The Art of Preparing a Successful Written Protest By William P ... - CCH

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The Art of Preparing a Successful Written Protestwill enhance voluntary compliance and public confidencein the integrity and efficiency of the Service.” 3What does this mission statement mean for taxpayersand those who represent them? In general terms, itmeans an independent professional within the IRS (anAppeals Officer) will take a fresh look at a taxpayer’scase and work with the taxpayer (and representative)in search for a fair and impartial resolution to the taxcontroversy. In approximately 90 percent of all cases,a fair and impartial resolution is achieved. Indeed,the IRS reports on its Web site that over 100,000cases each year are successfully resolved throughthe appeals process.What Can I Expect When Workingwith an Appeals Officer?According to the IRM, Appeals Officers (AO) are expectedto exhibit the following characteristics whenmeeting with taxpayers and their representatives: 4Confidence in their job knowledgeResponsible actionA judicial attitude when applying tax law in areasonable and impartial mannerUniformity and consistency with respect to taxpayersin similar circumstances and achieving theprimary goal of resolving the disputeAccourteous manner when conducting conferences,providing an atmosphere of openness thatfosters cooperation operain theresolution of disputesGood listening skillsWhat does this definition n mean for you and yourclient? It means you will lhave anexperienced, eriencompetentand skilled tax professional working with youto help find a fair resolution to your dispute. Typically,AOs have “come up through the system” and havemany years of experience in handling complex taxissues. AOs often possess advanced degrees and maybe attorneys or certified public accountants. The IRM’sdefinition of an “Appeals Office” also means that youwill be working with an IRS employee who sharesa common goal with you: to resolve tax disputes inan informal manner as quickly and efficiently as possible.As noted in the IRM: “Experience has shownthat when an AO is able to enlist the cooperation oftaxpayers and representatives, cases are resolved ona mutually satisfactory basis with minimum expense,delay, and inconvenience to taxpayers.” 5AOs come from a variety of backgrounds andexperiences. Not surprisingly, their styles and theapproaches they use to settle tax controversiesvary. However, there are certain basic attributes38we can expect from all AOs. For example, theyare expected to:have an open mind and genuine interest inachieving a mutually acceptable agreement;set realistic target dates for the taxpayer and/or therepresentative to submit additional information,including proposals for settlement;complete the conference in a timely manner andmake accurate and prompt decisions;initiate frank discussions and not consider ideologicalkinds of arguments; andconduct conferences in an open atmosphere thatfosters cooperation in the resolution of disputes. 6Appeals conferences are informal. The discussionwith the AO is usually open and direct, yet sometimesunstructured. There is much give and take. Unlike acourt setting, the AO will not ask that your testimonybe taken under oath. However, the AO may requestthat statements alleged as facts be submitted in theform of an affidavit or otherwise declared to be trueunder the penalties of perjury. Given the informalityof an Appeals conference, meetings often occur in theAO’s office. If space is needed to present documentsor other kinds of visual materials, it is wise to contactthe AO in advance of the meeting to request a largerroom, often a conference room with a table.During the conference, the AO will review thestrengths and weaknesses of your client’s case. Youshould assume the AO is very familiar with the case.The discussion may start with the AO asking youquestions. Alternatively, the AO may invite you tomake an opening statement about the case. Becausethere is no particular protocol for discussing a case,you should be ready to follow the lead establishedby the AO or be ready to take the lead if offeredthe opportunity. There is always the question aboutwhether the AO will raise a new issue or reopenan old issue during the conference. Typically, thisis not done unless the ground for such action is asubstantial one and the potential effect upon the taxliability is material. 7Taxpayers are allowed to represent themselves at anAppeals conference. Alternatively, they are allowedto have another person (a qualified representative)represent them. In general, a qualified representative isan enrolled agent, a certified public accountant, or anattorney authorized to practice before the IRS. Before aqualified representative is allowed to talk with an AO,the representative must complete a power of attorney(Form 2848—Power of Attorney and Declaration ofRepresentative) and deliver it to the AO.
How Do I Request a Conferencewith an AO?Because appealing a case is a voluntary process, youmust make a request to have the case heard. There isno filing fee. The IRS offers several options for makinga request. For example, you may make an oralrequest for Appeals consideration in (1) all officeinterview or correspondence examination cases; or(2) a field examination case if the total amount ofproposed additional tax including penalties, proposedover-assessment, or claimed refund (or, in an offer incompromise, the total amount of assessed tax, penalty,and interest sought to be compromised) is $2,500 orless for any taxable period.In these situations, you arenot required to file a writtenprotest. 8On the other hand,taxpayers are requiredto prepare a brief writtenstatement (a formal writtenProtest is optional) toobtain Appeals considerationin a field examination case if the total amountof the proposed deficiency exceeds $2,500 butdoes snnotexceed $10,000 for any taxable period. 9Finally, a formal written protest is required in thefollowing owsituations:If thetotal amount of the proposed deficiencyexceeds $10,000 00 for any taxable period 10In all employee plan and dexempt emorganizationcases 11In all partnership and S corporation cases 12In some circumstances, you are allowed to makea small case request if the total amount for any onetax period is $25,000 or less by completing IRS Form12203. This form serves as an alternative to the requirementof submitting a written protest.The IRS may refuse to hear a case on appeal in certainsituations. For example, the Appeals Office willnot hear a case involving a deficiency based solelyon the failure or refusal to comply with the tax lawsbecause of moral, religious, political, constitutional,conscientious or similar grounds; and the IRS mayrefuse to hear an appeal where a preliminary reviewof the written protest indicates that it requires furtherwork or development. 13A taxpayer may, of course, choose not to requestan Appeals hearing. In this case the taxpayer willreceive a 90-day letter, which allows the taxpayerAppeals Officers come froma variety of backgrounds andexperiences. Not surprisingly, theirstyles and the approaches they useto settle tax controversies vary.April–May 2008to file a petition in the U.S. Tax Court. Finally, it isimportant to remember that making a request foran Appeals conference does not stop interest andpenalties from accruing. Interest and certain penaltieswill continue to accrue during the Appealsprocess. Under certain circumstances, you maymake a request to stop the accrual of interest andpenalties on proposed adjustments. 14How Long Does theAppeals Process Take?According to the IRS Web site, once you have submitteda written Protest, you will usually hear from theapplicable Appeals Office within 90 days. If morethan 90 days have passed,you should contact theoffice where you sent theprotest. The IRS employeesat this office should beable to tell you when theysent your case to the AppealsOffice. If, for somereason, they were delayedin sending your protest toAppeals, you should expect to hear from someone inthe Appeals Office not later than 90 days from whenthe protest was forwarded to Appeals. If more than 90days have passed from this date, you should contactthe original office where your written protest was sentand ask for the name and contact information of theAOassigned sigtothe case. Once your protest has beenreceived by yanAO, it generally takes anywhere from90 days to a year to resolve the dispute.What Results Can I Expect from theAppeals Process?If after consideration of the case by an AO a satisfactorysettlement is reached between the taxpayerand the government, the taxpayer will be asked tosign Form 870-AD (or a similar agreement formdepending on the circumstances). By signing Form870-AD, the taxpayer agrees to waive restrictions onthe assessment and collection of any deficiency, andagrees to accept any over-assessment resulting fromthe agreed settlement. 15 On the other hand, if a satisfactorysettlement is not reached, a statutory noticeof deficiency will be issued. Once this process hasoccurred, the taxpayer has the right to file a petitionwith the U.S. Tax Court for a redetermination of thedeficiency. The filing must occur within 90 days ofthe mailing of the statutory notice of deficiency. 16JOURNAL OF TAX PRACTICE & PROCEDURE 39
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The Art of Preparing a Successful Written Protest By William P ... - CCH

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