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When the IRS sends you a letter saying your tax bill is higher than you expected, that you rejected an offer and now it won’t be collected, or that it will be collected, it’s stressful. An IRS decision is not always the final decision, though. In many cases, taxpayers have an administrative appeal option to have an independent IRS office look into the dispute before it goes to court.

The IRS Independent Office of Appeals resolves many conflicts with the IRS concerning audits, penalties, tax assessments, liens, levies, installment agreements, and other collection issues. The important thing is to know what type of appeal you’re eligible for, submit the appeal on time, and provide evidence that specifically refutes the IRS’s stance.

In general, you can appeal if:

• The IRS has issued a determination and the notice specifies appeal rights.
• You have a differing opinion on the interpretation of the law or application of the facts by the IRS.
• You haven’t previously signed an agreement to accept the IRS’s list.
• You have some records or other evidence to back your position.

Appeals may be available following an IRS audit, decision on a penalty, collection action decision, lien decision, Office of the Small Taxpayer Advocate (TSA) levy appeal, or some Offer in Compromise (OIC) determinations. You will be notified if there is an appeals process and how to appeal.

Not all IRS bills provide an Appeals opportunity. If a notice just asks for payment, you will probably have to go to the IRS employee working on your case or have to follow another procedure available.

You won’t get anywhere if you don’t state the reason for your disagreement. Appeals typically address the issues arising from the application of the relevant tax law and facts, and not moral, religious, political, constitutional, etc. objections.

The IRS Independent Office of Appeals (Appeals) is not part of the IRS examination and collection functions that made the determination.

It is designed to solve federal tax controversies without going to court. The IRS’s and the taxpayer’s position is examined by the Appeals Officer or Settlement Officer, and an attempt is made to reach a fair resolution. Appeals conferences can be held over the phone, through letter, by video conference, or at a meeting.

The Appeals process is not as formal as court litigation at the federal level. Taxpayers may represent themselves, or select an authorized tax professional.

1. An IRS notice or determination is issued, which includes appeal rights.
2. The taxpayer makes a written appeal or other required request.
3. Typically, the IRS office that originally made the determination will review the request first.
4. If not resolved, the case will be referred to Appeals.
5. A contact with the Settlement Officer/Appeals Officer is made with the taxpayer.
6. Both parties present facts, legal issues, documentation, and any disputed issues.
7. Appeals tries to defuse the controversy.
8. In the event of no agreement, the taxpayer might also have other court or administrative remedies available, depending on the kind of case.

Important: When requesting a regular Appeals conference, taxpayers generally should send the request to the IRS office and address specified in the appeal notice—not directly to Appeals. It may cause the case to be delayed if it is sent to the incorrect location.

These two are sometimes mixed up, but they have different functions.

Reconsideration of the audit may be helpful in cases where an audit led to an unpaid balance and the taxpayer thinks that the IRS missed important information.

For instance, if:

• There are new documents about income, deductions, or credits.
• You were not involved in the initial audit.
• You have never been sent the audit report due to a change of address.
• You don’t agree with the dollar amount that the IRS believes you owe.

According to the Taxpayer Advocate Service, audit reconsideration is a process that essentially is a reopening of the audit. If the IRS has not previously taken that information into account, it is important.

A formal Appeals request is not like that. Typically occurs following an IRS examination determination where you don’t agree with the proposed adjustments and you have the right to appeal.

Many of the letters that the IRS sends are for 30-day correspondence’s purposes, and they include details about the proposed adjustments and the request for an Appeals conference. The taxpayer is normally given 30 days to reply from the date of that letter.

The correct way to go will vary depending on the circumstances of your case.

The IRS may want to consider your receipts, expense records, basis documentation, and other important evidence; if it did not and does not, audit reconsideration may be relevant. If you have passed the exam and do not agree with the examiner’s legal or factual findings, Appeals might be the next step.

It is important to remember that just because further documents are posted, it does not automatically constitute an Appeals case.

The Collection Due Process (CDP) hearing is a type of appeal that can be taken after specific IRS collection notices.

Here are some examples of notices that might include:

• A Notice of Federal Tax Lien.
• A Final Notice of Intent to Levy.
• Certain jeopardy levies.
• Certain state tax refund levies.
• Certain post-levy situations.

A timely CDP hearing request typically must be made within 30 days of the date of the notice for the corresponding CDP. Usually, Form 12153: Request for a Collection Due Process or Equivalent Hearing is used.

A timely CDP request can offer vital procedural safeguards and, in some cases, time to consider collection alternatives.

Some of the problems that may arise are whether to take collection action and whether to consider alternatives like an Installment Agreement or Offer in Compromise.

Failure to meet the CDP deadline may have a substantial impact on one’s rights. In some cases, a taxpayer may still be entitled to an Equivalent Hearing, but the protections and rights for judicial review differ.

When you are served a CDP, please read it right away, and do not wait for the IRS to take the next action.

Another avenue for challenging some IRS collection actions is through the Collection Appeals Program (CAP).

CAP can be used in situations dealing with:

• There are Federal Tax Lien notices.
• Rejection of an installment agreement.
• Modifying an installment agreement.
• Proposed or termination of an installment agreement.

Some decisions concerning the lien certificate or property.

In general, CAP is drafted to resolve collection disputes faster than other methods.

This is a big difference, however, between CAP and CDP:

If you feel you have been wrongly denied a CAP determination by Appeals, you cannot appeal it to the U.S. Tax Court. In contrast, a timely CDP hearing has a right to judicial review in Tax Court.

In some cases of CAP, taxpayers will initially meet with a Collection Manager. If a taxpayer has been in contact with a Revenue Officer, Form 9423 Collection Appeal Request may be necessary.

Since the selection of CAP rather than CDP may have an impact on subsequent rights, taxpayers should take the time to carefully read the notice and applicable procedures before submitting.

Among the most important components of an IRS appeal are deadlines.

1. Examination appeal – generally, the taxpayer will have 30 days after the date of the 30-day letter to request an Appeals conference.
2. 90-day Tax Court deadline: If the IRS issues a statutory notice of deficiency, the taxpayer has 90 days to petition Tax Court (or 150 days if for an individual outside the United States).
3. 30-day CDP deadline: Usually, a CDP request must be received within 30 days of the applicable CDP notice.
4. The deadlines for CAP are many: Many CAP issues have their own deadlines. For instance, some appeals under the installment agreement are generally 30 days.
5. These are basic deadlines, NOT universal deadlines. The date of response and the procedure in your case are defined by the notice.

Use a deadline file to keep track of your deadlines.

As soon as you get an IRS notice:

1. Take a picture or scan of all pages.
2. Mark the date of the notice.
3. Write the date for the answer.
4. If it is applicable, retain the envelope.
5. Keep records of mailing or electronic submission.
6. Set a reminder on the calendar a couple of days early for the deadline.

If there’s an important appeal deadline that passes, a strong tax argument can become much more difficult.

Appeals are not just a place to let the IRS know that you don’t like its answer. Your stance must be justified with evidence and a good explanation as to how that evidence relates to the tax law.

Useful documents for a dispute include:

• Bank and credit-card statements.
• Invoices and receipts.
• Payroll records and Forms W-2.
• Various information returns, such as Form 1099.
• Business accounting records.
• Mileage and vehicle logs.
• Depreciation schedules.
• Real-estate closing documents.
• Records of stock or investment transactions.
• Basis documentation.
• Contracts and agreements.
• Medical or charitable contribution records (where applicable).
• Prior tax returns.
• Letters to the IRS.
• Reports/Appraisals from experts as applicable.

Specific, organized, and directly related to the disputed issue are the most convincing types of evidence.

The IRS might not be satisfied with just saying that the expense was legitimate, for instance, if the business deduction amount was $30,000 and the IRS disallowed it. A better presentation would specify the type of expense, the business reason for the expense, include invoices and payment documentation, and show where the amount would show on a return.

If appealing, structure the case around the specific disagreement.

1. List all points of contention

No, don’t write, “I disagree with the audit.

Rather, list each problem on its own:

• Income adjustment
• Deduction disallowance
• Penalty
• Credit denial
• Basis adjustment
• Collection action
• Installment agreement rejection

2. Explain the facts

Explain the events in order and limit the explanation.

3. Identify the relevant law in the case

Identify the facts that establish the argument in favor of the Internal Revenue Code provision, Treasury regulation, IRS guidance, or court authority involved.

4. Attach supporting documents

Number or label exhibits so the Appeals Officer can easily reference evidence to your arguments.

5. Address unfavorable facts

Ideally, if the IRS has spotted a weakness, it might not be so convincing if the presentation ignores it. When a fact does not affect the legal result or provide further documentation, explain why.

An Appeals Conference is typically not a court proceeding.

The Appeals Officer can have questions regarding:

• What you don’t like about it.
• The accuracy of the transaction.
• Your documentation.
• The relevant tax legislation.
• Discussions held with the examiner or Collection in previous years.
• Any updated information that is submitted.

Appeals review both the taxpayer’s and the IRS’s arguments. Taxpayers will be asked to state their dissent and make an appropriate showing of supporting evidence within the specified period.

In appropriate cases, secure digital tools may be utilized for document exchange and communication, also via appeal.

The introduction of new information is very important and sometimes has an impact on the process.

If you are including information that has not been considered by the examination or collection function, Appeals may refer the case back to the examination or collection function for reconsideration.

It is another reason to gather your evidence before an Appeals conference, and not see it piecemeal throughout the proceedings.

There are a couple of possibilities.

1. The IRS’s stance is supported.

Appeals may have reason to believe that the facts and relevant law are on the side of the IRS.

2. The taxpayer’s view has been received

The position taken in the contested action or collection may be modified where the evidence and law favor the taxpayer.

3. The case is compromised!

The facts or legal basis may be ambiguous and/or contradictory in certain situations. Appeals could be resolved by a settlement where the taxpayer pays a portion of the disputed amount.

4. The case moves forward in court.

Depending on the type of case, the notice filed, and the statute of limitations, the taxpayer may have court options if an administrative appeal does not settle the dispute.

For instance, a taxpayer who receives a statutory notice of deficiency may petition the U.S. Tax Court within the prescribed time limits after receiving the deficiency notice without paying the deficiency.

1. Do not treat the first IRS notice from the IRS as an ordinary bill. IRS letters often include a specific deadline and requirement that should not be ignored.
2. Make sure to appeal the correct type of adjustment, penalty, liens, levies, or collection action. The notice should specify which type of dispute will be presented to the appeals officer.
3. Organize your evidence by exhibit numbers with an index.
4. It is important to separate facts from arguments. The IRS appeals officer needs to know what happened first, then why it happened. Tax law is always necessary to back up any argument.
5. Never assume that any conversation with an IRS representative replaces the need to file an appeal by the deadline. The law allows for limited exceptions, but no taxpayer should rely on a conversation with a representative for an exception.
6. You may want to obtain professional representation if you have questions or concerns about factual, procedural, or technical issues and if you believe that having a representative will help you resolve the dispute more effectively or efficiently. Most representatives must file a Form 2848, Power of Attorney, with the IRS.
7. CDP and CAP are two different procedures, with different remedies. Appeals officers and special agents may be mistaken about a taxpayer’s rights; judicial review of collection actions is not always available under CDP or CAP.
8. Respond to all Appeals requests promptly. Taxpayers should always be careful to respond to requests for information from the IRS.

Disagreements with IRS auditors, assessors, collectors, or revenue agents do not necessarily require immediate or blanket resort to the federal courts for redress. The IRS maintains several different administrative remedy programs, including the Independent Office of Appeals, audit reconsideration, Collection Due Process hearings, and the Collection Appeals Program, designed to let taxpayers present their facts and arguments before a government official who has authority to make the disputed action or decision official.

The choice of remedies and procedures can be critical to a taxpayer’s case, but many taxpayers never fully understand the differences between them, or the need to follow all procedural requirements strictly, including filing deadlines.

Preparation should begin with questions like, “Exactly what is the IRS trying to do here?” “How and why is the IRS wrong?” and “What facts and law are on my side?” Thoroughly answering each question is necessary for success, but no one should overlook the importance of following all directions given in the notice that began the dispute, or observing every other applicable deadline and procedure.

1. How long do I have to appeal an IRS audit decision?

In many audit cases, taxpayers in general have 30 days from the date of the IRS’s 30-day letter to request an Appeals conference. It depends on the notice, so you need to look at it first and then take the necessary action.

2. What are the differences between CDP and CAP?

A Collection Due Process hearing could help in the case of some liens and levies, and it provides rights to judicial review. A Collection Appeals Program could challenge various collection actions, but it does not grant Tax Court review rights by default.

3. What evidence should I offer during an IRS appeal?

To appeal to the Tax Court, provide a list of documents as proof of your position and attach it to your application. The letters of receipt, invoices, and checks must be included in the paper, along with all the bank statements, contracts, tax returns, accounting records, and basis documents.