PART 3 – REPRESENTATION, PRACTICE, AND PROCEDURES
Section 3: Specific Types of Representation
Part 3 Representing a taxpayer before appeals
Right to appeal revenue agent findings
If a taxpayer is not satisfied with the result reached at the agent level, the next step
is to proceed to the Appeals Division of the IRS. Such a request must be
accompanied by a written protest, except in the following cases.
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Proposed tax deficiency does not exceed $10,000 for any of the
tax periods involved in the audit.
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Deficiency resulted from a correspondence or office type audit
(i.e., not as a result of a field audit).
The IRS Appeals Division is the next step in the negotiations. The taxpayer may wish
to avoid this step if:
a. new issues could be raised by the government as the process is prolonged
b. the taxpayer wishes to send a message of certainty in its argument to the
government, or
c. an expedited conclusion to the issue is desired.
2. Tax litigation is a costly, time-consuming process. Direct costs of attorney and
accountant fees, document reconstruction, travel, and witness production can make
this a difficult decision.
Request for appeals consideration (e.g., preparation, elements contained)
Appeals Division possesses more flexibility than an agent in settling tax disputes.
This added flexibility primarily is attributable to their ability to assess the hazards of
litigation, that is, the probabilities of winning or losing in a court proceeding.
Failure at the Appeals level may take the parties to litigation.
a.
Most tax litigation takes place in the Tax Court.
b.
The Small Cases division of the Tax Court is available if no more than
$50,000 in tax is under dispute. Neither party can appeal a Small
Cases decision.
Before you prepare a request for Appeals, refer to the Appeals homepage to decide
if Appeals is the place for you. If you decide you want to present your dispute to
Appeals, you will need to prepare a request for Appeals and mail it to the office that
sent you the decision letter.
Preparing A Request For Appeals
Small Case Request
You prepare a small case request instead of a written protest if the total amount for
any one tax period is $25,000 or less.
• Send a letter requesting Appeals consideration.
• Indicate the changes you do not agree with and the reason you don’t agree.
For specific guidance in preparing a small case request/protest, refer to Form 12203,
Request for Appeals Review.
Formal Written Protest
Prepare a formal written protest for all of the following situations:
• If the total amount for any one tax period is greater than $25,000.
• Employee plan and exempt organization cases without regard to the dollar
amount at issue.
• Partnership and S corporation cases without regard to the dollar amount at
issue.
To prepare a formal written request for Appeals you must:
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Include your name, address, social security number, and daytime telephone
number.
Include a statement that you want to appeal the IRS findings to the Appeals
office.
Include a copy of the letter showing the proposed changes and findings you
don’t agree with (or the date and symbols from the letter).
Indicate the tax periods or years involved.
List all the changes you do not agree with and why you don’t agree.
State the facts supporting your position on any issue that you do not agree with.
Cite the law or authority, if any, on which you are relying.
Sign the written protest under the penalties of perjury.
Enrolled Agent appearance at appeals conference
You can represent yourself in Appeals, and you may bring another person with you
to support your position. If you want to be represented by someone, the person you
choose to represent you must be an attorney, a certified public accountant, or an
enrolled agent authorized to practice before the IRS. If you plan to have your
representative talk to us without you, we need a copy of a completed power of
attorney Form 2848, Power of Attorney and Declaration of Representative.
Settlement function of the appeals process
Delegation Order 4-24 settlement authority may be exercised only if all of the
following factors are present.
• The facts surrounding a transaction or taxable event in the tax period under
examination are substantially the same as the facts in the settled period;
• The legal authority relating to such issue must have remained unchanged;
• The underlying issue must have been settled by Appeals independently of other
issues (e.g. no trading of issues) in the settled tax period; and
• The issue must have been settled in Appeals with respect to the same taxpayer
(including consolidated and unconsolidated subsidiaries) or another taxpayer
who was directly involved in the transaction or taxable event in the settled
period.
Issuance of 90-day letter
Notice of Deficiency (Letter 3219 SC/CG)
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A Notice of Deficiency is sometimes referred to as a 90-day letter. The Notice of
Deficiency tells you the tax we assess plus the interest and penalties you will
owe. A Notice of Deficiency is required by law and is to advise you of your
appeal rights to the U.S. Tax Court.
The letter also states that within 90 days, you must submit one of the following:
• Your Form 1040 completed and signed, including all schedules and forms
with cover letter;
• The Consent to Assessment and Collection form, signed and dated;
• A statement explaining why you believe you are not required to file, or
information you would like us to consider.