Tax season is well underway, which means that you are in the process of preparing your taxes, if you haven’t already filed. Unfortunately, it also means that a new audit season has opened for the IRS. If you or your business is being audited and you ultimately receive a higher tax bill, I highly recommend that you consider appealing.
What is the IRS Tax Appeals Office?
IRS appeals are processed through its’ tax appeals office, which is a separate entity within the IRS than the one that conducted your audit. The auditor who worked on your case has no involvement in the appeals process. Instead, your appeal is assigned to an appeals officer, who independently reviews the auditor’s file, as well as any relevant records and legal authorities that you provide. The appeals officer has the discretion to change your tax obligation from what the auditor recommended and can reach a settlement with you.
Appealing taxpayers have the chance to present their case through informal conferences between their tax representative (such as their tax attorney) and the appeals officer. Traditionally, these conferences have been conducted by telephone, by mail, or in person. As of October 2016, the IRS announced that it would no longer conduct in person conferences except in very limited circumstances. Two reasons for this change in practice are budget cuts and reductions in staff within the IRS that have resulted in the retirement of senior appeals staff and fewer office locations. This brings me to my next point, which is that conditions are favorable for a tax appeal.
Why Appeal Now?
While there is no “one size fits all” approach to deciding whether to appeal, consider the following:
• The IRS settles an overwhelming majority of its appeals.
• The IRS has a limited, shrinking budget and lacks the resources or desire to litigate every case, especially small cases.
• Appeals officers are tasked with considering the “hazards of litigation”, which may include the time and expense of going to trial before a tax court, and weighing the strength of a case.
• The IRS does not want the embarrassment or reputational damage of losing a case.
• The IRS is the Internal REVENUE Service, which means they are in the business of generating revenue. They want whatever money they can get, the easier the better.
• When the IRS sends a case to collections, they risk driving you to bankruptcy and seeing very little of their money. In contrast, if you reach a settlement of your tax obligation, the IRS knows it is much more likely get as much from you as possible.
Have you received a higher tax bill following an audit? Are you unable to pay your full tax obligation? Like I described above, there are compelling reasons why a tax appeal may be right for you, and I can help you weigh your options. An assertive and respected attorney can help you convince the IRS Appeals Office that your tax bill is too high. With over twenty years of practice, a Master of Law Degree in Taxation, and a license to practice in the United States Tax Court, I will provide my expertise to walk you through any tax situation. Call the Law Offices of Robert S. Thomas at 847-392-5893 to schedule a consultation or visit our website to set up a consultation online.