If the Internal Revenue Service informs you that you have unpaid taxes or are not entitled to a tax benefit, you have options. U.S. tax law requires the IRS to allow taxpayers to appeal the agency's decisions. In most cases, the taxpayer can appeal to the IRS Independent Office of Appeals that operates within the agency or take the government to federal court.

When Can You Appeal?

While the Taxpayer Bill of Rights guarantees U.S. taxpayers the right to appeal IRS decisions, there are still rules you must follow, including time limits for filing appeals. So, it's important to carefully read any letters or notices you get from the IRS to know the deadline for filing an appeal. Some taxpayers believe that the IRS's rigid adherence to the rules on the timing of appeals deprives them of their rights. But federal courts have repeatedly upheld time limits.

Most taxpayers have the right to appeal if all the following are true:

1. They got a letter from the IRS informing them of an IRS determination and their right to appeal
2. They disagree with the IRS's decision
3. They have not signed a form stating that they agree with the IRS's decision

Taxpayers can only file an appeal when they have a right to do so. There is no right to appeal if:

• The correspondence you got does not mention the possibility of appeal
• You were the subject of an IRS examination and did not provide the necessary materials
• The only issue is that you can't pay the amount owed

Letters and Notices That You Can Appeal

The list below includes some of the common notices and letters the IRS sends to taxpayers that they can appeal:

• Letter 11 — Final Notice of Intent to Levy and Notice of Your Right to a Hearing
• Letter 73 — Notice of Levy and Your Right to a Hearing
• Letter 531 — Notice of Deficiency
• Letter 3172 — Notice of Federal Tax Lien Filing and Your Rights to a Hearing under IRC 6320
• Letter 3391 — 30-Day Non-filer Letter
• CP90 — Final Notice — Notice of Intent to Levy and Notice of Your Right to a Collection Due Process Hearing
• CP92 — Notice of Levy upon Your State Tax Refund and Notice of Your Right to a Hearing
• CP297 — Final Notice, Notice of Intent to Levy, and Notice of Your Right to a Collection Due Process Hearing
• CP523 — Default on Your Installment Agreement (IA) Notice — Intent to Terminate your IA

IRS Appeals System

The IRS offers taxpayers an independent forum to contest an agency decision fairly without the time and expense of court. Taxpayers concerned about the impartiality of the IRS's appeals process should contact the local office of the Taxpayer Advocate Service for help.

If you want to challenge an IRS examiner's decision through the agency's independent appeals process, you should file an appeal by mailing a letter to the IRS. You must send the letter to the address listed in the letter you got, notifying you of your right to an appeal within the required period for responding (generally 30 days). Sending the letter directly to the Independent Office of Appeals may cause delays.

The IRS can't address every tax issue. For example, you can't challenge the amount of tax due by claiming that an income tax is unconstitutional in an appeal to the agency. The appeal must address one or more of the following claims about the IRS's actions:

• It incorrectly applied the tax law in the Internal Revenue Code (IRC)
• It misapplied the law because it did not understand the facts of your situation
• It is taking an inappropriate collection action
• It rejected your offer in compromise and has the documents to support your claim
• It used incorrect facts in making its determination

The IRS examination or collection office that sent the letter or notice will review your petition to see if it can resolve the matter before it goes to appeals.

Representation

Under the Taxpayer Bill of Rights, you have the right to representation in your dealings with the IRS. But, unless you are representing yourself or a close family member, the IRS usually requires that the representative be an attorney, a certified public accountant, or an enrolled agent authorized to practice before the IRS. If you choose to have a representative, you must file a Form 2848, Power of Attorney and Declaration of Representative, with the IRS.

Filing an IRS Appeal

A taxpayer usually gives the IRS notice of their intent to appeal by sending a letter that serves as a formal written protest. You must file a formal written appeal request before the IRS will schedule an appeals conference to discuss your case with an IRS employee. The letter should include the following information:

• Name, address, and daytime phone number
• A statement explaining that you would like to appeal an IRS determination
• Copy of the letter from the IRS explaining the agency's position on your tax return
• List of each item you disagree with in the IRS letter that includes an explanation of why you disagree with each one
• Documentation supporting each of your claims
• Laws, rules, or regulations supporting your claims
• The tax period for which you're disputing the IRS's actions
• Your signature and a statement that you signed under penalty of perjury

Appealing Collection Actions

If you disagree with an IRS decision on tax collection, you have collection appeal rights. Suppose you want a hearing before appeals employees. In that case, depending on your situation, you have four options: the collection appeals program, collection due process, offer in compromise, and trust fund recovery penalty appeal (if you own a business with employees).

Collection Appeals Program

Taxpayers can use the collection appeals program (CAP) to dispute a specific collection action the IRS proposed. You can often use the CAP program to resolve a dispute quickly. But, if you disagree with an appeals decision, you can still take the IRS to court to resolve the dispute through judicial review.

Collection Due Process

Taxpayers have the right to a collection due process (CDP) hearing with the Office of Appeals if they get a notice stating that they have a right to a CDP hearing, such as a notice of federal tax lien filing. One benefit of seeking a CDP hearing is that the IRS usually suspends collection actions during the appeal.

Once you get the notice entitling you to a CDP hearing, you have 30 days to request a hearing by filing Form 12513, Request for a Collection Due Process, or Equivalent Hearing. If you request it within 30 days, you will have the right to an appeals hearing and to appeal the results of that hearing to the United States Tax Court. If you miss the 30-day deadline, you can still file a Form 12513 requesting a hearing but lose your right to appeal the decision to the Tax Court.

Offer in Compromise

An offer in compromise (OIC) is when a taxpayer offers to settle their tax bill by paying less than the full amount owed. Despite ads on the radio or on the internet offering to settle your tax bill for pennies on the dollar, the IRS rejects most OICs unless the taxpayer can prove they can't pay more than the amount offered. If you make an OIC and it gets rejected by the IRS, you will have 30 days to appeal the decision.

Trust Fund Recovery Penalty

The IRS imposes the trust fund recovery penalty (TFRP) for failure to pay a business's employment taxes, excise taxes, or non-resident alien withholding. The person responsible for the following must pay it:

• Collecting or withholding
• Accounting
• Depositing or paying

Usually, this is the owner or an officer of a business, but an employee can do it.

You can appeal the determination if you get a notice that you are subject to a TFRP. The steps to take are in IRS Publication 5: Your Appeal Rights, and How to Prepare a Protest If You Disagree.

Still Have Questions? A Tax Lawyer Can Help

If you have got a notice from the IRS that it plans to take action against you that you would like to protest, a local tax attorney can help. Tax lawyers understand which IRS actions you can appeal and the steps to take in filing one. An attorney can also work with the IRS to resolve your tax dispute through the appeals process instead of going to court. Finally, if you are unhappy with the results of your appeal, an attorney can help you take your case to court.