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How to appeal IRS decisions

If you've been audited by the Internal Revenue Service and, as a result, asked to ante up more tax dollars, don't panic. If you believe you paid the correct amount of tax, consider appealing to the IRS, suggests the Maryland Association of CPAs.

In addition to the outcomes of tax audits, there are a number of other findings you can appeal, including penalties and interest, employment tax adjustments and collection actions such as liens, levies, seizures and rejected offers-in-compromise. You may appeal most IRS decisions with your local Appeals Office.

Here's some information to help you understand the appeals process.

Where to start

If you are appealing the outcome of an examination conducted through a personal interview with an IRS agent at an IRS office, the employee is required to explain your appeal rights to you. At that time, you may request a meeting with the employee's supervisor.

Should you not reach agreement at that meeting or if the audit was conducted at your office or home, the IRS will inform you of your right to request a conference with an appeals officer. The IRS examiner will write up the case, detailing both your position and the position of the IRS. After a few weeks, you should receive a report that summarizes the IRS's findings and includes instructions for scheduling your appeal.

Taxpayers whose examinations are conducted through correspondence also receive instructions notifying them of their right to an appeals conference.

Appeal conference or mediation?

Appeals conferences are informal meetings that may be conducted by telephone, correspondence or at a local Appeals Office, which is independent of the IRS office that proposed the disputed action.

As an alternative, if you qualify, the IRS offers Fast Track Mediation (FTM), a streamlined process implemented in 2002. FTM is designed to expedite disputes by helping the taxpayer and the IRS reach a mutually satisfactory solution.

Parties apply to the FTM program by completing and executing an Agreement to Mediate, which is sent to the FTM Program Manager. Using the Fast Track Mediation process does not preclude you from requesting an appeals conference; you may withdraw from the mediation process at any time.

Represent yourself or bring in the experts

Whether you choose an informal appeals conference or try mediation, you may represent yourself or you can be represented by a CPA, attorney or individual enrolled to practice before the IRS.

Taxpayers who choose to represent themselves may obtain assistance through specially trained customer service representatives. Contact information for these representatives can be found in the appeals section on the IRS Web site (www.irs.gov).

When you fail to reach agreement

Most tax issues are settled at the Appeals Office level. If you do not reach agreement with the IRS Appeals officer, or if you prefer not to appeal within the IRS, you may take your disagreement to federal court after satisfying certain procedural and jurisdictional requirements. These courts are independent judicial bodies and have no connection to the IRS. Court trials can be time-consuming and expensive, so you should make every effort to resolve the difference yourself.

Understand the process

The IRS publishes extensive information on the appeal process. The following documents may be downloaded from the IRS Web site at www.irs.gov. Publication 1, Your Rights as a Taxpayer, is a good place to start. Publication 5, Your Appeal Rights and How to Prepare a Protest if You Don't Agree, provides more detailed information.

Consult with a CPA

A CPA can provide advice concerning your disagreement with the IRS and represent you in the appeals process.

Only CPAs are equipped to address your full range of financial needs with integrity and insight. In Maryland, CPAs must pass a rigorous two-day examination, adhere to strict ethical and professional standards, and, beyond college, complete 80 hours of continuing education every two years to be certified by the state — accountants do not.

Your doctor is certified; your lawyer is certified. Make sure your accountant is a certified public accountant.

For CPA referrals in your area, contact the MACPA at (410) 296-6250 or click here.

The Maryland Association of Certified Public Accountants (MACPA) is a statewide professional association that provides leadership, information and services for its nearly 10,000 CPA members, who are employed in private practice, industry, government and education. CPAs are business and financial professionals who have passed a rigorous two-day examination in order to be licensed by the state. CPAs are committed to protecting the public interest, and must adhere to stringent ethical and professional standards and continuing professional education requirements.