Last week we negotiated a client’s back taxes into an IRS status referred to as Currently Not Collectible (CNC). The conversation went rather smoothly as we had all the necessary paperwork and we worked with a representative who was fairly amicable. But what happens when your experience isn’t so pleasant or doesn’t go in your favor? Fortunately for many people with a tax debt, the IRS has an administrative Appeals Division (Appeals) to which most collections actions taken by the agency can be appealed.
Appeals is one of the IRS’ best kept secrets. Why? In our experience, Appeals personnel appear to be under less pressure to collect tax revenue than Revenue Officers. This is likely due to different criteria for personnel reviews. In addition, Appeals personnel are simply more pleasant to deal with in general, usually lacking the snappy attitude and air of arrogance that is unfortunately common amongst Revenue Officers.
So what is the primary purpose of Appeals? Well, their functional mandate from on high is, effectively, to prevent cases from going to court (thus saving the government the expense of litigation). This is done by offering a “fresh look” at situations that have already had some interaction with the IRS at another level. Appeals, however, is still an administrative function and is not a court in any way itself.
Appeals works in a very formulaic manner, just like any other IRS division. When you file any sort of IRS appeal, you’ll receive a letter notifying you that your case has been assigned to a Settlement Officer (SO). Sometimes, this first letter will include your hearing date but sometimes it won’t.
The initial contact from appeals via mail will usually include a request for financial documentation, if this information wasn’t already in your file when it was passed to Appeals from Collections. If your Appeal in any way mentions a “resolution alternative” (such as an Installment Agreement, CNC, or Offer in Compromise) then you will be requested to provide the financial documentation necessary to reach that resolution alternative.
Many different types of Collection actions taken against you can be appealed. Aggressive collections actions such as bank account levies and wage garnishments are commonly appealed, but so are proposed garnishment actions, and even denials of payment plans. If the IRS takes any adverse action against you, make sure to carefully review the notices they send you, which will always explain your appeals rights. If you need assistance protecting your legal right to an appeal, such an action by the IRS, be sure to contact a tax professional experienced in representing taxpayers with such tax issues.
Until next time…