FAQs: IRS Appeals

I have been calling the IRS about my tax debt numerous times. I have spoken to several IRS employees but it appears that I am not making any progress towards resolution of my tax problem. What should I do?

      To begin with, communicating with the IRS and furnishing information about your finances is not always a good idea. Such information could be, and routinely is, used against taxpayers later on.

      The IRS employees who handle taxpayers' phone calls are usually only trained in collection matters and simply do not have the authority to negotiate with the taxpayers about reducing the tax bill. The only two options offered to the taxpayer are either making a lump sum payment to pay off the tax debt which includes interest and penalties, or entering into an installment payment plan. Taxpayers' communications with the IRS, therefore, often resembles those with collection agencies. The only difference is that the IRS is capable of inflicting more pain on the taxpayer than a mere collection agency. The IRS is fully aware of this fact and takes full advantage of it.

      As a matter of principle, if you disagree with the preliminary IRS finding about the amount of tax you owe, you may appeal the matter administratively. An administrative appeal means that you are asking the IRS Appeals Office to review your case.

      Administratively appealing an adverse finding by the IRS requires presenting factual and legal arguments as to why the preliminary determination of tax was not justified. You may argue that the procedural requirements of notifying you about the tax debt or lien filing or some other IRS action were violated. Alternatively, you may present arguments as to why the underlying tax amount was erroneously assessed by the IRS. You may also argue that some other IRS action such as the rejection of your offer in compromise was unjustified. Both types of administrative appeals (procedural and substantive) need to be grounded on solid legal and factual grounds in order to be successful. Presenting identical arguments that have already been rejected, will usually lead to the same result. For example, if during an IRS tax audit, you fail to convince the auditor that a certain item of expense is deductible and subsequently the IRS issues an audit report rejecting your arguments, you should not simply limit yourself to presenting the identical arguments that were rejected by the auditor. Even though your arguments may be right, you may nevertheless lose your appeal if you fail to craft an argument which is grounded on the relevant statutes and court rulings. The IRS appeals officer reviewing your case is not a tax lawyer and does not necessarily know the applicable tax law. He or she is an overworked government employee who wants to wrap up the case as soon as possible. Therefore, if the Tax Code contains provisions supporting your position, or if the United States Tax Court or another court has already ruled favorably on a similar case, it is your job to find and cite these legal authorities as part of your appeal.

      Before proceeding to the U.S. Tax Court, IRS Appeals is your last opportunity to convince the IRS that your tax position complies with the applicable tax laws and regulations. Therefore, it is imperative that you put your best foot forward by presenting concise and effective arguments in support of your position. An experienced tax lawyer can help you achieve your goals by crafting strong arguments supported by the applicable legal authorities. A tax attorney can also effectively represent you during an appeals hearing and negotiate a favorable resolution to your tax problems.