believe the IRS did not properly apply the law due to a misunderstanding of the facts. Be prepared to clarify and support your position.
- Think the IRS is taking an inappropriate collection action against you or you do not agree with its denial of your offer in compromise.
Always refer to specific IRS decisions, usually cited on the examination notice. In each case where you believe the facts used by the IRS are incorrect, make sure you have records or other support available to back up your position.
You don’t have to have legal representation at an Appeals Office meeting, but if you wish you can be joined by an attorney, certified public accountant or an enrolled agent. If you prefer to go it alone, you can get more information from the IRS Web page dedicated to appeals issues.
Most tax differences are settled at the Appeals Office level. But in the instances where taxpayers still are unhappy, they can take their cases to the independent Taxpayer Advocate for help. Finally, taxpayers who’ve exhausted all other tax-dispute avenues have the right to head to federal court.
Further information on taxpayer appeals is available in IRS Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree; Publication 556, Examination of Returns, Appeal Rights and Claims for Refunds; and Publication 1660, Collection Appeal Rights (for Liens, Levies and Seizures).
Keep in mind that during all levels of appeals you must have valid legal reasons based on current tax law for disagreeing with the IRS. You cannot appeal your case based only on moral, religious, political, constitutional or conscientious grounds.