The IRS uses an administrative appeals process to settle disputes with taxpayers and avoid court proceedings. If you have received IRS balance due notices and disagree with the tax you owe, you are entitled to an IRS assessment via an IRS administrative appeals process.
The IRS Office of Appeals makes independent reviews of tax disputes and objectively assesses the positions taken by the IRS and the taxpayer before making a ruling.
What Are the Types of IRS Appeals?
The Appeals Division works as an independent entity from IRS offices that conduct investigations. The division offers two types of administrative appeals to taxpayers:
- Collections Appeal Process (CAP) hearings
- Collections Due Process (CDP) hearings
CAP and CDP hearings are conducted either by phone, mail, or in person. You can also opt to represent yourself or be represented by an attorney or a certified tax expert.
What Is the IRS Collections Appeal Process (CAP)?
As mentioned earlier, the Collections Appeal Process (CAP) hearings are one of two IRS appeals options available for you to challenge IRS tax collection actions.
This program allows you to appeal a tax collection action before or after the action. The types of collection actions that can be appealed through CAP include:
- Notice of Federal Tax Lien filed or in the process of being filed by the IRS
- A seizure of property
- Proposed or actual bank account garnishment
- Proposed or actual wage garnishment
- Prior to or after request to issue lien certificates
- Proposed or action modification
- Rejection or termination of an IRS Payment Plan (Installment Agreement)
- Rejection of an Offer in Compromise
What Is the IRS Collection Due Process (CDP)?
If you have received a notice of intent from the IRS to place a tax lien or levy on your assets, you can request a Collection Due Process (CDP) hearing. Collection Due Process Hearing is a program that allows you to appeal IRS liens and levies.
The hearing assesses the validity of the IRS notice and all details related to the unpaid tax. The main goal of CDP is to work out a compromise between the IRS and the taxpayer. You can request a CDP hearing for a review of any of the following processes:
- An innocent spouse defense claim
- Collection proposals including Offer in Compromise and Installments Agreements
- Lien subordination
- A withdrawal of an IRS Notice of Federal Tax Lien
- A claim of economic or other hardship due to collection of tax liability
How do I know if I can appeal?
IRS appeals can be the best action for you if the following situations apply:
- You receive a notice from IRS detailing your right to appeal their actions
- You don’t agree with IRS decisions
- You don’t want to sign an agreement form sent by the IRS
How Do I Submit a Request for IRS Appeals Review?
If your tax assessment results from an audit of less than $25,000, you can contact the auditor directly or submit your appeals request through the IRS appeals system. Disputes involving assessment of less than $25,000 can be submitted as a Small Case Request.
Notably, when submitting an IRS appeals request, use Form 12203 – Request for Appeals Review (which you can download from the IRS website) or the specific form referenced by your assessment. You can also attach a written statement detailing the items you disagree with and the reasons for the disagreement.
Typically, assessments of $25,000 or more require a Formal Written Protest that must include a range of details such as your name, address, contact information, statement of intent to appeal, copy of the letter showing proposed assessment, and more.
How Is the Administrative Hearing Conducted?
Once you have successfully submitted your IRS appeals request for administrative review, you will be given 60 days to prepare for the hearing. The hearing is conducted informally via telephone conferencing, mail, or in person. You are allowed to record or take notes of the proceedings. The Office of Appeals will review your case and determine whether or not the IRS took the right and legal steps regarding the action under appeal. The settlement officers from the appeals office will assess the facts and documents you have presented and compare them to IRS records in order to arrive at a fair resolution.
Should you reach a verbal settlement during the hearing, the settlement agreement is transcribed on IRS Form 870. It is crucial that you understand and agree with all the contents of the agreement and don’t sign the form if you have found mistakes by the Office of Appeals or the auditor.
Before you sign the agreement, have a tax expert double-check all figures to ensure there are no errors or mistakes. Once you sign the form, you won’t get another chance to make another IRS appeal to the tax court.
How Can Wiztax Help?
We are available to help you better understand your options and if necessary, we can help with the filing of appeals. Our services are always all-inclusive, meaning your tax resolution plan includes everything that is needed for a fair fee that is guaranteed to save you thousands. Call us today at (866) 568-4593 to learn more, or start here.
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