Understand, Auditors are Very “Black and White.”

There’s no middle ground or “gray” area, or compromises. It either is or isn’t. The action of filing an appeal puts the IRS on notice that you don’t agree with them and are seeking a meeting with the Appeals Division to try to change the IRS’ decision. And if you aren’t successful there, you can then go to the U.S. Tax Court and have a federal tax judge hear and rule on your case.

The Appeals Division Settles Cases
Do you know what the Mission Statement for the Appeals Division is? To settle cases so they don’t have to go to trial. Think about that. Appeals’ purpose is to settle tax cases, based on the “hazards of litigation.” So Appeals lives in the world of “gray” – to make reasonable settlement offers, still based on your evidence and testimony and the law, but with a reasonable approach.

Why You Need a Tax Attorney
This is where a team of professional tax attorneys can really do the job right, because lawyers and attorneys are trained and skilled negotiators, experienced at putting together persuasive arguments, affidavits, and statements of the law to get your best shot at a reasonable settlement, if not outright victory. And, of course, our attorneys can continue on to try your case in front of the United States Tax Court, if the strength and economics of the case warrant it.

There Are a Number of Appeal Options Available
Choosing the best one can be a real challenge. The Taxpayer Bill of Rights is a cornerstone document that highlights the ten fundamental rights taxpayers have when dealing with the Internal Revenue Service. Included is the right to appeal an IRS decision in an independent forum.

That means you are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. In addition, you also generally have the right to take your case to court (depending on which type of hearing you elect).

How to know if you should appeal
To decide if you should appeal your tax dispute, the IRS suggests you consider the following:

• If you believe the IRS made an incorrect decision based on a misinterpretation of the law, check the publications discussing your issue(s), or refer to Tax Topics.
• If you believe the IRS did not properly apply the law due to a misunderstanding of the facts, be prepared to clarify and support your position.
• If you believe the IRS is taking inappropriate collection action against you, or your offer in compromise was denied and you disagree with that decision, be prepared to clarify and support your position.
• If you believe the facts used by the IRS are incorrect, then you should have organized records or other evidence you should have organized records .

Why you must be careful when filing an appeal
Some of these appeals may be helpful, depending on your situation. However, remember that even though the Office of Appeals is "independent" of the IRS, they are still IRS employees, bound by IRS rules. With that in mind, without extremely persuasive evidence, they are not inclined to overturn a fellow employee’s decision. So while filing an appeal is a tempting way to hold the IRS at bay, it can also make your situation even worse.

Many of these appeals extend all relevant statutes of limitation, possibly inflicting even more damage to your financial situation. But some appeals can be taken without extending the statute of limitations. Be careful! The bottom line is, you may be best served to put an experienced tax attorney on your team.