Most people may be surprised to learn that the IRS Office of Appeals operates independently of the agency’s collection, examination, and accounts management functions. Therefore, the Office of Appeals does not conduct fact finding or investigative actions. In 2012, the Appeals Judicial Approach and Culture (AJAC) project began, and the Office of Appeals came under review to ensure consistency with its mission. As a result, a number of revisions to the IRS appeals process have been drafted; many of the changes have already taken effect. A few of the revisions are detailed below.
Changes to Further Development Procedure
The Office of Appeals will no longer return cases to the Examination division for further development. However, an exception may apply if: 1) the taxpayer’s protest is missing, 2) the protest does not state the taxpayer’s position, or 3) the taxpayer fails to meet the protest requirement in the case of matters that exceed $25,000. Cases that require further action by IRS headquarters may also be returned to Examination.
Investigative Action Discontinued
Appeals will no longer investigate or analyze new information upon receiving a case. Revision and analysis fall under the category of case development, which is not among the duties of appeals officers. Furthermore, if a case has not been sufficiently developed by Examination, it is unlikely that Appeals will not return the case to Examination.
New Theories
While Appeals will not undertake investigative actions, the office may raise new theories to support Examination’s adjustment. The office may also correct computational errors in the agent’s report.
Unagreed Issues
Unagreed issues that have not been properly developed by Examination may be resolved by Appeals. This new announcement is particularly important because it sets forth that if a taxpayer has complied with all document and information requests, yet Examination has failed to fully develop the case or support its findings, Appeals may evaluate the case as is and settle the issues without additional information.
The IRS appeals process may seem confusing to the average taxpayer; therefore, enlisting the support of a CPA is highly recommended. Gary Kaplan is a seasoned CPA currently serving businesses and individuals in Florida, Maryland, Washington, D.C., New York, and Utah.
