Tax Appeals: Know and Defend Your Rights

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By Robert Steere, Toolkit Staff Writer

Have you ever had a run-in with the Internal Revenue Service? Hopefully not, but it's not at all unusual for the IRS to make adjustments to your tax return for various reasons. They might make an adjustment for an inconsistency between income on information reports (W-2s and 1099s) and the income reported on your return; incomplete information supporting a deduction or credit; a simple math error; or some other glitch in your return. They also can examine your return and disallow deductions or credits if they believe you don't qualify for them. In some cases, they impose penalties for underpayment, late payment or even fraudulent tax evasion.

In any event, the IRS provides an appeals process for those who do not agree with the results of a tax return examination or with other adjustments to their tax liability. Here are seven things you should know about your appeal rights in the event of a disagreement with the IRS.

1. When the IRS makes an adjustment to your tax return, you will receive a report or letter explaining the proposed adjustments. This letter will also explain how to respond to the notice of adjustment or to request a conference with an appeals office if you disagree with the IRS findings on your tax return.

2. In addition to tax return adjustments and examinations, many other tax obligations can be appealed. You may also appeal penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies.

3. If you choose to request a conference with an IRS appeals office, make sure you prepare for the conference by compiling the appropriate records and documentation to support your position. It is also wise to review the applicable law and regulations so that you have a firm grasp of your legal obligations.

4. Appeals conferences are informal meetings. You may represent yourself if you want, or you may have someone else represent you. Those allowed to represent taxpayers include attorneys, certified public accountants or individuals enrolled to practice before the IRS.

5. The IRS Appeals Office is separate from--and independent of--the IRS office taking the action you may disagree with. The Appeals Office is the only level of administrative appeal within the IRS.

6. If you do not reach a satisfactory agreement with the IRS appeals office, or if you choose not to appeal your claim within the IRS, you may still be able to appeal certain actions through the courts.

7. For further information on the appeals process, refer to IRS Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree, or go to the IRS website. You can find Publication 5, along with other items of interest regarding IRS Appeals, including the following links:

Posted April 13, 2010.