Taxpayer’s Guide to IRS Appeals

The IRS may be the authority on all tax-related issues, but that doesn’t mean that you always have to accept their decisions as final. They have an extensive appeals process that allows taxpayers to try for a different decision by presenting additional evidence or making their case in different ways. This post outlines how to appeal different IRS decisions. 

With the help of Damiens Law, you can find out if you are entitled to an appeal, what your next steps should be, and how to get started.

Overview of the IRS Appeals Process

Appeals are handled by the IRS Independent Office of Appeals. Their goal is to resolve tax issues without the need for litigation, which saves both sides time, money, and effort. After you request an appeal, the IRS will process your application and decide how to move forward. While the Office has traditionally reached out to taxpayers to begin this process via mail, they have recently started reaching out via phone to settle cases more quickly. 

When you request an appeal, the Office schedules a conference to review your situation. Conferences can be held via phone call, video call, or in-person appearance.

During the conference, the Office of Appeals representative explains the laws relating to the taxpayer’s case. Once all the relevant information has been gathered, the Appeals Officer will look over the facts of the case, the relevant laws, additional comments provided by the taxpayer, and information from the exam or collection office. They then make their final decision and notify the taxpayer, providing an explanation for their final decision. They may rule in the IRS’ favor, in the taxpayer’s favor, or they may recommend a compromise.

Types of IRS Appeals

There are multiple types of appeals, and understanding the role of each type can help you figure out which is the right option for your current situation. 

CDP Appeals

In certain circumstances, you can request a Collection Due Process (CDP) hearing. This process begins with filing Form 12153, and you must do so quickly—appeals run on a tight timeline. 

After you request a hearing, the IRS will temporarily halt collection efforts. You can request a CDP hearing if you receive a Final Notice of Intent to Levy or after a federal tax lien is issued. You can also follow this process if you receive a Notice of Jeopardy Levy and Right of Appeal, Notice of Levy on Your State Tax Refund, or Post Levy Collection Due Process Notice. 

During your hearing, you meet with an IRS appeals officer to talk about the alternative solution you’d like to utilize. A CDP hearing allows you to dispute the penalties in question, not just how they collect them.

CAP Appeals

This is a Collection Appeal Program (CAP) appeal. It’s utilized when taxpayers want to challenge specific IRS actions. It begins with the filing of Form 9423. 

Taxpayers may pursue a CAP appeal if the IRS has or has not yet initiated a collection action. Additionally, the CAP is useful in appealing issues related to installment agreements. It’s important to remember that the CAP doesn’t let taxpayers challenge the tax liability itself. While the CAP has limitations that the CDP does not, it is also a much quicker process.

Appealing IRS Audits

Finding out you’re the target of an IRS audit is terrifying—it’s enough to make even the most organized and honest taxpayer start imagining life in prison after an accidental deduction. Should your audit end with unfavorable decisions, you do have options. 

You can appeal an audit the same way you appeal other tax concerns. However, you must submit your protest no later than 30 days from the date of the letter sent by the IRS. From there, you have a hearing in which you present your case and hopefully negotiate a settlement. 

Successful appeals benefit everyone involved—taxpayers have a chance to limit their financial losses and the IRS lowers its chances of ending up on the wrong side of an expensive lawsuit.

Appealing Penalties and Interest

If you disagree with a failure to file or failure to pay penalty imposed on you, you are required to notify the IRS that you want them to remove the tax penalty. Should they deny your request, you can then pursue an appeal. 

The IRS reviews these issues by looking at the information you have provided and contacting you directly to request additional information or insight. They may also schedule a conference to discuss this issue in greater detail. From there, they will make their final determination.

Tax Levy and Lien Appeals

Upon receiving a Notice of Intent to Levy, you can request a CDP hearing or use the CAP program. Discussing your options with a tax attorney is important because both options have their benefits and drawbacks. You may consider an appeal if the following apply:

• You would rather pursue an installment agreement.
• You will be unable to meet your financial obligations if they follow through with the levy.
• You plan on requesting relief as an innocent spouse.
• You are applying for an Offer in Compromise. 

For many people, an installment agreement is a better option that allows them to spread payments out over time rather than absorbing the full financial hit of a tax levy.

The IRS may move forward with a lien if you owe more than $10,000. This can shackle you to your home or other assets until you are able to clear the lien, which is why many people want to appeal it. 

After you receive a Notice of Federal Tax Lien Filing, you can begin the appeals process via the CAP or with a CDP hearing. However, a CAP is your only option if the tax lien has not yet been actually filed. If you move forward with a CDP hearing, you must file Form 12153 within 30 days of the date listed on your notice. If you move forward with a CAP appeal, you can begin by requesting a meeting with the manager of the IRS employee with whom you are currently working. If they are unable to help you, you can file Form 9423 within three days of the meeting.

Appealing Trust Fund Recovery Penalty

Companies that fall behind on trust fund taxes, which include railroad retirement taxes, collected excise taxes, Medicare, and Social Security taxes, often come under scrutiny by the IRS. The IRS may then assess a trust fund recovery penalty (TFRP) against individuals to recover those. losses. 

The people responsible for paying this penalty include business owners, officers, or others who meet certain criteria within a business. When the IRS sends you a notification that it is going to assess the TFRP against you, you have 60 days to appeal their decision. To do this, you submit a formal protest to the IRS outlining your arguments against the TFRP. They will then begin their investigation and schedule a conference hearing. This will result in an upheld TFRP decision, acceptance of your proposed settlement, or a settlement offer.

Innocent Spouse Relief Appeals

If you’ve requested relief from taxes owed on a joint tax return because of your spouse’s decisions, the IRS may decide against you. When they do, you can appeal that decision—and your spouse can also participate to provide assistance. 

Your decision should come through postal mail, in which the IRS explains the decision to provide or deny relief. You then have 30 days from the date listed on the letter to appeal their denial. Begin the appeals process by filling out Form 12509. You can submit that letter and all of your supporting documentation to the IRS, at which point they will consider your appeal. If they still deny you relief, your next step is to petition the United States Tax Court.

Appealing a Rejection of an Installment Plan

If you have a tax liability and you’ve applied for an installment plan to pay it off, it’s disheartening to see that the IRS has rejected your application. You can appeal this decision by calling the IRS at the number found on your letter and explaining the situation. 

If it’s a simple error that led to the denial, it can often be resolved immediately. Otherwise, you can request to speak with a manager or collections manager. If no one is able to help you by this point in the process, you can file Form 9423 to begin a CAP appeal.

How to Prepare for an Appeal

Filing an appeal is generally a good use of your time. Statistically, taxpayers do see some decrease in what they owe when they go through with an appeal. It’s a situation where you lose little by trying and stand to gain a lot if you’re successful. Note, though, that this doesn’t mean that appeals are risk-free. 

Depending on whether you request a CDP hearing or go through the CAP process, you may have to make certain concessions or give up certain options available to you. That’s why it’s best to talk to a tax appeal attorney before making any final decisions. Some of the ways you can prepare for an appeal include:

• Read the notice sent to you carefully: While tax procedures can seem overwhelming and complicated, the IRS does try to make them as straightforward and easy to follow as possible. It’s normal to get an IRS notice, panic, and not retain any of the information in the letter. However, these letters generally contain all of the information you need to learn more about your appeals options and start the process. Once you’ve calmed down, review the notice you received in the mail and figure out what your next steps are.
• Review the process: The appeals process is slightly different for each type of tax issue. As you review your notice, take notes on the process and identify the documentation you’ll need to provide.
• Mind the timeline: This is perhaps the most important part of preparing for an appeal. Although the IRS may take its time processing your paperwork and actually reviewing your appeal, they hold taxpayers to extremely strict deadlines—and that applies to appeals, too. Missing a deadline could mean losing your right to an appeal or having to go through an entirely separate process with different requirements and potential outcomes.
• Gather your evidence: If you want your appeal to be successful, you’ll have to show that the IRS was mistaken in some way or that there’s a better way to address the issue at hand. Think about if you have any official documentation, photos, bills, or receipts that could be used to prove your side of the story.
• Speak to an attorney: This should be high on your list of priorities when you’re stressed out over tax disputes. While you can fill out the forms, gather evidence, and attend your conference on your own, you’re essentially guessing what the IRS needs to change their mind and trying to hit a target you can’t see. Meeting with an attorney can give you a better understanding of your options and what you need to do for a successful appeal.
• Consider different outcomes: In some situations, the IRS will offer a different outcome rather than just agreeing with you or staying with their original decision. Think about which outcomes you would be happy with and which ones would require you to explore further appeals options.

The Difference Between an IRS Protest and Appeal

When talking about tax concerns, people may use the terms “protest” and “appeal” interchangeably. However, there are differences that may apply to your situation.

In most cases, you need to submit a protest before you can move forward with the appeals process. There are exceptions if your case is below a certain dollar amount. In these situations, an oral request is enough to warrant consideration for an appeal.

Writing a strong protest is key to being considered for an appeal. At minimum, your protest should include a statement that you wish to appeal the decision made by the IRS, your name and address, information on the findings you disagree with, information regarding your position, and any specific laws on which you base your protest.

Upon acceptance of your protest, the appeals process can begin. You should consult with a tax attorney before writing your protest letter, as they can best advise you on which information to include and how to proceed.

Getting the Legal Support You Need With Tax Appeals

In any situation involving the IRS, working with a tax attorney is highly recommended. Your financial well-being is at stake, and handling your tax issues on your own can leave you with thousands of dollars in debt and little recourse. You could end up with damaging liens attached to your property that leave you unable to take out loans or sell your property, have your income garnished, or have your assets seized.

From the very beginning, when you begin working with a tax appeal attorney, you can significantly decrease your stress levels and take a more measured approach to your appeal. Having an attorney means understanding your options, not assuming that every letter from the IRS is the be-all-and-end-all of your case, and knowing what to expect from the entire process.

Working with Damiens Law is one way to make the most of your shot at an appeal. Our Mississippi tax law team works exclusively in tax law, giving us the most up-to-date information on IRS laws and procedures. Our sole focus on tax law allows us to hone our skills and techniques in IRS communications and negotiations, equipping us to handle complex cases like yours.

If you entrust your tax appeal case to Damiens Law, know that you’ll always have access to your assigned tax professional. When you have questions or concerns, we will be there to address them. You won’t have to chase us for updates, because we’ll keep you in the loop at all times.

Is an appeal the right choice for your tax matters? Let’s talk. Call Damiens Law at 601-476-2693 or send us a message online now.