Depending on your reasons for disagreeing with the IRS, there could be a special process available to resolve your dispute. Unfortunately, figuring out how to do this can be almost as confusing as the tax issue itself. That’s why we created this guide: to offer a basic overview of how the IRS appeals process works and when you might use it.
Tax Issues Typically Subject to an IRS Appeal
While you can choose to disagree with the IRS on any issue you want, only certain tax disputes are subject to an official appeals process. If you’re like most taxpayers thinking about appealing the IRS, it’s probably because you think the IRS is wrong about:
- A proposed tax assessment against you
- Collecting an unpaid tax balance with a lien or levy
- Its findings after a tax audit
- Imposing a tax penalty on you
- Refusing to accept you into a tax program, such as an offer in compromise (OIC)
- Denying your request for innocent spouse relief
A good way to know if you can file an appeal with the IRS is if they send you a letter or notice about a tax issue (such as a CP504 Notice) that explains your right to file an appeal if you disagree with the IRS.
IRS Tax Disagreements You Can’t Appeal
You can only file an appeal if you believe the IRS relied on wrong information for its decision, misapplied (or misinterpreted) the law, or misunderstood the facts for its decision. In other words, there’s no appeals process in place for tax disputes based on religious, moral, or political grounds.
The General Process for Filing a Tax Appeal With the IRS
If your tax concern involves $25,000 or less and follows a tax audit, you can file an appeal using the small case request process. To do this, you must complete and submit IRS Form 12203, Request for Appeals Review. You may also need to fill out an appeal request form that may have come with the letter or notice you got from the IRS. If necessary, you can write a brief written statement outlining the reasons for your disagreement with the IRS. The IRS will outline the precise process in the letter or notice it sends you, giving rise to your right to appeal.
In most other cases (unless otherwise noted below), you can file an appeal by using the formal written protest method. Here, you tell the IRS why you believe they’re wrong and what proposed changes you believe the IRS should make. Generally, you’ll have 30 days from the date of the letter initiating your right to the appeal to send the IRS your written protest, which will usually include the following information:
- The tax years you’re appealing
- A description of the disagreement(s), including your factual and legal basis for the dispute and your proposed resolution to the tax appeal
- Citation to the necessary case law, tax statutes, and/or regulations that support your arguments
- Your name, daytime telephone number, and mailing address
- A signed declaration stating that the information you’ve provided the IRS is true and complete to the extent of your knowledge
After you file your written protest, the IRS Examination or Collection Office will read your reasons for appealing and attempt to find a solution. If they can’t, your appeal can go to the IRS Independent Office of Appeals.
Regardless of your appeals pathway, you can decide to handle everything yourself or hire a tax professional to help. The IRS will only recognize an attorney, enrolled agent, or certified public accountant to represent you during the appeal.
Other IRS Tax Appeals Process Options
The above discussion outlined the general appeals process, although some tax disputes will follow slightly modified procedures.
Offer in Compromise
If the IRS denies your OIC request, you have 30 days from the date of the denial letter to file an appeal using one of two methods.
The first method involves filling out IRS Form 13711, Request for Appeal of Offer in Compromise. Alternatively, you can provide the IRS with the following information instead:
- The tax years you’re appealing
- The specific areas of disagreements with the IRS, including the legal and factual basis for your disagreements
- A declaration that you’re appealing the IRS’ rejection of your OIC request to the IRS Independent Office of Appeals
- A signed affirmation that you have provided the IRS with complete and true information to the best of your knowledge
- A copy of the OIC rejection letter
- Your mailing address, name, tax ID, and daytime telephone number
Collection Appeals Program
If you want to appeal a tax lien or levy, you can usually use either the Collection Appeals Program (CAP) or Collection Due Process (CDP) Hearing. CAP is typically available earlier in the lien or levy collection process, while the CDP Hearing will normally be available later after you receive a specific notice from the IRS (discussed below).
How the CAP process works depends on your prior interactions with the IRS. If these interactions have not involved an IRS revenue officer and only resulted in telephone calls, then you’ll begin your CAP appeal by calling the telephone number listed on the IRS notice, giving rise to the appeal. You can use this telephone call to present your case to the IRS about why you believe they’re making a mistake. If the first person you speak with can’t offer you the desired results, you can ask to speak with a Collection Manager.
If you’re still not happy with the IRS after speaking with the Collection Manager, you can ask the IRS Independent Office of Appeals to review your appeal. If your appeal relates to an installment agreement, you can go straight to the IRS Independent Office of Appeals if your first telephone call isn’t successful in resolving your appeal.
If your interactions with the IRS have involved a revenue officer, then your CAP process will be slightly different. You’ll still start with a telephone call to the revenue officer handling your case. If explaining your disagreement to the revenue officer doesn’t resolve your issue, then you’ll ask to talk to the Collection Manager. Escalating your dispute to the Collection Manager is optional for installment agreement appeals but is recommended.
Failure of the Collection Manager to resolve your disagreement means you can continue your appeal to the IRS Independent Office of Appeals. To do this, you must first send your revenue officer a completed IRS Form 9423, Collection Appeals Request.
The CAP is often an option for appealing liens, levies, and installment agreements, but it can also be used to appeal a disallowance of your request for the return of levied property.
Collection Due Process Hearing
If you don’t want to use (or can’t use) the CAP, you may have the CDP Hearing as an option. If you’re not sure about which process to use, the IRS notice or letter you receive about the issue will normally explain which appeals process is available. Generally speaking, the CDP Hearing will be available if you receive any of the following from the IRS:
- Final Notice – Notice of Intent to Levy and Notice of Your Right to a Hearing
- Notice of Jeopardy Levy and Right of Appeal
- Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320
- Post Levy Collection Due Process Notice
- Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing
Appealing any of these notices with a CDP Hearing must be done within 30 days of the date of the notice. To file an appeal and get your hearing with the IRS Independent Office of Appeals, you’ll need to fill out IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing, and mail it to the address provided in your notice.
One of the benefits of a CDP Hearing is that if you disagree with the decision, you can appeal it to the U.S. Tax Court. However, this right is lost if you file Form 12153 after the 30-day deadline but within one year from the notice date. This type of appeal is called an Equivalent Hearing. The right to file an appeal to the IRS Independent Office of Appeals is lost altogether if you file Form 12153 after the one-year deadline listed on Form 12153.
IRS Penalty Appeals
The most common tax penalties from the IRS usually concern a failure to file, failure to pay, or failure to furnish certain forms to third parties. Depending on your situation, you can challenge these penalties by asking for penalty abatement. If this isn’t an option or the IRS declines to remove your penalty, you can appeal that decision.
To do so, you’ll either use the small case request or formal written protest processes described earlier. If you’re appealing a trust fund recovery penalty, you’ll also need to provide the following information to the IRS employee identified in your Letter 1153:
- An explanation of your responsibilities and duties
- A copy of Letter 1153, Proposed Trust Fund Recovery Penalty Notification
- An explanation of your disagreement with the imposition of the penalty and/or the penalty amount
- A list of legal authorities that support your position
Innocent Spouse Relief Determination Appeal
What’s unique about an innocent spouse relief appeal is that either spouse could disagree with the IRS’ decision. This means the spouse asking for the relief could file an appeal if the IRS denies the request. However, it also means the spouse not asking for the relief could file an appeal if the IRS grants the request.
Regardless of who files the appeal, either spouse will need to complete IRS Form 12509, Innocent Spouse Statement of Disagreement. The spouse must file the appeal within 30 days of the date of the preliminary determination letter sent by the IRS to both spouses.
Before issuing a final determination letter, the IRS will review Form 12509 and any documentation offered in support. Once the IRS sends out the final determination letter, another appeal is possible, but it must be made within 90 days, and it will go to the U.S. Tax Court.
How to Resolve a Dispute Without Filing an Appeal
Not all IRS disputes with the IRS require an appeal. Depending on your case, you can ask for mediation. This is where an IRS appeals officer acts as a mediator to resolve your disagreement with the IRS. Because mediation is nonbinding, the benefit of mediation is that it offers an opportunity for you and the IRS to communicate your differences and find a more permanent settlement to your tax dispute.
Some tax disagreements will require judicial intervention, so you can go to court instead of filing an appeal with the IRS. However, you’ll often need to go through one or more appeals or dispute steps with the IRS before you can file a petition with the U.S. Tax Court.
Get Additional Help With Your IRS Appeal
In some cases, the biggest hurdle isn’t challenging the IRS’ decision but figuring out when and how to submit this challenge. No matter what type of situation you find yourself in, the tax professionals at Wiggam Law are here for you. You can schedule a consultation by calling (404) 233-9800 or using our online contact form.