Tax compliance controversies can involve proposed tax assessments, tax collection or other IRS actions. While many taxpayers believe that the first decision in an IRS tax compliance matter is final, almost all decisions are subject to review by the IRS Independent Office of Appeals. This review process, however, is not automatic. Taxpayers must ask for an appeal in their case – a process known as filing a written protest. The appeals process is less formal and less costly than court proceedings and is not subject to judicial rules of evidence or procedure.
As the name implies, the Independent Office of Appeals is staffed by IRS employees who work independently of IRS tax law enforcement employees. Appeals’ mission is to resolve tax controversies without litigation on a basis which is fair and impartial to both the Government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the IRS.
In many cases, an IRS employee or the employee’s manager may be unwilling or unable to consider the taxpayer’s point of view. In these cases, having someone from Appeals make a fresh and impartial review of the tax dispute can be quite beneficial. Appeals must also consider the hazards of litigation and how a court might rule in the case. Appeals frequently settles cases in order to keep cases from going to trial. These settlements typically involve IRS conceding a percentage of the proposed tax assessment, typically 40 to 60 percent.
Additionally, employees in Appeals are some of the most experienced and talented IRS employees in reviewing and resolving tax law controversies. Unlike many compliance enforcement employees, Appeals employees understand that tax issues frequently involve “gray areas” of the law and therefore are generally more adept at applying professional judgment in matters involving differing interpretations of the tax law.
Bennett Thrasher LLP has a Tax Controversy Practice that helps clients resolve IRS matters prior to the litigation stage. For more information contact James Pickett, Director of Tax Controversy, by calling 770.396.2200.