Maintaining an Independent IRS Appeals process
In an effort to demonstrate to taxpayers that IRS Appeals can be done in a fair and impartial manner by an independent appeals process, the IRS introduced the Appeals Judicial Approach and Culture (AJAC) Project which promotes a quasi-judicial approach in the handling of tax controversies.
The IRS recently released new guidance for Part 8 of the Internal Revenue Manual, including AJAC Project implementation. This two-part blog post will cover some important aspects of Memorandum for Appeals Employees, Collection – Phase 2, which includes discussion of issues that may or may not be raised on appeal, collection due process and Offers in Compromise.
The importance of an independent IRS appeals process
The IRS appeals process plays a crucial role in resolving tax disputes. Our tax law office has resolved a number of cases at the appeal level, saving our clients the time and expense trials and litigation. The appeal process is far more cost effective than litigation, and serves a vital role in minimizing the volume of tax court cases. However, for it to work taxpayers and tax defense counsel need to see Appeals as an independent process, not a mere rubber-stamp of Examinations and Collections.
With this in mind, one of the main goals of the AJAC Project is to ensure that the appeals process does not become in essence a continuation or extension of the examination process.
No new issues on appeal
In the past, new issues could be raised during the appeals process (with certain limitations). Policy Statement 8-2(Rev. 1) (formerly P-8-49), which became effective on August 13, 2014, now states that:
- Appeals may not raise new issues
- Appeals may not reopen an issue which has already been settled by the IRS and the taxpayer
- Taxpayers MAY raise new issues on appeal
Note that although no new issues may be raised by the IRS on appeal, there is no prohibition on the discussion of new cases, theories and legal arguments. However, appeals hearing officers are still barred from bringing forth evidence not already in the file in order to support their new theories and arguments.
In sum, the focus has shifted to dispute resolution regarding issues already identified by the parties.
Hire only the best for your appeal
The lawyers at Moskowitz LLP are as aggressive as they come, within the bounds of the law, in defending your rights with regard to issues with the tax authorities. We routinely represent clients in a full range of tax collection matters and can help you explore all short- and long-term options for settling your tax debt. Don’t wait until collection activities begin — call our offices today for a consultation.
In Part II of this series, we will discuss the new guidance on Collection Due Process and Offers in Compromise.
For additional information regarding IRS Appeals, please see: Challenging an Unfavorable Tax Audit Decision and our blog.