Did you know that taxpayers have the right to appeal an IRS decision in an independent forum. This is not just one of ten basic rights — known collectively as the Taxpayer Bill of Rights — it's the law. All taxpayers should know and understand their rights in the event they need to work with the IRS on a personal tax matter.
The IRS's Independent Office of Appeals that handles a taxpayer's case must be separate from the IRS office that initially reviewed that case. Generally, Appeals will not discuss a case with the IRS to the extent that those communications appear to compromise the independence of Appeals.
Here are some important details about this right
- A statutory notice of deficiency is an IRS letter proposing additional tax. Taxpayers who receive this notice and then timely file a petition with the United States Tax Court may dispute the proposed adjustment before they must pay the tax.
- Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties.
- Taxpayers have the right to receive a written response regarding a decision from the Office of Appeals.
- When taxpayers don't agree with the IRS's decisions, they can refer to Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree (PDF), for details on how to appeal.
- Generally, taxpayers may file a refund suit in a United States District Court or the United States Court of Federal Claims if:
- They have fully paid the tax and the IRS has denied their tax refund claim.
- No action is taken on the refund claim within six months.
- It's been less than two years since the IRS mailed them a notice denying the refund.
When taxpayers disagree with the IRS's decision on their tax situation, they can submit a written request to have the IRS Independent Office of Appeals review the decision. The goal of Appeals is to resolve tax disputes outside of the courtroom in a way that is fair and impartial and encourages voluntary compliance with tax law. This office is separate from the rest of the IRS in order to ensure its impartiality.
Who can file an appeal
A taxpayer may be eligible to file an appeal if they:
- Received a letter from the IRS explaining their right to appeal the IRS's decision
- Disagree with the IRS's decision
- Haven't signed an IRS agreement form sent to them
Taxpayers should review the facts and tax law relevant to their situation and gather any documents needed to support their position.
Requesting an appeal
If taxpayers are eligible to submit an appeal, they can write a letter to request an appeal and mail it to the IRS address on the letter they received with their appeal rights. To avoid delays, it's important that taxpayers send their request to the address on the letter they received and not directly to the IRS Independent Office of Appeals.
Taxpayers may represent themselves or have a tax professional represent them during the appeal process. More details about who can serve as a representative is in Practice before IRS and Power of Attorney, Publication 947. (Best choice is an Enrolled Agent)
Special case procedures
Some types of appeals have their own processes including:
- Innocent spouse
- Mediation programs
- Rejected offers in compromise
- Penalty appeals
- Art appraisal services
Overview of the appeals process
If a taxpayer disagrees with an IRS decision, they may be able to avoid the time and expense of a court trial by asking the IRS Independent Office of Appeals to review their case. This office is separate from the rest of the IRS. When Appeals officers review cases submitted by taxpayers, they meet with taxpayers informally and consider their position and the IRS's position in a fair and unbiased manner.
Here's what taxpayers need to know if they want to appeal their case:
- To submit an appeal request, taxpayers mail their request in writing to the office that sent them the letter with their appeal rights. For information on filing a formal written protest or a Small Case Request, taxpayers should review Publication 5, Your Appeal Rights and How To Prepare a Protest If You DisagreePDF. The IRS function that receives the request will consider the taxpayer's protest and attempt to resolve the disputed tax issues. If that office can't resolve the taxpayer's issues, they will forward the case to Appeals for consideration.
- Once the request is with Appeals, the Appeals officer contacts the taxpayer within 45 days by mail to schedule an informal conference to review the taxpayer's situation. Appeals conducts conferences by phone, in person and by video. Taxpayers may choose which type of conference they prefer.
- At the conference, the Appeals officer discusses with the taxpayer the law as it applies to the facts of the case, including court rulings on similar cases.
- If a taxpayer hasn't heard about their appeal and it's been more than 120 days since they filed their request, taxpayers can ask for a status update by contacting the IRS exam or collection office they worked with last.
- If the taxpayer sends new information or documents to Appeals, the Appeals officer may need to send the case back to the original IRS function to review the new information. Appeals will not raise new issues or reopen issues agreed to by the taxpayer or the IRS except in cases of potential fraud or malfeasance.
- Appeals officers review the facts, the law, the taxpayer's comments, and information presented by the taxpayer and IRS exam or collection office before they make a final decision. They will also explain to the taxpayer the reasons for the decision and their options. Generally, there are three outcomes of an appeal:
- In the IRS' favor: If the facts and laws support the government's position, the Appeals officer recommends that the taxpayer concede and give up the issue.
- In the taxpayer's favor: If the law and facts support the taxpayer's position or courts have ruled in favor of taxpayers in similar cases, the Appeals officer recommends that the IRS concede and give up the issue.
- Compromise: The Appeals officer may recommend a compromise when the facts or laws are unclear, or the courts have made different rulings on similar cases. In this situation, Appeals may recommend a settlement where the taxpayer pays a percentage of the tax due.
Interest continues to add up on any unpaid balance a taxpayer owes as Appeals reviews a case.