Did you know that you have the power as an individual taxpayer to appeal almost any decision made by the IRS? In fact, you can appeal audit findings, penalties and interest, rejected offers-in-compromise, liens, seizures, garnishments, and other collection actions.
When You Cannot Appeal According to the IRS “Appeals is not for you if: (a) Your only concern is that you cannot afford to pay the amount you owe. (b) The correspondence you received from the IRS was a bill and there was no mention of Appeals.” So in these two instances, an appeal would be a premature action to take.
If you are concerned that you cannot afford to pay the tax you owe, there are channels to go through before you would begin the appeal process. For instance, you could work with a tax attorney and make your case to the IRS that your situation qualifies for one of these tax debt payment methods: Non-Collectible Status, Offer-in-Compromise, Installment Payment Plan, Partial Payment Installment Agreement, or Tax Bankruptcy.
How to Appeal the Findings Of An Audit. If you’re audited (which is happening with increasing frequency these days, especially for small business owners), you may disagree with the IRS findings. You have the right as a taxpayer to disagree with any or all of the IRS’ findings.
First Step: If you do disagree with the IRS assessment of your taxes after an audit, you can choose to meet or speak face-to-face with the supervisor of the person who issued the findings. However, going into a meeting like this with a supervisor face-to-face is ill-advised. IRS supervisors are highly-trained in arguing their point in these situations. Going into a meeting like this alone could be a huge mistake.
Second Step: The Appeals Office of the IRS is where most differences are settled with the IRS. For cases under $25,000 in tax, it may be possible to settle for a lessening in the tax liability while at this level.
Third Step: However, if the case is more substantial and the Appeals Office does not reach what we feel is a fair decision, it is possible to take the case to a United States Tax Court.
Your Argument Must Have Merit – Or Pay a Stiff Penalty. The IRS will not consider your disagreement valid if made solely on “moral, religious, political, constitutional, conscientious, or similar grounds”. But be forewarned, if your appeal is seen as frivolous and you end up taking it to Federal Tax Court, it could end up costing you big time. The IRS doesn’t have much patience with delaying tactics.
The IRS gives this warning: “Frivolous Filing Penalty Caution: If the Tax Court determines that your case is intended primarily to cause a delay, or that your position is frivolous or groundless, the Tax Court may award a penalty of up to $25,000 to the United States in its decision.” As you can see, there’s a lot involved with the Appeal process. It’s not something to tread into lightly. If you’re going to appeal, it makes a lot of sense to have a competent attorney representing you to increase your odds of winning before the IRS.