PREP STEPS FOR APPEALS
- Gather the IRS notice giving you a right to Appeal.
- Gather all documents you have sent to the IRS.
- Collect all letters the IRS has sent you.
- Obtain a copy of your tax return.
- Call the IRS at 1-800-829-1040 or go to IRS.gov & request your "Account Transcripts" & your "Wage & Income Transcripts" for the period(s) at issue. (More)
- Contact Mr. Hopkins in Colorado Springs or Pueblo to set a consultation in-person, by Skype or Facetime.
- Bring all documents with you to the attorney meeting. See you there!
Your attorney consultation will be more productive if you bring your Account Transcripts & your Wage and Income Transcripts. See below*
IRS Appeals Process
Appeals within the IRS can be very slow but they can be useful, when appropriate. If you feel like you have a good case, then IRS Appeals will be fair. If you foresee problems, the Court might be the better option. You may not need a tax attorney - just legal advice.
There are many types of Appeal and many reasons to Appeal within the IRS. You can appeal an unfavorable audit, a hardship collection of tax, a levy or lien, an unfavorable determination or a denial of benefit. At the end of each of these procedures the IRS will send you Publication 5 which (weakly) explains the Appeals process.
But, the process is slow within the IRS agency and they have no real incentive to reverse their fellow employee. Here is a list of IRS Notices and Letters offering you a chance to appeal. Here is a list of IRS forms & publications for the various types of appeals.
Appealing an Audit or Denial of Claim for Refund
To Appeal to the IRS examiner's supervisor during an audit for relief from penalties, use Form 12009. You can Respond to Appeal a Disagreement to a Form 4549 adjustment with Form 12203. In either event, the IRS wants you to use Form 12661 ("Disputed Issue Verification") to clarify your dispute.
To Appeal the complete IRS audit or a denial of a claim for refund (Letter 105C), you may present Form 12203 if the amount at issue is less than $25,000. You may also make a Formal Protest but there is no form for this. You must send the appeal to the IRS office & state the following:
- Your name, address, and a daytime telephone number.
- A statement that you want to appeal the IRS findings to the Appeals Office.
- A copy of the letter showing the proposed changes and findings you do not agree with.
- The tax periods or years involved.
- A list of the changes you do not agree with, and why you do not agree.
- The facts supporting your position on any issue that you do not agree with.
- The law or authority, if any, on which you are relying.
- Your signature on the written protest, stating that it is true under the penalties of perjury, as follows: "Under the penalties of perjury, I declare that I examined the facts stated in this protest, including any accompanying documents, and, to the best of my knowledge and belief, they are true, correct, and complete."
Appealing Joint Liability
If you have signed a return with the filing status of Married Filing Jointly and do not feel you should be liable for the tax attributable to your spouse, you may file a request for Innocent Spouse relief with Form 8857.
If you have applied for this relief but have been denied, you may Appeal this denial using Form 12509.
For normal Appeals, use Form 9423.
If the IRS is seizing your assets, Appeals is often your only option because the only Court that can, by law, stop the IRS is a Federal Bankruptcy Court & bankruptcy is not always advisable. Use this Evaluator to see if you qualify for a Bankruptcy!
You may also choose to appeal to the Taxpayer Advocate by using Form 911. But, they can only grant relief in hardship cases & where normal channels of IRS procedure have failed. Also, the Taxpayer Advocate is able retard & question IRS Collection but can't override enforced collection action.
You might receive a Letter 4473C transferring your case to another office. Go ahead & call the IRS to find out where the file is being transferred & the IRS agent's phone number. You must follow up. Don't depend on the IRS.
With any of these appeals, the method & manner which the forms & questions are answered are essential to a successful appeal.
Denial of Offer in Compromise
A very high percentage of Offers in Compromise must be appealed to have any chance at success. Use Form 13711. Obviously, this extends the whole process and all applicable statutes of limitation.
Appeals in Tax Court
After you file a Petition in Tax Court, the IRS attorney will respond within 60 days. Then you will be contacted by IRS Appeals to try and settle the case before trial. They will send you a Letter 4141 as well as a Notice 1016 & a Publication 4227, briefly explaining the Appeals process.
Most cases are resolved in Appeals. When you are ready, contact the Appeals officer whose name appears on the letter and request and appeals conference. If you follow the TaxHelp Audit Defense Program you will be thoroughly prepared for the Appeals conference.
Caution with Appeals
Some of these Appeals may be valuable in certain circumstances but remember, even though Appeals declares that it is "independent" of the IRS, they are still IRS employees bound by IRS rules. Absent persuasive evidence they are not inclined to overturn a fellow employee. Plus, many of these Appeals extend all relevant statues of limitation, exacerbating your damage.
Don't file futile Appeals that you will lose. You could make your situation worse. For instance, the IRS always invites you to Appeal (Form 9423) a Notice of Federal Tax Lien (Form 668(y)(c)). You are led to believe that this is the proper process & you'll be able to set up an installment agreement. However, the IRS has no power to reverse a validly filed tax lien & very few liens are invalidly filed. Plus, you don't need to Appeal - normal IRS Collections can set up an installment agreement. And by filing the Appeal, regardless of whether it is granted, you extend the statute of limitations. So, you are tricked into filing a futile Appeal & you extend the statute of limitations when there were other, better options available for you. It's best to get independent legal advice.
As another example, taxpayers are often fooled into Appealing the Trust Fund Recovery Penalty and/or the collection of the penalty with a Due Process Collection Appeal. But, realistically, if you are liable for the penalty, Appeals can't accomplish anything more than the normal IRS Collection procedures. If you are not liable for the penalty, it is usually better to file a claim for refund (Form 843) & then sue the IRS in US District Court or the Court of Claims. See the Business Tax Prep Steps for more information, forms & instructions.
With any of these Appeals, don't be surprised if you get a letter such as this Letter 3884C, denying you an Appeal. If that happens, you will be forced to act through normal IRS procedures.
So, you may not want to Appeal within the IRS, especially if there are other, better options. But, if you Appeal within the IRS make sure you include all defenses & further claims, with complete supporting evidence & legal authority. This will likely be a difficult task. But, use the opportunity in Appeals to address the immediate issues and to bring more & different claims not made on your return - so look for further deductions & credits!
Instead of Appeals, consider working directly with the IRS agent or officer involved. They have legal authority to respond to your demands. Often, they simply need clarification of factual & legal authority to determine in your favor.
But, usually the best option (if available) is a Federal Court: Tax Court, US District Court, Court of Claims or Bankruptcy Court. There are many reasons why a Court is a better option against the IRS but mainly it is because a Court can enforce its order and has power over the IRS to protect your rights, provide a fair forum for your claims, & give you an opportunity for a full, formal hearing on your case. But, you must be totally prepared & follow the Court Rules. See the Court Cases Prep Steps for more details, forms, & instructions.
Please DO NOT complete any questionnaires for the IRS until you've met with Mr. Hopkins. What you say in writing WILL be used against you!!
*Wage & Income transcripts are computer-generated IRS records about you from your job, your bank, your mortgage company, etc. Account Transcripts show details of your account at the IRS. If you are too nervous about calling the IRS just bring what you can and come in. If you call, the IRS may be stern but don't worry, you need the Wage & Income Transcripts and the Account Transcripts. Tell them you are not yet ready to talk and need the documents to get tax legal advice. Don't Argue!!