The Tax Appeals conference is presided over by the Appeals officer in charge of the case. Although the process is rather informal, the IRS and the Treasury Department provide some guidance as to how the conference is to be conducted in the Internal Revenue Manual and Treasury Regulations (1). To prepare for the tax appeals conference, the taxpayer’s representative should at least reviewed the IRS and Treasury materials, as well as all materials exchanged between the taxpayer and the IRS and applicable law related to the case. Prior to the conference, the taxpayer’s representative should determine the desired level of participation by the taxpayer in the conference. As a general rule, extensive taxpayer participation is not desired except for the unique situation in which the taxpayer is well-versed in the facts and law of the case. If the taxpayer participates in the conference, he is allowed to stop the conference at any time to speak privately with his representative.
Negotiation with the Tax Appeals Officer During the Conference
As noted, the Tax Appeals conference is typically an informal affair. The Tax Appeals officer and the taxpayer’s representative begin the session by talking about the issues. The goal at the preliminary stage is to find out what issues the parties agree upon, and which issues remain at disagreement. This stage of the Appeals conference gives the taxpayer the opportunity to present his or her position and gauge the Appeals officer’s reaction to the taxpayer’s presentation. A strategy for presenting the case at this first stage is to only present the taxpayer’s stronger arguments. Overwhelming the Appeals officer with your less strong arguments may only serve to undermine the stronger arguments and decrease the chances of a favorable tax appeals settlement for the taxpayer. In order to present a strong argument, the taxpayer’s position should be supported by facts in the form of documents or an affidavit. Essentially, the Tax Appeals officer will need to see some concrete evidence of the merits of the taxpayer’s position in order to be swayed by his or her position. One way to bring evidence to the Tax Appeals conference is through the use of third-party affidavits, expert reports, charts, pictures, or other physical or demonstrative evidence. It is also helpful to point out some fact or piece of evidence that the local IRS revenue agent failed to properly consider.
This step is important and when done properly, can significantly increase the chances that the Tax Appeals officer will see the merits of the taxpayer’s case. The ability to effectively present the facts and legal analysis in support of his or her position gives the taxpayer leverage to translate the argument into a concrete number. It is also worth noting that once a settlement is reached, the Appeals officer must write a written statement in support of the settlement figure. If the taxpayer has developed the factual and legal analysis, then the Appeals officer will be able to support the conclusions in the settlement report. The representative should take this factor into consideration, because the Appeals officer must be able to convincingly show that the determination of the original revenue agent should be overruled. By writing a strong memorandum, with factual and legal analysis supporting the taxpayer’s position, the representative can ease negotiations with the Tax Appeals officer.
The Appeals officer typically requests the taxpayer’s representative to make a preliminary settlement offer of the dispute, and the parties will then have to decide whether an agreement can be reached.
Things to Consider When Presenting Evidence in Appeals
Presenting evidence during the Appeals conference is somewhat similar to presenting evidence in court, but there are some differences and considerations that are worth noting. One of the most advantageous differences is that the rules of evidence do not apply in Appeals. Thus, every piece of evidence that supports the taxpayer’s position should be presented at the Appeals conference, even if it would not be admissible in a court of law. Even if the evidence would ultimately be inadmissible at court, it still might persuade the Appeals officer that there are hazards to tax litigation. Moreover, if the taxpayer has some evidence that the originating officer failed to consider, this can be pointed out on Appeals and later at the litigation stage if necessary.
Another factor to consider when presenting evidence in the Appeals conference is the rule on vicarious admissions. The representative must remember that any statement made by the taxpayer in connection with the Appeals conference can be considered an adoptive admission and used against the taxpayer at trial if the case does not settle (2).
Although legal support can be extremely important in supporting the taxpayer’s position on Tax Appeals, it sometimes is not useful to present the legal support during the Appeals conference itself. In these cases, legal analysis tends to be more persuasive in writing, because the Appeals Officer and the representative might clash over fine points of tax law if the discussion is held in person at the Appeals conference. Also, when presenting legal evidence, choose your legal authority wisely. Court cases are helpful and can be persuasive, but Appeals Officers will be more swayed by official statements released by the IRS. As such, a point of law will be more successful if it is a regulation, ruling, acquiescence, or technical advice.
How a Tax Attorney Can Help with Appeals
Preparing for your Appeals conference can go a long way to achieving a favorable outcome for the taxpayer. If you think that your tax situation might make you a candidate for an Appeals process, you should consult with a knowledgeable tax appeal attorney.
The Tax Lawyer - William D Hartsock Tax Attorney Inc. has been successfully helping clients with appeals since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.
Tax Law References:
- See IRM 8.6.1, Conference and Issue Resolution (Aug. 15, 2012); 26 CFR § 601.106(e); Prop. Reg. §§ 601.106(c)–601.106(e).
- Fed. R. Evid. 801(2).