Category: IRS Appeals

When navigating a dispute with the IRS, one of the best moves you can make is taking your case to the Office of Appeals. It’s a chance to resolve disagreements without the expense and stress of court. However, one critical factor that can greatly influence the success of your appeal is your level of tax compliance. Maintaining compliance isn’t just about filing returns—it’s about showing the IRS that you’re serious about resolving your tax matters fairly.

Why Tax Compliance Matters

The IRS is more likely to negotiate with taxpayers with a history of complying with tax obligations. Being up to date with your filings and payments signals that you’re acting in good faith, which can work in your favor during the Appeals process. Conversely, if you have a history of non-compliance, it can be a major obstacle. Even if you have a legitimate argument, non-compliance can make the IRS less willing to work with you.

What Does “Being in Compliance” Mean?

For IRS purposes, compliance usually means that you’ve filed all required tax returns for at least six years. The IRS uses this key benchmark to assess whether you’re meeting your obligations. So, if you’re missing returns from earlier years, they generally won’t be a problem as long as the most recent six years are fully filed.

Being in compliance also means you’re making any required tax payments on time, including estimated payments if you’re self-employed. Even if you can’t pay off everything you owe, showing a commitment to keeping current with new obligations can help your case.

Compliance in Collection Appeals

Your current compliance status is even more critical if your appeal involves collection actions—like disputing a lien or levy. The IRS is less likely to grant relief if you still miss recent tax returns or fail to make payments on time. In fact, the IRS often views non-compliance as a sign that the appeal is more about delaying collections than resolving the dispute.

Compliance is non-negotiable for taxpayers seeking relief through an Offer in Compromise or Currently Not Collectible (CNC) status. The IRS will not even consider these options unless you’re fully current with your tax filings for the past six years.

How to Get Compliant Before Appeals

If you’re not currently compliant, here are some steps you can take before your Appeals conference:

1. File Any Outstanding Tax Returns for the Past Six Years: Even if you can’t pay the full amount owed, it’s crucial to file all required returns.
2. Set Up a Payment Plan: If you owe back taxes, consider entering into an installment agreement. Showing that you’re working toward paying your tax debt helps demonstrate good faith.
3. Make Your Estimated Payments: If you’re required to make estimated payments, ensure they are current. This is especially important for self-employed individuals.

Final Thoughts

Tax compliance is key in determining how the IRS Appeals Office approaches your case. The goal of Appeals is to reach a fair settlement, but your compliance history plays a big role in building trust and credibility. By ensuring you’re fully compliant with your tax filings for the last six years and staying on top of current obligations, you’ll put yourself in a much stronger position to achieve a favorable outcome.

Dealing with a tax dispute can be stressful, but the IRS Office of Appeals offers a path to resolve issues without needing a court battle. If you’ve received an IRS decision you disagree with—whether it’s about an audit, penalties, or collection actions—you might find that Appeals is a smoother, less formal way to get things settled. Let’s break down how the process works and what you can expect.

What is the IRS Office of Appeals?

Think of the Office of Appeals as a neutral party within the IRS. Their job is to review tax disputes fairly, helping both sides—taxpayers like you and the IRS—find a middle ground. Importantly, Appeals officers are separate from the folks who made the original decision on your case. So, you’re getting fresh eyes to look at your situation.

When Should You Consider Going to Appeals?

If you’ve been audited, hit with penalties, or received a notice of collection actions like a lien or levy, and you don’t agree with the IRS’s decision, you might be eligible to take your case to Appeals. Typically, this starts when you get what’s called a 30-day letter. This notice allows you to challenge the decision before it becomes final. You must submit a written protest within 30 days if you want your case to be reviewed.

What Happens Once You Request Appeals?

Once you’re in the Appeals process, you’ll work with an Appeals officer who will review your case. The process is usually pretty flexible—you might have a phone conference, exchange letters, or even meet in person. The goal here isn’t just to rehash the facts but to figure out a resolution that works for everyone.

Appeals officers are allowed to consider more than just strict legalities—they’ll weigh things like the risk the IRS would face if the case went to court. This opens the door to potential compromises, like reducing what you owe, arranging payment plans, or finding other creative solutions.

How Can You Prepare?

Being prepared is key. Here are a few tips:

1. Know Your Stuff: Brush up on the tax laws and guidelines relevant to your situation. It helps to know the rules inside and out.
2. Gather Your Proof: Collect all the documents and records that back up your position. The more organized and clear you are, the better.
3. Be Clear About Your Disagreement: In your protest letter and during your conference, make sure you explain clearly and confidently why you disagree with the IRS’s decision.

Wrapping It Up

The IRS Appeals process is there to help you resolve your tax dispute without the hassle of going to court. It’s a less formal, more taxpayer-friendly way to address disagreements. If you feel like the IRS has gotten something wrong or just want to avoid the stress and expense of litigation, Appeals could be the right move for you. Just make sure you’re prepared, know what you’re arguing for, and are ready to negotiate toward a fair solution.