What happens when a taxpayer receives a decision or determination from the Internal Revenue Service and disagrees with it? Can it be appealed? Short answer: YES! Long answer: well, it depends on the circumstances… maybe they shouldn’t even file an appeal if they technically qualify to do so! Let’s take a dive into the IRS appeals process to learn more about the appeal options available and when it is appropriate to exercise those options.

Let’s first start with what actions or decisions by the IRS CAN be appealed. This is crucial because you don’t want to try filing an appeal when you don’t have the right to do so. These are:

• Notice of tax lien filing
• A levy was issued.
• Denial, termination, or modification of an Installment Agreement
• Seizure
• Final Notice of Intent to Levy
• Notice of Levy on State Tax Refund
• Rejection of Offer in Compromise
• Proposed Assessment of the Trust Fund Recovery Penalty
• Denial of a Penalty Abatement request

Most of the above items will come to a taxpayer through a standard notice or correspondence issued by the IRS. If you read the notices thoroughly, you will find that if the notice comes with appeal rights, it will say so somewhere in the correspondence. It may be noted on the back of the last page in a type font smaller than 8, but it will be there.

Alright! Let’s move on to the different types of appeals available to taxpayers. Wait, there are different types of appeals? YES! The different appeals available will depend on what tax matter is being appealed. They include:

• Collection Due Process (CDP) to be used for:
  • Final Notice of Intent to Levy
  • Notice of Levy on Your State Tax Refund
  • Notice of Federal Tax Lien Filing
• Collection Appeals Program (CAP) to be used for:
  • Notice of federal tax lien filed or proposed to be filed.
  • Rejection, termination, or modification of an Installment Agreement
  • Levy issued.
  • Seizure action.
• Small Case Request to be used for:
  • Tax or penalty proposed is $25,000 or less for each tax period.
• Formal Written Protest to be used for:
  • Proposed Trust Fund Recovery Penalty above $25,000
  • Rejected Offer in Compromise
  • Denied Penalty Abatement request.

A general rule of thumb on how long you have to file an appeal is 30 days from the date of the notice issued. Therefore, it is crucial to timely determine whether you should file an appeal or not. But how do you know if filing an appeal will be an appropriate action to pursue? It truly depends on the tax account and the actions being threatened.

When an appeal is filed, it is important to have a sound basis for doing so. For example, suppose you file an appeal on a threat of levy action on a past-due tax balance, but you aren’t tending to your current tax obligations once an Appeals Officer is assigned. In that case, you will be put through the wringer for lack of ongoing tax compliance.

Remember that many appeal filings will pause (or “toll” for those of you in the industry) the Collection Statute Expiration Dates, thereby extending the amount of time the IRS has to collect on the debts. I once had a client come to me several years after she started accruing tax debt and was very proud to report that she filed an appeal on every single notice that came to her that she was advised she could. While that showed true attentiveness to her rights, she didn’t realize that by doing so, she extended her collection timeframe by over three and one-half years! (For more information on CSEDs, refer to our blog from May 22, 2023, titled “The Primary SEDs of the IRS Alphabet.”)

Let’s say you have gone through appeals, but the IRS still sticks to its initial decision. What's next? If your appeal denial qualifies to proceed with Tax Court, it is best to retain a tax attorney who can walk you through the process. Certain instances may not allow you to go to tax court, for example, if you filed your Collection Due Process appeal late or filed a Collection Appeals Program request. Instead, reach out to your local Taxpayer Advocate. They are the taxpayer’s voice at the IRS, and yes, even tax professionals utilize them! The Taxpayer Advocate’s role is to ensure the taxpayer is treated fairly and to help with tax problems surrounding the collection of taxes.

If you or one of your clients is dealing with one of the items listed above that qualify for an appeal, but you want someone experienced to handle it, reach out to the Golden Lion Tax Solutions team. We have over 24 years of experience handling all tax debt concerns and appeals before the IRS and state tax departments, including how to successfully optimize an appeal to work in favor of a taxpayer. Let us use our knowledge to work for you during such time-sensitive matters!

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Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.