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Within the IRS system, the Appeals Division is intended to have final authority to determine tax liability, to function independently of the units whose determinations are being appealed, and to act "with strict impartiality between the taxpayer and the Government." The Office of Appeals' "mission statement" is
to resolve tax controversies without litigation on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the IRS.
IRS Appeals Officers tend to be more experienced and better educated (some are attorneys and CPAs) and are permitted to weight the potential cost to the IRS of court litigation as a factor in evaluating an appeal. According to IRS statistics, about 85 to 90 percent of appeals filed by taxpayers are settled at the Appeals Division level.
In addition to Deficiency Appeals, which involve audits and examinations of tax returns, the Appeals Division also handles Collection Appeals, Refund Appeals and Assessable Tax and Penalty Appeals. Because of the Appeals Division's settlement officers' expertise in dispute resolution, the Appeals Division may be called upon to consider cases in which no initial decision has been made as well as cases in which the taxpayer has chosen to bypass the Appeals process and sue the IRS in U.S. Tax Court.
Whether it is most advantageous to take advantage of the administrative appeals process or to proceed to U.S. Tax Court or District Court or the Court of Federal Claims in a given case can be a complicated strategic decision best made in consultation with experienced tax litigation counsel. Similar choices are available at various stages of IRS disputes of which the taxpayer is unlikely to be aware and which the IRS is under no obligation to point out.
Fast Track Mediation, now available with an Appeals Division, is a streamlined process designed to expedite disputes involving audits, collections and settlement proposals rejected at the examinations level. The Appeals Officer will act as a mediator in the dispute between the IRS and the taxpayer at an early stage before a decision has been made. When a speedy decision is strategically desirable, Fast Track may be the way to go, depending on a number of factors.
Philadelphia tax attorney Joseph R. Viola has represented hundreds of taxpayers in IRS Administrative Appeals over the years and generally encourages effective use of this IRS procedure to advance his client's interests. If you have represented yourself unsuccessfully in an IRS audit or other proceeding and have been advised that you have a right to an administrative appeal, you should call Joseph R. Viola to schedule a face-to-face consultation to help you evaluate your remaining options and minimize your tax burden.