A taxpayer can appeal to the IRS Independent Office of Appeals if they have a dispute. They can also request a review of their case. According to IRS data, 94.832 taxpayers made use of IRS appeals in 2018 to resolve a dispute at IRS.
These four disputes account for 87% of all appeals to the IRS.
- Collection due Process cases (38%): Taxpayers can request an appeal to a Collection Due Procedure (CDP), if they are served with a notice of lien, notice or levy. The notice will inform taxpayers of their right to a hearing. A CDP hearing can be requested by taxpayers to request collection alternatives, innocent spouse relief, or penalty abatement. If a lien has been issued, taxpayers may request lien subordination or discharge.
- (29%) These cases are related to audits. Only 27,290 appeals were received out of the nearly 1,000,000 audits that were completed in 2018, which is around 3%.
- Penalty Appeal cases (10%): In such situations, the taxpayer contests an adverse penalty relief decision. Audit penalties may be challenged in examination cases by taxpayers. Only 11% of all IRS penalties were reduced in 2017.
- Compromise Cases (9%): More than 15% of the 59,000 OICs filed in 2018, were resolved in appeals. Many OICs have disagreements so appeals may be an option. Only 40% of all IRS OICs were accepted by the IRS in 2018. Only 33% of all IRS OICs were accepted in 2019.
Many taxpayers and tax professionals may choose not to appeal to the IRS because they want to resolve their disputes sooner than later. Recent U.S. Government Accountability Office study found that many taxpayers take a while to access IRS appeals. The process takes a while to complete once they arrive.
The average wait time to reach IRS appeals for these common appeals cases was 2 to 3 1/2 weeks depending on the issue. During the COVID-19 epidemic, however, these times were likely to have increased significantly. For regular IRS examination cases, which included taxpayers with assets less than $10 million, the average case resolution time was almost one year.
Here’s what the GAO discovered:
|Average Days in IRS Appeal (2014-2017).|
|Appeals case type||Time to reach IRS Appeals||Time taken to resolve|
|Hearings on Collection Due Process||59 Days||252 days|
|* Regular audit||105 Days||337 Days|
|* Large case audit||108 Days||637 Days|
|Penalty appeals||100 days||220 Days|
|Acceptance of compromise||61 Days||240 Days|
It was unclear until this study how long it took for an IRS appeal to be reviewed or how long it took for an appeal to be resolved. To better communicate expectations with clients, tax practitioners who practice before the IRS Independent Office of Appeals maintained their own scoreboard. The IRS will be more transparent about historical resolution times in the future. Surprisingly the IRS closed more appeals than it received despite having a reduced staff at the IRS, and in particular the IRS Independent Office of Appeals ( 11% decrease in appeals officers between 2017 and 2018).
Going to appeals can be a slow process if you have a dispute with the IRS. A complete protest can be submitted to reduce the time it takes to appeal. It should outline the facts, your disagreements, your interpretation of tax law versus the IRS interpretation and offer a solution. You will get better results and a faster resolution time if you do the work for the IRS. Watch how the IRS responds to GAO recommendations regarding the time it takes to appeal to the IRS. These wait times can be expected to continue even though the IRS is experiencing a shortage of staff.
This article was written by Alla Tenina. Alla is one of the best IRS Tax attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.