Are you interested in submitting a written request to have the Independent Office of Appeals review a decision that the IRS made because you disagree with it? If that sounds like you, then you're in luck, because we are here to discuss everything you need to know about the appeals process.
The goal of this type of appeal is to resolve tax disputes outside of a courtroom. The result should be fair and impartial while simultaneously encouraging voluntary compliance with all United States tax laws.
Are there eligibility rules?
The IRS will send you a letter that notifies you of the right to appeal a decision it made. You are entitled to file an appeal if you disagree with the IRS's decision. Make sure you do not sign an agreement form from the IRS when presented with one if you ultimately want to appeal the decision.
So let's say you have officially decided to appeal a decision that the IRS made. You might be wondering what you should do next after deciding that an appeal interests you. For starters, begin by reviewing the facts of your situation.
Then take a look at the tax laws that are relevant to your set of circumstances. From there, make sure you gather any documents that you will need to support your position as you combat the decision made by the IRS.
Once you have gathered all the relevant documentation, send your request to appeal to the address printed on the letter you received from the IRS. Do not submit your request directly to the IRS Independent Office of Appeals.
Keep in mind that you can choose to either represent yourself or hire a tax professional to represent you. For more insight into your options and whether self-representation is better than hiring someone, refer to Publication 947, Practice Before the IRS and Power of Attorney.
What is alternative dispute resolution?
Alternative dispute resolution is essentially mediation. It's an informal, confidential and voluntary way of working with an IRS appeals officer who is trained in the process of successful mediation. These individuals seek to reach an agreement among all involved parties by fulfilling the following duties:
Mediation is voluntary, nonbinding and effective when both parties share the same goal of resolving the disputed issue. This allows you to avoid a lengthy process and costly litigation. However, remember that mediation isn't a replacement for an audit or the collection process.
You can use mediation time as an opportunity to present new information or raise additional issues with the IRS. You might also view mediation as an opportunity to get a better deal or to buy more time before the IRS closes its case with you.
Mediation is helpful in the following instances:
An example of mediation benefiting taxpayers
Let's say you're an innocent spouse who wants to get relief from taxes that are owed on a joint tax return. Imagine you appeal the decision within 30 days of receiving a letter from the IRS that explains the agency's decision. In the meantime, you and your spouse are still responsible for the penalties and interest associated with your taxes.
You can take these actions to mediate this situation:
You'll receive a final determination letter from the IRS once the agency has fully completed and finalized its consideration. If you disagree with the decision the IRS has made, you can choose to petition the U.S. Tax Court and ask for the case to be reviewed within 90 days of the final determination letter[kl1] .
If you receive a letter informing you that the IRS has rejected your offer, you'll have 30 days to appeal the decision. If it has been more than 30 days since you received the rejection letter, your appeal will not be considered or accepted.
If you still want to take action, you can use Form 12711, Request for Appeal of Offer in Compromise. Alternatively, consider sending a separate letter that contains the following information about you:
What if the IRS rejects your request to remove a penalty?
If this happens, you can follow up by requesting an appeals conference or hearing. If the IRS denied your request, contact the agency via mail. Send the IRS a letter asking for the penalty to be removed. That way, you can appeal for failure to file or failure to pay.
The IRS usually removes penalties that pertain to certain statutory exceptions and administrative waivers. You can learn more about these situations by reviewing the official IRS Manual Penalty Handbook online.
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