Taxpayer Bill of Rights: The Right to Appeal an IRS Decision in an Independent Forum

From the Desk of Lauran Corcoran

Taxpayer Bill of Rights: The Right to Appeal an IRS Decision in an Independent Forum

One of the more interesting components of this right is that the IRS must ensure that an appeals officer is regularly available within each State. However, almost one quarter of the states (12 out of 50) have no permanent Appeals presence, and this number of states lacking a permanent field office has increased by 33 percent, from nine to twelve states, since 2011. The IRS maintains that it meets this mandate by Appeals “riding circuit” (which means Appeals Officers travelling to meet Taxpayers in person) at least quarterly in states lacking a permanent Appeals presence.

The Taxpayer Advocate Service correctly identifies the big problem with “riding circuit.” Appeals Officers who reside within the community, or at least in the same state as the taxpayers with whom they are interacting, have a greater likelihood of being well-versed in the local industries and economic circumstances prevailing in a particular region, and help in preserving both the appearance and the reality of fair and equitable consideration. Conversely, taxpayers residing in a state without a permanent Appeals office may be disadvantaged in the presentation of their case, or dissatisfied with the Appeals process itself, because of the cost and inconvenience of traveling extended distances for a hearing, or the wait for a circuit riding Appeals Officer to appear in an accessible location.

The Right to Appeal an IRS Decision in an Independent Forum:
Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

What does Right to Appeal an IRS Decision in an Independent Forum mean?
• The IRS must ensure that an appeals officer is regularly available within each State.

• The Commissioner must ensure an independent IRS Office of Appeals that is separate from the IRS Office that initially reviewed your case. Generally, Appeals cannot discuss a case with the IRS unless you or your representative is given the opportunity to be present. See IRS Publication 4227, Overview of the Appeals Process.

• You have the right to request an independent review conducted by the Office of Appeals prior to the termination of your installment agreement.

• If the IRS rejects your request for an offer in compromise asking the IRS to settle your tax debt for less than the amount owed, or a payment plan, called an installment agreement, then you may seek an independent review of the rejection with the IRS Office of Appeals.

• You can generally request that an issue you have not been able to resolve with the IRS examination or collection division be transferred to the Office of Appeals. For issues that are unresolved after working with Appeals, you may request non-binding mediation (where a neutral third party will help you try to reach a settlement) or binding arbitration (where you and the IRS will be bound by a third party’s decision). You may also request non-binding mediation or arbitration after unsuccessfully trying to enter into a closing agreement or offer in compromise.

If you missed last week’s blog: Taxpayer Bill of Rights: Right to a Fair and Just Tax System