IRS Appeals Division Reduces Taxpayer Rights
Posted By: Jennifer O'Neill // Oct 27, 2016
Effective October 1, 2016, the IRS has announced that the Appeals Division will significantly reduce face to face meetings. In the past procedure the Taxpayer had the choice of a face to face meeting with an Appeals officer or a Telephone conference hearing. Since the "in person" meetings often required Regional Travel and extended scheduling most taxpayers opted for the Telephone conference hearing. The new procedure as outlined under Internal Revenue Manual (IRM) 126.96.36.199, entitled Conference Practices, provides that ALL conferences will be held by telephone except under certain specific circumstances. Those circumstances are:
* The records for review in the Appeal are so substantial that they cannot be easily referenced with page numbers or indices.
* The Appeals Officer or Settlement Officer cannot judge the credibility of the Taxpayer's oral testimony without an in-person conference.
* The Taxpayer has special needs that can only be accommodated with an in-person conference.
* There are numerous conference parties (witnesses) that create risk of unathorized disclosure or breach of confidentiality.
* An alternative conference procedure such as Post Apepals Mediation or Rapid Appeals Process involving separate caucuses will be used.
* Another IRM section specific to the action calls for an in-person conference.
In review of these exceptions the "books and records" stands forefront as reasoning for most, however almost all of those apepals deal with an Exam issue and in those cases the Appeals Officer sends the case back to exam for that analysis. Most savvy representatives do NOT bring their clients to Appeals Conferences, except in limited circumstances. It is the collective determination of the Appeals Officer along with the Appeals Team Manager that gets to decide whether or not credibility can be determined without an in-person conference.
Any taxpayer who request an in-person conference is supposed to be offered a video conference ....IF....the IRS has a nearby facility (nearby as in within 100 miles) for so-called Virtual Service Delivery. As of now we see no such sites listed in NY or CA which are two of our most populated states. Under IRC 7521 taxpayers are allowed the right to record the in-person neetings with the IRS. This right is limited to in-person meetings and will be a consequence of this change.
The IRS Appeals Division has been the place most taxpayers get their last shot at resolving their case. The next step is litigation which has the related expense. For most taxpayers with a liability issue, litigation costs simply aren't affordable. The initial thought is that this action will lead to more litigation, however in our practice and the majority of legal firms comprised of mostly middle class taxpayers, the associated expense will force the resolutions more towards Offers in Compromsie and even Bankruptcies. The mission of IRS Appeals was essentially to "resolve tax controversies" in a fair and equitable manner to allow both sides to weigh the hazards of litigation on costs and precendent and would result in enhanced voluntary compliance and positive confidence in the effeciancy and integrity of the IRS. However, this new policy is step backward in promoting that mission and reduces the options of taxpayers further.
This Blog was written by:
James T. Rindfleisch, EA
Regional Manager at IRS HELP INC.