Last time, we began discussing the IRS appeals process. As we pointed out last time, the right to appeal an IRS determination is one of taxpayers’ basic rights, and taxpayers should not be afraid to make use of the process when they have a disagreement with a decision made by an auditor or revenue officer.
As we noted, taxpayers are required to make either a small case request or to file a formal protest in order to participate in an appeals conference. The difference between the two is largely based on the amount in controversy.
Small case requests are proper when the total amount the IRS claims it is owed for each tax period is $25,000 or less. That includes not only the tax, but also penalties and interests. A formal written protest is required for all tax periods if the amount the IRS claims is owed for any tax period is more than that amount.
Regardless of which type of appeal the taxpayer pursues, it is important that he or she is prepared to discuss all disputed issues at the appeals conference. Working with an experienced tax attorney can help ensure that the taxpayer clearly presents each of the disputed issues in the case, the reasoning behind the taxpayer’s dispute, and the factual and legal basis for the dispute.
An experienced attorney will also be able to provide any additional information or documentation that helps establish the taxpayer’s position. Provision of new information may result in reconsideration of the case by auditor or revenue officer who originally handled the case, in which case the taxpayer would have an opportunity to respond to that individual’s comments on the new information.
While most cases can be resolved in the appeals process, it is important for taxpayers to be represented by legal counsel so that the IRS doesn’t benefit from their lack of familiarity and facility with the law and the appeals process. Skilled legal counsel cannot guarantee a favorable outcome, but can help ensure that the taxpayer has the best opportunity to advocate for his or her rights and interests in the appeals process.