If you are involved in a dispute with IRS or are currently undergoing an audit, you should be aware of your rights to appeal tax determinations within IRS. This approach tends to be less costly and formal than litigating the matter in court, and often results in satisfactory resolution of the issues involved. Our Vol I post covered when you can file an appeal and mediation. In Volume II we address arbitration.
Arbitration is generally available for cases in which a limited number of factual issues remain unresolved following settlement discussions in IRS Appeals. Arbitration is optional for both the taxpayer and Appeals. Either the taxpayer or Appeals may submit a request to arbitrate after consulting with the other party. Neither party may appeal the decision of the arbitrator or contest the decision in any judicial proceeding, but the decision by the arbitrator doesn’t bind or otherwise control the parties for tax years not covered by the arbitration. IRS specifies issues for which arbitration isn’t available. Although no formal appeal procedure exists for the denial of a request to arbitrate, a taxpayer may request a conference with the Appeals Team Manager to discuss the denial. The denial of a request to arbitrate is not subject to judicial review.
An administrative appeal can also be made by filing an application with the office of the Taxpayer Advocate. The Taxpayer Advocate or his designee can issue a Taxpayer Assistance Order based on a determination that the taxpayer is suffering or is about to suffer a significant hardship as a result of the way in which the tax laws are being administered by IRS.
What’s important to keep in mind, is that there are procedures that represent a middle ground between merely giving in to IRS, or waging a costly all-out war through litigation. Please call if you wish to discuss these issues further.
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