What is the role of the IRS Independent Office of Appeals?
To serve as an informal administrative forum for taxpayers disputing an IRS determination, resolving disputes fairly and impartially without litigation.
The IRS Independent Office of Apeals is independent of any other IRS Office.
Who may represent a taxpayer before IRS Appeals?
- Attorneys
- Certified Public Accountants (CPAs)
- Enrolled Agents
Unenrolled preparers may only be witnesses, not representatives, in appeals conferences.
What are the three choices a taxpayer has when protesting an IRS determination?
- Appeal within the IRS appeals system.
- Take the case directly to the U.S. Tax Court.
- Bypass both IRS Appeals and the Tax Court and take the case to the U.S. Court of Federal Claims or a U.S. District Court.
The contested tax does not have to be paid first if a taxpayer opts for either IRS Appeals or the Tax Court, but if the taxpayer goes directly to the Court of Federal Claims or a U.S. District Court, the contested tax must be paid first, and then the taxpayer must sue the IRS for a refund.
What happens if a taxpayer opts for the Court of Federal Claims or a U.S. District Court?
The contested tax must be paid first, and then the taxpayer must sue the IRS for a refund.
What must a taxpayer do within 30 days of receiving a 30-day letter from the IRS?
Either accept or challenge the proposed changes by reaching out to a local Appeals Office.
What is required in a formal protest to request an Appeals conference?
- A detailed statement of facts supporting the taxpayer’s position.
- The law or authority they are relying upon.
- Signature under penalties of perjury.
What is the 90-Day Letter (Notice of Deficiency)?
A formal legal notice informing taxpayers of their rights to appeal to the U.S. Tax Court, required before the IRS can make a final assessment of tax due.
The taxpayer has 90 days (or 150 days if outside the U.S.) from the date of this notice to file a petition with the U.S. Tax Court to dispute the deficiency being assessed.
What is the U.S. Tax Court’s jurisdiction over tax disputes?
- Notices of deficiency for income, estate, and gift taxes
- Review of the failure to abate interest
- Notices of transferee liability
- Adjustment of partnership items
- Administrative costs
- Worker classification
- Review of certain collection actions
- Relief from joint and several liability on a joint return
- Certification of seriously delinquent tax debt
- Whistleblower awards
What is required for a taxpayer to have representative in an IRS appeals hearing?
A power of attorney authorization via a signed Form 2848 or another valid POA form.
What are the dollar limits for the Tax Court Small Case Division?
- $50,000 for any year for a Notice of Deficiency.
- $50,000 for all years combined for a Notice of Determination.
- $50,000 maximum amount of spousal relief for all years combined for relief from joint and several liability.
- $50,000 for any calendar quarter for an IRS Notice of Determination of Worker Classification.
Small tax cases are handled under simpler, less formal procedures than regular cases. The Tax Court’s decision in a small tax case cannot be appealed by the taxpayer.
What is the maximum dollar limit for a Notice of Deficiency in the Tax Court Small Case Division?
$50,000 (including penalties) for any year.
True or False:
A decision entered in a small tax case is treated as precedent for other cases.
False
What is the penalty for filing a frivolous case in the U.S. Tax Court?
Up to $25,000
If a taxpayer filed a case with the Tax Court primarily to cause a delay a $25,000 penalty may be imposed by the Tax Court.
List examples of frivolous position that may incur a penalty in Tax Court.
- Arguing the income tax is not valid.
- Payment of tax is voluntary.
- A person or a type of income is not subject to tax.
- Espousing other arguments previously rejected as baseless.
In which courts must a taxpayer first pay the contested tax deficiency before filing a case?
- U.S. District Court
- Court of Federal Claims
Who has the right to represent taxpayers in disputes with the IRS before U.S. District Courts?
Licensed attorneys.
Under what conditions can the burden of proof shift from the taxpayer to the IRS during court proceedings?
- Adhered to IRS substantiation requirements.
- Maintained adequate records.
- Cooperated with reasonable requests for information from the IRS.
- Introduced credible evidence relating to the issue.
What are the requirements for a taxpayer to recover litigation costs incurred to defend a position while contesting tax assessed by the IRS?
- Costs must be incurred in a proceeding brought by or against the United States.
- Taxpayer must be the prevailing party.
- Taxpayer must have exhausted all administrative remedies within the IRS.
- Costs must be reasonable and related to tax, interest, or penalty.
- Taxpayer must not have unreasonably delayed any IRS proceeding.
What is the process for a Small Case Request?
The taxpayer may use Form 12203, Request for Appeals Review, or prepare a brief written statement requesting an appeals conference. The taxpayer must also specify why they do not agree with the proposed tax assessment.
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Essential Tax Law Updates for Representation12
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Unit 1: Legal Authority of the IRS30
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Unit 2: Practice Before the IRS31
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Unit 3: Authorizations and Disclosures31
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Unit 4: Circular 230 and Best Practices31
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Unit 5: Practitioner Standards and Tax Advice28
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Unit 6: Due Diligence for Refundable Credits and HOH Filing Status19
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Unit 7: Recordkeeping Requirements and Penalties51
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Unit 8: Practitioner Misconduct23
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Unit 9: Tax Payments and IRS Collections48
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Unit 10: The IRS Examination Process32
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Unit 11: IRS Appeals and the U.S. Tax Court19
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Unit 12: The IRS E-File Program29
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Unit 13: Identity Theft and Safeguarding Taxpayer Data25
