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Resources:
Tax Education:
Appeals
The
word “appeal” means different things in different contexts.
Usually in the legal arena, an appeal is when the losing
party to a lawsuit takes their case to a higher court.
Each state has its own Court of Appeals, and the federal
courts have their appeals court in different circuits, such as
the Ninth Circuit Court of Appeals, which covers the federal
District Courts in the western states.
The ultimate court of appeal at the state level is the
State Supreme Court. Each
state has one. The
ultimate court of appeal in the federal system is the United
States Supreme Court.
In
the tax area, “appeal” or “appeals”refers to something
different that appeal of a lawsuit.
It refers to an administrative process.
It is the appeal of an IRS administrative decision.
Typically the decision being appealed is a proposed tax
assessment. Assessment
is the internal IRS bookkeeping entry that evinces your legal
obligation to pay taxes. If
the IRS proposes to assess a tax against you, say after an
audit, you may want consider availing yourself to the appeals
process within the IRS.
If
you lose your IRS appeal and the IRS assesses the tax against
you, you may contest the assessment in court.
If you lose that decision, you may wish to appeal the
court decision to the United States Court of Appeals.
The appeal to the United States Court of Appeals
generally is not what people mean when they refer to IRS
appeals.
The
IRS appeals is an informal administrative procedure.
The IRS has a separate division for appeals.
The IRS officer working in appeals is in a peculiar
position. He or she is both an advocate for the IRS position, and the
judge deciding the case.
You
might ask how fair can such a system be where the prosecutor and
judge are the same person.
Sometimes it’s not fair.
But it’s an expedited system that sometimes does work.
Remember, the IRS doesn’t like litigating tax cases
either, and the appeals process is how it attempts to weed out
its own mistakes before they end up in court.
If your argument is a good one, you will get the attention of
the IRS appeals officer.
One
thing to bear in mind is that the appeals process is not
required by law. It is a process the IRS has instigated to help catch its own
mistakes. You have
no right to an IRS appeal.
You have a right to contest the tax liability in court,
but the IRS appeals process is a gratuity.
To
win you case in IRS appeals, you need to have both the law and
the facts on your side. Although
the process is informal, the manner of deciding the case is not
much different from what a judge does.
The rules of evidence don’t apply (hearsay is
admissible) and there are no rules of civil procedure.
A letter usually suffices to present your case.
But the tax code, IRS regulations, and case law are the
deciding authorities. Smooth
talking alone do not win cases in appeals.
If
your appeal involves an amount between $2,500 and $25,000, use
IRS Form 12203 to start the appeal.
Otherwise you must write a letter.
The process is simple and it costs nothing.
Plus, usually there is no collection activity during the
pendency of the appeal. The
downside is the Appeals Officer is free to open new issues that
were missed during the audit, although this is rare. Also, the appeal process can take months and meanwhile
interest continues to run.
Before
or during the appeals process, you might want to consider using
the Freedom of Information Act to obtain a copy of the
auditor’ file, which might contain additional information
explaining the IRS’ position.
For
more information contact us
at taxhelp@taxdefendant.com
or
Toll Free 866-216-1930
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