As stated in earlier blogs, the Internal Revenue Service (IRS) is not perfect. They can, and do, make mistakes. They can miscalculate tax amounts owed or even overlook deductions. Fortunately, for taxpayers there is a process that can reverse or stop an IRS’ decision or action that is unfair or incorrect. An Administrative appeal gives you a second chance that may lead to a more favorable outcome with your tax problem. Help is available without going to court.
An Administrative Appeal process can apply to any appeal filed regarding a decision and/or action taken by the IRS. This can include decisions made during audits or for collecting a tax debt. The IRS allows any taxpayer who feels that the IRS was unfair or incorrect regarding a tax situation, to appeal without legal action through their Office of Appeals. This entity is separate from the IRS themselves so that decisions are objective.
Since all Administrative Appeals are filed through the IRS Office of Appeals, the process is often more cost effective than going to court. You have a right to appeal disputes with the IRS or even tax audits. Sometimes the IRS will request either written arbitration or a hearing usually over the phone with an official within the IRS Office of Appeals once a taxpayer has filed an appeal. This arbitration or hearing will determine a final decision, although arbitration is optional. Most appeals should be made through a tax professional for the best outcome. However, if your appeal is rejected, you may appeal the rejection of that appeal as well.
The IRS will halt any collection actions against you until the appeal is resolved and a decision is made whenever an Administrative Appeal is filed. The timing for filing an Administrative Appeal depends upon the type being filed; however, the following criteria is best when filing any appeal:
- File an appeal as soon as possible.
- Immediately file an appeal after the IRS makes a decision you disagree with.
- When being audited by the IRS, file an appeal as soon as possible so that no actions are taken by the IRS before you can appeal.
Although there are many situations in which you can file an Administrative Appeal, the following is a list of the more common reasons:
- Decisions made during a tax audit
- Undesirable response or rejection when applying for an Offer in Compromise
- Notice and/or placement of any liens, levies, or seizures of property
- Modification, rejection, termination, or any change to an Installment Agreement
- Any collection decision and/or action made by the IRS
- Rejection of an appeal
The most common type of appeals are the Collection Due Process (CDP) and the Collection Appeal Program (CAP). However, there are other types of appeals that can better suit your situation. The most important takeaway from this blog is to consult a tax professional to guide you through your best options and processes whenever the IRS takes any action against you for which you wish to appeal. Administrative Appeals are difficult, complex, and may not always produce the best-case scenario outcome. A tax professional can provide you with the best- and worst-case scenarios to help you find the best option for relieving you of any outstanding tax debt. Call us today for tax resolutions!