IRS Appeals

If an IRS audit ends with changes you do not agree with, you are not stuck with the examiner's conclusion. The IRS Independent Office of Appeals, usually just called Appeals, reviews disputed results without going to court. This page explains when Appeals is the right route, how to ask for it, and what other options exist, including the U.S. Tax Court.

When Appeals makes sense

The IRS says an appeal may be right for you if you received a letter that describes your right to appeal, you disagree with the IRS decision, and you are not signing the agreement form the IRS sent. It can resolve disagreements about how the law applies, about facts the IRS misunderstood, and about collection actions or a rejected offer in compromise.

Appeals is usually not the right route when:

• the IRS letter is just a bill that does not mention an appeal;
• you did not give the examiner the information that supports your position during the audit (new substantial documents are usually sent back to the examiner first); or
• your only concern is that you cannot afford to pay, which is handled through installment agreements and the other collection options.

The steps after an audit

1. The proposed changes arrive. After the audit, the IRS sends a report and a letter, commonly the 30-day letter. A letter such as Letter 525 typically gives you 30 days from the letter date to respond. Other letters list different periods, so use the date printed on yours.
2. Try to resolve it first. The IRS suggests calling the contact on the letter first. Sometimes a missing document or a misunderstanding can be fixed without a formal appeal.
3. Send the appeal request to the address on the letter. Do not mail it directly to Appeals. The IRS says sending it directly can delay the process or prevent Appeals from considering your case.
4. Appeals reviews your case. An Appeals officer who was not involved in the audit looks at both sides and tries to reach a settlement.
5. If you reach an agreement, you sign it. If you do not, the IRS may issue a notice of deficiency.

Small case request or formal protest

The type of request depends on the amount in dispute.

Employee plans, exempt organizations, S corporations and partnerships are not eligible for a small case request and must use a formal protest. In either case, list each item you disagree with and your reasons. If you use a representative, the representative must also provide a declaration with the protest. Appeals applies the tax law, so your reasons should rest on the law and the facts rather than on fairness alone.

Timing and the statute of limitations

Appeals needs enough time left on the IRS's assessment period to consider the case. The IRS procedures call for a substantial amount of time, generally about a year, to remain when the case reaches Appeals, which is why the IRS may ask you to extend the period by signing a consent. Whether to sign is a real decision with consequences; read our page on the statute of limitations first.

Other routes

• Mediation. Appeals offers mediation programs that the IRS says can resolve disputed issues more quickly than the ordinary process.
• Notice of deficiency and Tax Court. If you do not agree, the IRS can send a notice of deficiency (see the CP3219A notice). You then have 90 days (150 if the notice is addressed outside the U.S.) to file a petition with the U.S. Tax Court, and the Court cannot extend that period. This lets you dispute the amount without paying it first. The filing fee is $60, and the Court may waive it if you cannot pay. Smaller disputes can use simplified small tax case procedures, which the IRS describes as available for amounts up to $50,000 per tax year.
• Pay and sue for a refund. In some cases you can pay the tax, claim a refund, and file suit in a federal district court or the Court of Federal Claims if the claim is denied.
• Collection disputes. Liens and levies follow different rules; see collection due process hearings.

Common mistakes

• Mailing the request to Appeals instead of the address on the letter.
• Arguing only that the result "is unfair" without citing the law and records.

How we can help

We can review the examination report, tell you which items are worth disputing, prepare the small case request or written protest, and speak for you at the conference once you sign a power of attorney. Appeals often involves negotiation, and we cannot promise a particular result. We can explain the choices and the deadlines so you can decide.

For related help, see IRS audit representation or contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.