Changes in IRS Appeals Procedures

Few groups within the IRS have been spared cuts as funding has failed to keep up with inflation. After losing almost 21 percent of its staff between 2012 and 2015, Appeals has needed to reorganize.

Three functional offices – Collection, Examination and Specialized Examination Programs and Referrals – replace two geographic field operations. Collection Appeals will resolve cases that involve offer in compromise, trust fund recovery penalties and collection due process to name a few. Examination Appeals are generated from IRS audits and other examination functions. Specialized Examination Programs and Referrals will look at international issues including those related to offshore accounts, innocent spouse and penalty appeals. As U.S. Tax Court policies and practices evolve, you need to consult an attorney who focuses on tax and can help you navigate the system.

Telephone conferences

Appeals conferences had generally been held in person. These will now be held via telephone unless a request is made for an in-person conference and approved by a manager.

The Internal Revenue Manual changes now will limit the in-person conferences to situations that involve record reviews. The rationale behind the change may be to limit case reassignment to field employees. But it means that an important step in the appeals process is being removed.

October Policy Clarifications

To ensure U.S. Tax Court cases receive consistent treatment, the agency has changed certain policies for docketed cases. They are designed to make sure that IRS compliance functions are the fact finders.

Here are some of the things that Appeals will not do:

• Investigate or verify additional records or documentation
• Recommend that a Notice of Federal Tax Lien be filed
• Offer collection alternatives in offer in compromise cases

If you are concerned an appeal may become necessary in your tax case, you need to make sure that the file is complete prior to appeal. Trying to submit new information with Appeals will cause delay and possibly a return trip to the compliance team.

Narrowly and specifically detailing how a final determination is flawed is also crucial to success. These IRS has stated that the goal of the changes is to ensure you have the right to an independent appeal.

As the IRS adapts to staffing reductions it can cause delays in the resolution of cases. When you have a dispute with the IRS, speak with a tax attorney to learn about available legal options and how long it might take to resolve the matter.