The IRS Appeals Process

The IRS appeals function has the mission of attempting to resolve tax disputes between taxpayers and the IRS by negotiated settlement discussions rather than litigation. Since tax litigation is very expensive, the IRS appeals process is a very useful tool to help resolve tax disputes. Today, in our society, using means other than litigation has caught on in the form of mediation and arbitration.

The ability to utilize the IRS appeals function, as demonstrated by Facebook’s failed attempt to gain access to the appeals group and ended up going to court just to have the right to go to IRS appeals, can sometimes be a tricky process. I have used the IRS appeals process many times to try to avoid tax liens, for collection and exam issues, and penalty abatement cases. If you desire, the appeal can be heard in person, or over the phone.

a8-300x301-299x300Fast Track Mediation is geared mostly to the small business and self employed taxpayers that are disputing tax assessments as a result of an income tax audit, the imposition of a trust fund recovery penalty (for unpaid payroll taxes), offers in compromise settlements, or IRS collection actions where a Revenue Officer is involved. The trained mediator (who does not force either party to accept his or her decision), listens to both sides to understand the tax issues involved and try’s to formulate a solution that both parties can accept. This process is usually complete in about 30 to 40 days. The mediation process is started when the IRS and the taxpayer both sign a Form 13369, for the case to transferred to the mediation group. With the form, you also provide a written explanation of your position, with legal support (tax law, court cases), that supports your position. The mediator reviews all the evidence, speaks to each party, and then renders a decision.

Fast Track Settlements is also available by filing form 14017. The purpose of this proceeding is to resolve tax disputes while they are still in the examination phase. If the exam phase is over, the audit reconsideration process should be used.  The process is usually complete in about 60 to 120 days, which is short when compared to other IRS proceedings.

Lastly, arbitration is another appeal function. If settlement negotiations between the IRS and taxpayer are not successful, the parties may decide to jointly file for an arbitration proceeding. I have used this process mostly for exam issues for matters the IRS would rather not litigate. Some cases that are excluded from arbitration are purely legal issue disputes, some collection issues, and frivolous arguments.

The IRS appeals function is independent from the IRS as a whole so it can make decisions that are not clouded by the IRS. The IRS appeals group needs to decide the cases it gets on their won merits, and can not communicate with the remainder of the IRS if that would give the appearance of lacking independence. The prohibition against communications does not apply to Fast Track mediation of settlements since the appeals function is meant to bring to two sides together which obviously takes a certain level of communication to accomplish.

 

 

 

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