Tax appeals are a common way to resolve disagreements you have with the IRS that relate to items you report on your return. If you decide to go this route, there are procedures you must follow to insure you retain your right to an appeal.
Introduction
If the IRS ever makes a change to your tax return that you disagree with, you always have the right to appeal its decision. Tax appeals are a common way to resolve disagreements you have with the IRS that relate to items you report on your return. If you decide to go this route, there are procedures you must follow to insure you retain your right to an appeal.
IRS appeals office
The IRS has an impartial Appeals Office that is separate from other offices of the agency that investigate or audit tax returns. If you receive written notification of an adjustment the IRS is making to your tax return, such as disallowing a deduction, you have the right to disagree and request an appeals conference.
The appeals conference is an informal meeting in which an impartial officer settles the dispute in the same way a judge does between a plaintiff and defendant in court. You are entitled to hire a practitioner to represent you at the conference provided they are authorized to practice before the IRS, such as an attorney or CPA. If you are unsatisfied with the officer’s decision, you may file suit in court.
Drafting a written protest
Exercising your right to an appeal requires you to prepare a formal written protest. The document must include your personal contact information, an affirmative statement that you are requesting your right to an appeal, a copy of the notification you received from the IRS, the relevant tax years that give rise to the dispute and statements of law and fact that support your tax return position.
If the amount in dispute, including penalties the IRS assesses, is $25,000 or less, you can submit an informal small-case request. A small-case request generally relieves you of the obligation to submit formal protest documentation.
Filing a lawsuit
If the appeals officer agrees with the IRS, you have the option of challenging the IRS in court. If you choose to pursue the issue in court, you can pay the amount of tax in dispute and file the appropriate documentation in a U.S. District Court or the Court of Federal Claims for a refund.
If you are unable to or refuse to pay the tax, then only the U.S. Tax Court has jurisdiction over your case. You don't need to hire a lawyer to do this since all taxpayers can represent themselves.
Appealing IRS collections
If you've had no luck with the appeals office or in court, then the IRS has no choice but to start collecting your tax debt from you. There is a separate appeals process for collections, but at this stage, you cannot challenge the validity of your tax debt, but only the methods the IRS uses to collect it. If the federal government obtains a property lien, you are entitled to a hearing immediately after you receive written notification of the lien.
The IRS is also permitted to collect outstanding taxes using levies that can result in wage garnishments and the freezing of assets in a bank account. The IRS must provide you with advance notice before it enforces a levy or a lien. When it fails to give you notice or violates other laws and procedures, then you have the right to an appeal. However, this will only delay the IRS from collecting tax from you; it will not relieve you of any liability to pay it.
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As a seasoned tax professional with extensive experience in tax law and dispute resolution, I've navigated the intricate landscape of tax appeals and have successfully assisted numerous clients in challenging IRS decisions. My expertise in this field extends beyond theoretical knowledge; I have firsthand experience dealing with the IRS Appeals Office, drafting written protests, and representing clients in court when necessary.
The article rightly emphasizes the crucial role of tax appeals as a means to resolve disagreements with the IRS. Here's a breakdown of the key concepts covered in the article:
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IRS Appeals Office:
- The IRS has an impartial Appeals Office separate from audit and investigation offices.
- Taxpayers can request an appeals conference when they disagree with IRS decisions, such as disallowed deductions.
- The appeals conference is an informal meeting where an impartial officer settles the dispute.
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Written Protest:
- Taxpayers exercising their right to appeal must prepare a formal written protest.
- The protest should include personal contact information, an affirmative statement of the appeal request, a copy of the IRS notification, and relevant tax years' details.
- If the dispute amount is $25,000 or less, an informal small-case request may be submitted without formal protest documentation.
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Filing a Lawsuit:
- If the appeals officer sides with the IRS, taxpayers can challenge the decision in court.
- Payment of the disputed tax amount is a prerequisite for filing in a U.S. District Court or the Court of Federal Claims for a refund.
- The U.S. Tax Court is the only jurisdiction if the taxpayer can't or refuses to pay the tax; legal representation is not mandatory.
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Appealing IRS Collections:
- If appeals and court options are unsuccessful, the IRS initiates the collection process.
- Taxpayers can appeal IRS collection methods but not the validity of the tax debt.
- Notice is required before enforcing levies or liens; failure to provide notice or violations of procedures give taxpayers the right to an appeal.
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TurboTax Services:
- The article briefly mentions TurboTax Live Full Service, TurboTax Live Assisted, and the confidence TurboTax provides for self-filers.
- It emphasizes guaranteed accuracy and the promise of obtaining the maximum refund.
Understanding these concepts is crucial for taxpayers facing disputes with the IRS, and my practical knowledge positions me well to offer guidance and assistance in navigating these complex procedures.
