Don’t feel like you have a chance in challenging the IRS? You might be surprised to find out just how much power you have. The federal government is overwhelmed by the hundreds of Americans under audit and who owe money to the IRS, and it’s difficult for them to pursue and attend to each and every case. In order to avoid a complete shutdown of the federal Internal Revenue Service, the Office of Appeals was created to decongest the large numbers of disputed tax cases. Each year hundreds of thousands of appeals cases are filed. The process can take months to go through, but most taxpayers obtain a significant reduction on their tax bill after the appeal process, making it well worth their while. It‘s not always the case that an IRS tax appeal will be your best avenue, but for most, it’s a great way to save yourself money and stress.
What is a Tax Appeal?
A tax appeal is a common way to protest and hopefully resolve disagreements regarding your tax return with the IRS. Tax appeals are filed with the IRS Office of Appeals, and there are some strict conditions as to what can and can’t be disputed. For example, a tax penalty appeal is an IRS tax appeal that addresses a failure to file or failure to pay penalty assessed to an individual or business. Before a taxpayer can appeal, he or she must first write a formal letter to the IRS requesting that the penalty is removed. Once the written request is rejected, they can then move through the formal tax appeal process. This is only one example of an IRS tax appeal, and there are many different types of appeals and reasons for their submissions. With so many steps and details, filing for an IRS tax appeal can be challenging.
Do I Need a Tax Attorney to File?
In short, the answer is no. However, it is ill-advised to go into a tax appeal by yourself. One of the first things you should do is hire a qualified and experienced tax professional. There is an ocean of information regarding tax law and taxpayer rights, and navigating this difficult terrain by yourself can be quite overwhelming. Hiring a trusted professional who will guide you through the process, find you the most savings and prevent any unnecessary losses is among the smartest things you can do.
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How Does the IRS Office of Appeals Work?
Once you have filed a tax appeal with the IRS, a date will be set for your case. As noted, it would be in your best interest to hire a tax appeal professional to help you through your case. It’s extremely important that you file a claim with the IRS first before filing an appeal. If you go straight to court without following the appropriate steps, the IRS can claim that you did not exhaust their administrative remedies and your case may be dismissed on these grounds.
What Can Be Appealed?
- Installment Payment Plans
- Innocent Spouse Decision
- Offers in compromise
- Audits/Examination Determinations
- Requests for Penalty Abatement or Removal
Knowing and learning the tax code can tell you whether or not you’re eligible for a tax appeal. Tax appeal professionals can also answer questions regarding appeal eligibility while saving you the time and hassle of personal research. A credible tax professional will be able to tell you if a tax appeal will be your best option and can potentially save you from a futile effort. The jurisdiction of the Office of Appeals is vast but not all-encompassing; there are limitations to what can be heard and what can be settled, and a tax practitioner can determine whether your case qualifies. If it doesn’t, they can offer alternative tax settlement solutions instead.
Don’t Hesitate to Appeal
Most appeals will be time sensitive. After the issuance of a lien or proposed levy seizure, the taxpayer will have 30 days from the Final Notice date to file an appeal. If you miss this 30-day window, your case might not ever get past the first steps of the appeal process. If you do miss the window, don’t be discouraged. With the help of a tax appeal professional, you might still be able to reach a reasonable agreement with an IRS officer.
Tips on the Appeals Process
- Request a conference with a supervisor before going to Appeals court: In most cases, it’s rare that an IRS manager will bother to resolve a tax dispute themselves, but it’s not unheard of. If the dispute is simple enough and the requests of the taxpayer are reasonable, a supervisor may be willing to resolve the dispute.
- Have a settlement in mind before going through the process: More often than not, an appeals officer will resolve a case with a settlement number or installment plan. It’s important that a taxpayer or their representative has a target number in mind so they are prepared for the conversation with the appeals officer.
- Hire a qualified tax professional: Hiring a qualified expert can keep you from making mistakes that could potentially destroy any chance of reaching the settlement you are hoping for with the IRS.
- Don’t do anything to damage your credibility: Even if you think it might hurt your case or your chances of a good settlement, you should never lie or hide anything from the IRS.
Avoiding Tax Court
If possible, staying out of a federal court for your tax appeal is sometimes the best thing to do. Keep in mind, the IRS wants to resolve disputes at the lowest level possible. Why? Because going to court to collect money that is owed to the IRS will almost always cost them more money than it’s worth. Similarly, going to court can cost you more money in legal fees than you would save by going to appeals court in the first place. Appeals officers are looking at the cost-effectiveness of their mitigation; showing up to an appeals meeting with a qualified tax appeal practitioner will immediately let the officer know that you are ready and willing to go to court. Unlike IRS revenue agents, appeals officers don’t view cases in black and white; they can be much more flexible when it comes to reaching an agreement and will try to settle outside of court.
Develop a Good Protest
The easier you make the appeal officer’s job, the more likely you are to get what you want. The best thing to do is present all of the facts in chronological order and clearly explain the argument for each one. Every IRS appeals case should include:
- The tax period and years involved
- A clear statement of the taxpayer’s challenge of the findings
- Law that supports the taxpayer’s claims and position
- A signed and notarized statement
- A copy letter showing the proposed changes
An appeals case will be more successful if the practitioner can prove that the original IRS employee who first handled the case failed to follow standard protocol or violated taxpayer rights.
After the Appeal
Once the process is finished, the appeals officer will prepare a closing agreement. This will essentially be the terms on which the IRS is willing to settle the tax appeal. There won’t be any negotiation at this point; either you accept the terms that the IRS has presented or you don’t. If the taxpayer agrees to the terms of the closing agreement, the case will be over. If the taxpayer decides that the terms of the agreement are unreasonable, they will have a short window of time to appeal the case to a higher tax court. Again, try to cooperate and do everything possible beyond a reasonable doubt to resolve the issue before filing an official appeal; otherwise, the IRS is going to look for a way to claim that you did not “exhaust administrative remedies” before getting to court and will likely drop your case. A tax professional will know how the IRS thinks and what angles they are going to work, and will try to prevent your case from escalating to court unnecessarily.
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Why You Should Choose Community Tax
Community Tax was founded as a tax resolution company staffed with licensed tax professionals. Tax resolution is at the core of our foundation and it’s why we are the best at what we do. If you are being audited by the IRS or you need to appeal a collection, Community Tax is the industry-leading dedicated and specialized company. Our founding mission is based on the principals of top notch customer service, a guarantee on our work and commitment to customer satisfaction—no matter what it takes. Taking on the IRS in any form or fashion is extremely daunting and difficult. Community Tax aims to help you accomplish any and all of your IRS appeal and tax-related needs. Other companies take a cookie-cutter approach to solving tax issues, but Community Tax has your back and understands the unique attention your case deserves. You won’t find more qualified and trustworthy team of CPAs and licensed tax professionals anywhere else.