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Updated by Kevin Thorn on Apr 07, 2020
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Kevin Thorn Kevin Thorn
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A Guide to the Federal Tax Appeals Process

If you have just been through an IRS audit and you are now facing substantial liability for tax, interest and penalties, it is time to weigh your options for filing an appeal. Filing a successful appeal can greatly reduce the amount you owe to the IRS… if not wipe it out entirely.

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Your First Step is to Request an Appeal with the IRS

The first stage of the federal tax appeals process involves requesting an administrative appeal with the IRS Independent Office of Appeals (“Office of Appeals”). The Office of Appeals is a neutral body within the IRS that is responsible for resolving taxpayer disputes. When you request an appeal, the Office of Appeals will review the facts of your case and render its own decision regarding how much you owe (if any) to the federal government.

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You Might Not Hear From the IRS Right Away

Once you file your appeal, the Office of Appeals will review your filing and contact you regarding further proceedings. However, this first contact might not come right away. The Office of Appeals states that you should wait 120 days before following up on your request. In the meantime, however, any interest and penalties will continue to accrue. As a result, while your appeal request is pending, you need to make an informed decision about how to address any potential outstanding and ongoing liability.

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Federal Tax Appeals Often End with “Offers in Compromise”

If you owe money to the IRS, one option for resolving your federal tax appeal is to negotiate an “offer in compromise.” An offer in compromise is a binding settlement between you and the IRS that allows you to pay less than the full amount that you legally owe. Negotiating a favorable offer in compromise requires a thorough understanding of federal tax law and the appeals process, and it is best to hire an experienced tax lawyer to represent you in your negotiations with the IRS.

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If Your Administrative Appeal is Unsuccessful, You Will Need to Go to Tax Court

If you are not able to negotiate an offer in compromise or the Office of Appeals rules against you, then next option is generally to take your case to the U.S. Tax Court. The U.S. Tax Court is located across the Potomac River from Virginia in Washington D.C., and you will need to hire an experienced tax lawyer to represent you.

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You May Be Able to Challenge the Tax Court’s Ruling in the Court of Appeals

If the Tax Court rules against you, then you may be able to appeal the decision in the U.S. Court of Appeals. This is an option as long as you did not elect for “small tax case” status. In order to preserve your right to appeal, you must file a notice of appeal within 90 days of the Tax Court rendering its decision.