Huge federal tax debt can make you feel like you’re drowning with no life preserver. And keeping your head above water on your own without some help can spell doom.
A good place to start (besides calling your favorite Greater Memphis tax specialist, wink) is to send out an SOS to the IRS Independent Office of Appeals.
Appeals operates independently from the IRS division that assesses tax debt and ignites collection. Their office aims to resolve tax snarls impartially without litigation.
You don’t have to request an appeal before going to court to fight out your debt question, but an appeal is less formal, cheaper, and not subject to complex rules of evidence or procedure. You also don’t give up your right to go to court by coming to Appeals.
How do you start?
Should you appeal?
This can be a good route for you if you got a letter from the IRS in your Greater Memphis mailbox explaining your right to appeal the IRS decision, you don’t agree with the IRS decision, and you aren’t signing an IRS agreement. You have a few other considerations beforehand, too.
Do you think the IRS:
- Misinterpreted tax law in your case or misunderstood the facts?
- Is taking inappropriate collection action against you, or you disagree with the denial of your offer in compromise?
- Is using incorrect facts?
Be ready to back up your position. (We’re happy to help you with all the above.)
An appeal is not for you if the IRS correspondence that you got was a bill not mentioning an appeal, you didn’t provide all the info to support your position during the audit, or you simply can’t pay what you owe.
You request an appeal by filing a written protest mailed to the IRS address on the letter that explains your appeal rights — and not directly to the Independent Office of Appeals. Before sending your case to Appeals, the IRS Examination or Collection office will consider your protest and attempt to resolve the disputed issues. If that fails, they forward your case to Appeals.
You can represent yourself to Appeals or have a professional representative with you. That person must be an attorney, a CPA, or an enrolled agent. (Of course we’re happy to help with this, too.)
You don’t have forever to send your protest, either: Generally, the limit is 30 days from the date of the letter. Use IRS Form 12203, “Request for Appeals Review.”
There’s also another kind of protest called a Small Case Request. You can use this if the entire amount of additional tax and penalty proposed for each tax period is 25 grand or less.
Appeals will schedule a conference with you, an “informal” meeting conducted by correspondence, telephone, video conference, or in person. They’ll consider any reason you have for disagreeing with the tax trouble in the case except for moral, religious, political, or constitutional arguments, as well as conscientious objections “or similar grounds.”
You have to listen to their explanation of your rights and the process, including the timeframe to resolve your case. Be prepared to state the issues you disagree with and why, provide any additional info or documents that might help, and give your understanding of the facts and the law in your case (here’s where a representative is helpful).
You may be entitled to a copy of the administrative case file that went to Appeals with your appeal request. If you meet the criteria, they’ll give you a chance to request that information prior to your conference.
Note: If you give information that you didn’t provide to the auditor or revenue officer, Appeals may kick your case back to them for reconsideration. If any IRS comments come out later, you’ll have a chance to respond.
There’s no telling how long it will take to resolve your case in Appeals but you can ask.
You can contact your Greater Memphis Local Taxpayer Advocate — another independent organization in the IRS — to make sure you’re treated fairly. You can also consider voluntary mediation (aka alternative dispute resolution), an informal and confidential process where a trained Appeals works with you and the IRS employee on your case. It’s not a substitute for the audit or collection process, but it can help you wrap up the dispute faster than some measures.
Appeals may call you if you filed a petition with the U.S. Tax Court and you haven’t previously had a chance to resolve your case. While on the phone, the Appeals caller should give you their name, title, badge number, and contact information including phone number, e-fax, and e-mail address. He or she should know the docket number, as well as your case specifics. Appeals employees will never ask for your credit card or banking info.
Understanding how to approach the Office of Appeals can be a critical step in putting your tax mess behind you. We’re always here to help walk you through it:
On your team,