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How to Appeal an IRS Decision: Taxpayer Strategies

How Do You Appeal an IRS Decision? 

The IRS has a lot of power, and its decisions can have a significant impact on your financial life, especially if you have unpaid taxes, unfiled tax returns, or are undergoing an audit. Luckily, IRS determinations are rarely absolute and final, which means there’s usually a way to challenge the decision. 

If you’ve received bad news from the IRS and you disagree with their decision, you may have specific appeals rights, which we’ll go over below. There isn't just one appeals process – rather, there are multiple options that apply to different scenarios.

Key takeaways

  • Taxpayers have the right to appeal most, but not all, IRS decisions.
  • An appeal lets you get a review of the IRS's decision or determination.
  • There are different appeals processes depending on the issue at hand. 

What Is an IRS Appeal?

The term "appeal" refers to any IRS procedure that a taxpayer can use to have someone at the IRS take a “second look” at a decision or conclusion reached by someone else at the IRS. In other words, think of the term “appeal” as interchangeable with terms like “review” and “protest.” 

There are different appeal processes depending on the issue at hand – but in all cases, the appeal involves a review by an independent division of the IRS or by someone other than the person or department that made the decision you want to appeal. 

Common Reasons to File an IRS Appeal 

If something results in a finding or conclusion by the IRS, there’s likely an appeal or review process for it. Some frequently appealed IRS actions include:

Other potentially reviewable IRS decisions include:

  • Change in tax-exempt status.
  • Change in employee plan examination.
  • Change concerning an employment tax examination.
  • Disqualification of a retirement plan.
  • Imposition of a trust fund recovery penalty.

These aren’t fully comprehensive lists and simply provide an overview of what’s potentially appealable. Furthermore, most of these have their own review processes. 

Types of IRS Appeals

There may be multiple appeal options available depending on the taxpayer’s preference, the IRS action being appealed, and the amount of tax in question.

For instance, two commonly used appeal methods are the formal written protest and the small case request. If you want to file an appeal, you’ll have to use the formal written protest process unless you qualify for the small case request. You may qualify for the small case request option if the total amount in question (unpaid taxes and penalties) for the tax period in question is $25,000 or less.

By way of another example, an IRS tax collection action can sometimes be appealable with either a Collection Due Process hearing or through the Collection Appeals Program. Which process you use could depend not just on eligibility requirements, but also on certain strategic considerations. 

What Is the Independent Office of Appeals?

The Independent Office of Appeals exists to resolve tax disputes without going to court. While part of the IRS, it’s a separate and independent entity from the examination (audit) and collection functions of the IRS. Therefore, the person or department that originally handled your case won’t be at the Office of Appeals reviewing your appeal. 

When Filing an IRS Appeal Isn’t an Option 

Not every disagreement with the IRS is subject to appeal. Generally speaking, you aren’t entitled to an IRS appeal if:

  • Your disagreement is based on moral, political, constitutional, religious, or conscientious grounds.
  • The letter or notice the IRS sent you didn’t mention the right to appeal.
  • Your reason to appeal is solely based on the fact that you can’t afford to pay the amount owed.
  • You didn’t provide all of the information requested or information that could support your position to the IRS. 

How to Initiate an Appeal 

The exact appeals process depends on several factors, including your reason for requesting the appeal, how much money is involved, what you’re appealing, and how long it’s been since you’ve received the notice or letter indicating you have appeal rights. That being said, the following is a basic outline of how the appeals request process will work in most cases. 

Review the IRS Notice or Letter 

You want to look closely at this document to confirm you have appeal, review, or protest rights at all. If you do, the document will say so, as well as list the steps necessary to file the appeal.

Reading the letter or notice is also important because it explains the IRS’s reasoning for its decision. This will be useful when crafting your arguments and gathering information for your appeal. 

For example, all of these notices contain appeal options with strict deadlines:

In rare cases, you may have appeal rights without receiving a letter. For example, if you apply to the innocent spouse program and don't hear back in six months, you can file an appeal.

Respond Before the Appeal Deadline 

If you wait to file your appeal after the deadline, you will likely lose all your appeal rights. Even if you don’t, the scope of your appeal or your rights to further review can be limited. In most cases, you’ll have 30 days from the date of the IRS letter or notice to file your appeal. 

Sometimes, even if you don't receive the notice of your appeal rights, you may lose the chance to appeal. That's why it's critical to make sure the IRS has the correct mailing address for you.

Prepare Your Appeal 

This will typically entail filling out a form and attaching any relevant documentation, including a copy of the letter or notice giving rise to the appeal. IRS forms differ, but you should expect to provide the following information on the appeals form:

  • Identifying information, such as your name, address, phone number, and tax ID number.
  • Confirmation that you are filing an appeal.
  • Identification of the tax issue you’re appealing and its applicable tax year.
  • A detailed explanation of each point of contention, including what you disagree with, why you disagree with it, and what evidence you have in support of your position. 

File Your Appeal 

The submission process should be provided on the IRS notice or letter explaining your appeals rights. Usually, a mailing address (and maybe a fax number) will be provided. In many cases, there’s no fee to file an appeal.

You’ll notice that you won’t be initially sending your appeal to the IRS Independent Office of Appeals and instead will be sending it to the department that made the decision you’re appealing. This is normal, as it gives the department a chance to review your appeal request and attempt to resolve the matter before escalating it to another part of the IRS. 

What To Expect During the IRS Appeals Process 

After you file your appeal, the IRS will confirm receipt. Assuming the matter can’t be resolved with the department or IRS employee you’ve been dealing with, the case will be transferred to the Independent Office of Appeals.

Within 45 days of this transfer, you should be contacted by the Independent Office of Appeals to schedule an informal appeals conference. If you don’t hear from anyone at the IRS within 120 days of filing your appeal, you can contact the IRS to ask for a status update.

These conferences can take place over the phone, but you can choose to have them in person or with a videoconference. Before this conference, it’s possible for the case to be sent back to the original department or IRS employee if you provided new information on appeal not previously seen by the IRS.

After the informal conference, you should get a decision within a few months, but the exact amount of time depends on the amount of new information provided by you, the complexity of the issues of contention, and the amount of money in dispute. 

Alternatives To Filing an Appeal 

If you can’t file an appeal (or just don’t want to), you normally have three possible options:

  • Mediation: A form of alternative dispute resolution that requires both you and the IRS to agree to mediate. Mediation offers a chance to have an independent third party hear both sides and try to foster a compromise. It’s voluntary, confidential, and nonbinding.
  • Fast Track: A form of mediation where a fast resolution is important.
  • Federal court: This is among the slowest and most expensive ways to resolve your dispute with the IRS. However, it can offer a more comprehensive legal review of the issues in your case, including issues the IRS doesn’t handle during the appeals process. A good example of this would be the constitutionality of an IRS regulation or statute. 

Escalating an Appeal Beyond the IRS 

If you’ve completed your appeal, but disagree with the appeals decision, any further appeals rights will likely exist with one or more of the following federal courts:

The right to judicial review won’t always be available, or there may be certain conditions that need to be met before suing the IRS. For example, if you disagree with a particular tax assessment and want to challenge it in court, you may be first required to pay the tax. Then, only if the IRS denies your request for a tax refund, can you petition the U.S. District Court or Court of Federal Claims. 

Tips for a Successful Appeal 

To maximize your chances of success on appeal, consider the following:

  • More documentation the better: You’re more likely to convince the IRS that they’re wrong if you can provide any correspondence, invoices, bank statements, etc., to support your position.
  • Respect deadlines: Filing an appeal after the due date makes it easy for the IRS to deny your request.
  • Talk to a tax professional: You don’t always have to hire a tax pro, but talking to them about your case can reveal potential pitfalls to avoid. At the very least, it offers peace of mind that can increase your confidence going into an appeals conference. 

Get Help With an IRS Appeal from a Tax Professional 

If you want to appeal an IRS decision and there’s a lot at stake, TaxCure can help you find the best tax pro to ensure your rights are protected and your tax concern is dealt with fairly. Even if you’re not 100% sure if you need professional tax help, it doesn’t hurt to set up an initial consultation and get a clearer picture of what you’re dealing with and what your best options are. 

IRS Appeals FAQs 

What’s the difference between the Collection Appeals Program (CAP) and a Collection Due Process (CDP) hearing? 

The CAP is available for most tax lien and levy actions, as well as a rejection, termination, or modification of an installment agreement. In contrast, a CDP hearing is typically only available when you want to appeal a lien or levy action. If you’re not sure which process is available, the IRS letter or notice should indicate which avenue to use.

Another big difference has to do with whether you disagree with the decision after appeal. With a CAP hearing, you can’t go to court to ask for judicial review if you disagree with the appeals decision. But judicial review is still an option after a CDP hearing (as long as the request for the CDP hearing was filed on time). 

How long will the appeal take? 

The timeline can vary, but expect the appeals process to take at least a few months. 

Am I required to file an appeal if I want to go to court and have a judge resolve my disagreement with the IRS? 

Not always. However, filing an appeal can often provide a faster and more affordable way to resolve your tax dispute. 

Can I represent myself during the appeals process? 

Yes, but depending on the amount of money at issue and the complexity of the issues, you might want to hire a tax professional, such as a tax lawyer, CPA, or an enrolled agent to assist.

What happens if my appeal is unsuccessful? 

Depending on which process you used, you may be able to file a petition or request for judicial review with the U.S. Tax Court or other federal court.

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