It’s not uncommon for taxpayers to disagree with the IRS on decisions pertaining to their federal tax returns. While tax disputes may be taken directly to tax court, the IRS offers its own internal appeals system for those taxpayers who wish to avoid federal litigation.
The IRS Appeals Process
Following a disputed IRS tax decision, a taxpayer may request an appeals conference with the IRS Office of Appeals by filing a written protest. Conferences with IRS Office of Appeals personnel are conducted either in person, via written correspondence, or by telephone. Taxpayers have the option of either representing themselves or utilizing professional representation during appeals conferences. A taxpayer’s representative must be either an attorney, a CPA, or an agent authorized to practice before the IRS.
Depending on the amount involved, a taxpayer may either make a small case request or file a formal written protest.
Small Case Request
The most common type of appeal request is known as a small case request. This type of request is appropriate when a taxpayer’s total tax liabilities, including penalties and interest, for the period in question equal $25,000 or less.
To make a small case request, the taxpayer must:
- Send a letter requesting an appeal to the address provided in the IRS letter of proposed tax adjustment within the time period indicated; and
- Describe the changes he or she disagrees with and the reasons for the disagreement.
Formal Written Protest
A formal written protest may be filed under the following circumstances:
- When the tax amount owed by the taxpayer for any single tax period is higher than $25,000.
- S corporation and partnership cases may file formal written protests regardless of the dollar amount in question.
- Employee plan and exempt organization cases may be filed as formal written protests regardless of the dollar amount in question.
To file a formal written protest, the taxpayer must:
- Identify the tax periods in question.
- Provide his or her name, address, social security number, and phone number.
- Indicate in a statement that he or she wishes to appeal the findings of the IRS to the Office of Appeals.
- Include a copy of the letter of proposed tax adjustment and identify the specific findings in dispute.
- Identify all adjustments in dispute, and supply reasons for the disagreement, including any and all supporting facts regarding each of the disputed issues.
- Cite all legal authority being relied upon to dispute the information contained in the letter of proposed tax adjustment.
- Sign the written protest.
Federal tax law is a complicated subject, and it can be difficult to navigate the appeal process alone. If you’ve received a letter of proposed tax adjustment from the IRS, it’s imperative that you engage the services of an experienced tax attorney in order to ensure that you understand your appeal options. Please contact us for a free consultation at (720) 897-1550 or (888) 694-2093 (toll-free).
Posted in: Tax Law