Established in 1998, the IRS Appeals Division was created to provide a fair and impartial venue for taxpayers (or their representatives) to settle tax disputes outside of the IRS’s Examinations and Collections Divisions. The IRS Appeals Division resolves over 100,000 cases per year involving audit decisions, innocent spouse claims, adverse collection actions (liens, levies, and seizures), penalty disputes, installment agreements, offers in compromise, and other matters. Our tax attorneys routinely represent clients in federal tax appeals; and, if you need to challenge an IRS decision, we can seek relief from the IRS Appeals Division on your behalf. We also regularly assist clients with contesting IRS levies through the Collection Due Process (CDP) and the Collection Appeals Program (CAP).
Challenging an Audit in the IRS Appeals Division
An appeal is a request for reconsideration of an IRS decision. The act of filing an appeal puts the IRS on notice that you do not agree with its decision and stops (or “stays”) any efforts to collect your alleged tax debt. The most common reason for filing an appeal is to challenge an IRS audit that has increased your tax liability. Often this increase includes additional penalties and interest, which can add thousands to your overall tax liability. However, the IRS Appeals Division settles various other types of disputes between the IRS and taxpayers as well.
Once you receive an audit determination, you have 30 days to exercise your appeal rights. If you do not file your appeal request correctly and on time, you may usually have another option to get your caase before the IRS Appeals Division. You would first need to wait until you received your Notice of Deficiency and timely petition the tax care. After that, you will have an opportunity if you haven’t had one already to have an Appeals Officer listen to your side of the story. As a result, if you are interested in filing an appeal, it is important that you speak with an attorney promptly.
Filing an appeal has several advantages. For example, because of the independence of the IRS Appeals Division, taxpayers often obtain more favorable results. Appeals Officers are not measured by the amount of tax they collect. As a result, they have an incentive to resolve cases quickly and fairly rather than collect the most money possible.
Additionally, it usually takes several months for a case to be transferred to the Appeals Division. This time period can be used as a tactic to gather additional documents, save more money to settle your liability, and strategize before your appeals conference. Once your appeal begins, your Appeals Officer has the authority to settle your case.
Contesting an IRS Levy
The IRS has the power to levy a tax debtor’s assets in the event that the debtor fails to remit assessed taxes within 30 days of receiving a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. However, there are a number of ways that taxpayers can contest levies, including the Collection Due Process (CDP) and the Collection Appeals Program (CAP).
Collection Due Process (CDP)
The CDP is available to tax debtors who receive levy notices as described above. Under Section 6330 of the Internal Revenue Code, taxpayers usually have the right to a hearing prior to any levy taking place. While tax debtors are usually entitled to a pre-deprivation hearing, there are certain situations in which a tax debtor may receive a levy notice only after its assets have been levied or transferred. These are:
- When collection of the tax is in jeopardy
- When the IRS levies upon a state tax refund
- When the criteria for a Disqualified Employment Tax Levy is met
- When the IRS serves a federal contractor levy
Even if a tax debtor fails to timely request a CDP, an equivalent hearing can be requested up to one year following receipt of a levy notice.
Collection Appeals Program (CAP)
The CAP is different from the CDP in that it does not afford the opportunity to challenge the existence or amount of the taxpayer’s federal tax debt. It also does not afford access to judicial remedies for taxpayers that participate in the process and disagree with the outcome on appeal. Instead, the CAP is typically used to contest seizure of certain assets and to contest the rejection, modification, or termination of an installment agreement or a wrongful levy.
With respect to installment agreements, the IRS cannot levy until 30 days after rejection or termination. As a result, an appeal of the decision within 30 days will effectively bar the IRS from levying until the appeals process is complete. That said, unlike the CDP process, a decision made through CAP is binding on both the IRS and the tax debtor, and it is not subject to appeal in federal court except under very limited circumstances.
Why Choose a San Diego Tax Lawyer at RJS Law for Your IRS Appeal?
Appeals Officers are some of the most highly-trained employees of the IRS. Many were previously senior members of the Collections Division or have a background in the area to which they are assigned. Appeals Officers usually have a better understanding of the Internal Revenue Code than most IRS employees, and they are skilled negotiators who handle a high volume of cases.
Appeals conferences and CDP and CAP proceedings may seem straight forward, but there is a lot of timing and strategy involved in filing a successful appeal. The appeals process has multiple deadlines; and, since you only get one chance to take your case to the Appeals Division or file under CAP, an experienced tax attorney can help you make the decision on when is the best time to transfer your case. Sometimes the threat of filing an appeal can help you achieve a more-favorable result with a Revenue Officer or Revenue Agent. Furthermore, while your case is pending, an attorney can help you file a Freedom of Information Act (FOIA) request to obtain a copy of the IRS file. Obtaining the file and analyzing the comments of the IRS employee assigned to your case will help you present a better argument for relief from your federal tax debt.
In appeals where a formal protest letter is needed, an experienced tax attorney can help you strategize regarding how much information to include. If the Appeals Officer is in communication with your Revenue Officer or Revenue Agent, saving your best arguments until the appeals conference may play in your favor. In contrast, a detailed explanation of your position along with supporting Tax Court cases and other precedent may help expedite settlement. Picking the best method depends on your individual situation. Finally, hiring a tax attorney demonstrates that you are serious about your case, prepared to potentially litigate the matter if a resolution is not reached, and can properly protect your rights if you are mistreated during the appeals process.
Our San Diego office can help you formulate a game plan and structure your appeal in order to obtain the best possible outcome and potentially lower your final tax bill. Our attorneys frequently deal with the same group of Appeals Officers and have established a good working relationship with them through our past history of cases. In short, we can use our experience to help you obtain a more-favorable result.
Even if you ultimately plan to handle your own appeal, you should consult an experienced tax attorney. If you are considering taking your case to the Appeals Division, please contact our San Diego office to schedule a free consultation today.
Speak with a San Diego IRS Appeals Lawyer in Confidence
If you have any tax law questions or if we can assist with your IRS appeal, please contact us to schedule your free initial consultation. To speak with one of our experienced San Diego tax lawyers in confidence, call 619-595-1655 or inquire online today.