Effective September 2, 2014: New IRS Appeals Process

Effective September 2, 2014: New IRS Appeals Process

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On September 2nd, 2014, the IRS will change the way it handles audit appeals. The IRS Office of Appeals, under the new Appeals Judicial Approach and Culture (AJAC) project, will “no longer. . . be examiners or investigators,” said IRS Appeals Team Manager Philip A. Oyoto at last week’s IRS National Tax Forum in National Harbor, Maryland.

In a memo to appeals staff, John V. Cardone, IRS Director of Policy, Quality and Case Support, wrote that the AJAC enforces “Appeals’ quasi-judicial approach to the way it handles cases, with the goal of enhancing internal and external customer perceptions of a fair, impartial and independent Office of Appeals.”

Cardone said that while the Appeals Office will not generally return cases to the examination division for further development, it will return cases in the following circumstances:

  • The case is missing a protest, or the protest, when required, fails to set forth the taxpayer’s position, lacks detail, or fails to meet the requirements of Publication 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree (January 1999);
  • Some action must be taken or some event must occur before Appeals can adequately consider the case;
  • Technical advice was pending at the time of the referral;
  • Appeals discovers potential fraud, malfeasance, or misrepresentation of a material fact; or
  • The taxpayer provides new information or evidence.

The purpose of these new rules, Cardone said, is to ensure that the Appeals Office only handles tax cases that have been fully developed at the examination stage. Appeals hearing officers will no longer do their own investigations and will send any new issues raised or evidence submitted by the taxpayer during the appeals process back to the examiner n for consideration.

A  fully developed case according to Cardone is a case that “has all pertinent evidence well documented with an easy to follow audit trail. Generally, the case contains the evidence needed to support the adjustments proposed in the [auditor’s report].”

Oyoto said that the biggest change in the new rules is that  IRS Appeals will attempt to settle cases based on factual hazards (i.e., uncertainties as to what facts the Court will find to be true) if the case not fully developed and the taxpayer has provided no new information or evidence to the IRS appeals officer.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida