Episode 27: In this episode, Timalyn is relaxing after the federal tax deadline. Today, she'll discuss the IRS appeals process. Timalyn will discuss how to make an appeal and how it affects your current situation.
You might find it helpful to go back and listen to Episode 26 on the IRS Collection Due Process. It sets up today's topic.
Let's face it, nobody like to pay taxes. As an enrolled agent, Timalyn represents taxpayers in IRS proceedings. There are times when she doesn't agree with a decision made by the IRS. That's when IRS appeals offer a chance to revisit a particular issue, on behalf of the taxpayer.
Timalyn discusses a time she had to contact the IRS about a tax refund they forgot to issue to her. For some reason, they couldn't simply apply the balance to an upcoming tax payment. She had to go through the same process other taxpayers have to experience. In the end, the issue was resolved without the need for an IRS appeal.
Making an IRS Appeal
When you have a tax liability, you know you need to pay it to the IRS. However, there are times when you dispute the amount the IRS proposes you owe, as well as penalties and enforcement actions. This is when you need to file an appeal. In Episode 26, Timalyn explained that the IRS Appeals Office is an independent organization. They can look at the situation objectively.
When Can't I Make an Appeal?
There are certain reasons you cannot use as a basis to appeal an IRS decision. For instance, you can't appeal based on what you feel are moral reasons, religious reasons, political reasons, Constitutional reasons or what's called "conscientious reasons."
However, any other basis is considered fair game enabling you to make an IRS appeal.
What Happens When I Appeal an IRS Decision?
Timalyn explains that the first step is a conference with your local appeals office. It sounds more intimidating than it really is. The conference may be in person, via written correspondence, or via telephone. You can hire an authorized representative to handle your appeal. Episode 23 outlines the 3 types of tax professionals who are authorized to represent you regarding IRS issues:
● A Tax Attorney
● A Certified Public Accountant (CPA)
Types of IRS Appeals
The first type of appeal is a "Small Case Request." This is for issues less than $25,000. You'll need to include a brief statement regarding the original IRS decision and what you are requesting to appeal. You need to specifically include the issue with which you disagree.
You only have 30 days, from the date on your notice (not the date you received it), to submit this information.
The second type of appeal could involve more than one tax period or is $25,000 or more, this is called a "Formal Protest." There is more required with this appeal.
Here's what you'll need to include with your Formal Protest:
● Taxpayer's full name, address and daytime phone number
● Statement outlining why you want to appeal the decision
● Include a copy of the letter Proposed Tax Adjustment (sent by the IRS)
● List the tax periods or years
● Include a list of changes you don't agree with, including your rationale for the disagreement
● You must include facts substantiating your reason for disagreeing with the IRS
● Include any law or authority used as the basis for your disagreeing
● Don't forget to sign everything you're submitting.
● State that you are signing "Under the penalties of perjury, you are signing that you believe the information your submitting is true, correct and to the best of your knowledge, complete."
This is a serious process. It's not meant to enable you to game the system or to cause additional delays.
For Tax Professionals and Representatives
Remember, we are required under IRS Circular 230 to sign and submit a similar statement regarding the validity of the information you submit on behalf of your client. Cover your bases and ensure your client is being forthright.
What Can be Appealed with a Formal Protest?
You can use this process to:
● Appeal an offer in compromise
● Appeal issues related to an exempt organization or an employee plan
● Appeal issues on behalf of partnerships and S-Corps
You wouldn't use the Formal Protest to:
● Appeal an installment agreement
● Appeal a tax lean
● Appeal a tax levy
Remember, you do have options. The IRS is not always correct in its decisions. The IRS Appeals process helps to ensure you are treated correctly. After all, back taxes shouldn't ruin your life.
As we conclude Episode 27, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
