IRS Appeals Conference Explained | Kathryn Meyer Law PC

An Appeals conference is an informal meeting, held by phone, video or in person, where an Appeals officer from outside the office that audited you takes a fresh look at the disputed issues and tries to settle them. You or your representative explain why the examiner's proposed changes are wrong, and the officer weighs the strengths and weaknesses of both sides. IRS Publication 5 notes that most disputes can be settled at this level without going to court.

The IRS Independent Office of Appeals is the only level of administrative appeal inside the IRS. Knowing how it works helps you decide what to put in a protest and what to expect once the case arrives. This page is part of Kathryn Meyer's guidance on IRS audits and examinations.

How independent is Appeals from the examiner?

Independence is written into the statute. Section 7803(e) of the Internal Revenue Code establishes the IRS Independent Office of Appeals, headed by a Chief of Appeals who reports directly to the Commissioner. Its job, in the words of the statute, is to resolve federal tax controversies without litigation on a basis that is fair and impartial to both the government and the taxpayer, and the law says that process is generally available to all taxpayers.

In practice, IRS Publication 4227 says Appeals will not communicate with employees of other IRS functions to the extent that communication appears to compromise its independence. When Appeals needs legal advice, the statute directs that it come, as far as practicable, from Chief Counsel attorneys who were not involved in the case.

How an appeal moves, step by step

You send the protest. A small case request or formal written protest goes to the address in the 30-day letter by the date it sets.
The deadline is checked. If too little time remains on the assessment date, you are asked to sign a consent before the case is sent on.
Appeals contacts you. An appeals officer or settlement officer arranges a conference at a convenient time with you or your representative.
You see the file, if you qualify. Eligible taxpayers get the nonprivileged parts of the case file at least 10 days before the conference.
The conference. Each disputed issue is discussed; significant new information goes back to the examiner for a written opinion, which is shared with you for a reply.
Settlement or a notice. If you reach agreement, the case closes on those terms; if not, the IRS issues a notice of deficiency.

How does a case get to Appeals?

Most audit cases arrive after the IRS 30-day letter. You respond with a small case request (when the proposed tax and penalties are $25,000 or less for each period) or a formal written protest, and the examination function forwards the file. Appeals then contacts you or your authorized representative to schedule the conference.

Timing can block the door. The IRS generally requires at least 365 days to remain on the assessment statute when Appeals receives a non-docketed case, and if there is not enough time it will ask you to sign a consent extending it. If you decline, Appeals will not accept the case. Publication 5 notes that docketed Tax Court cases do not have that concern. Our page on how far back the IRS can audit explains the assessment deadline and the consent forms.

What happens at the conference itself?

Publication 5 describes Appeals conferences as informal. The officer will want to discuss each disputed issue and the reasons you disagree with it, so you or your representative should arrive ready to do that issue by issue. Publication 4227 describes the officer's task as reviewing the strengths and weaknesses of the positions taken and giving them a fresh look.

A few rules shape the discussion:

Arguments must rest on the tax law. Appeals applies the Code, regulations and court decisions to the facts. It cannot consider objections based only on moral, religious, political, constitutional or similar grounds.
New evidence goes back for comment. If you raise a new issue or significant new information, Appeals will generally return it to the examiner for review. You receive the examiner's comments and can respond, and your appeal continues.
Who may speak for you. You can represent yourself, or be represented by an attorney, certified public accountant or enrolled agent authorized to practice before the IRS. Someone without that standing may attend as a witness but cannot represent you. If your representative will attend without you, a properly completed power of attorney, such as Form 2848, must be on file.
Seeing the file. For individuals with adjusted gross income of $400,000 or less, and other taxpayers with gross receipts of $5 million or less, for the year in dispute, the statute gives access to the nonprivileged parts of the case file at least 10 days before a scheduled conference.

Penalties are part of the conversation too. The Taxpayer Bill of Rights describes a fair and impartial administrative appeal of most IRS decisions, "including many penalties," so a penalty can be disputed on its own even when the tax is not. See what penalties the IRS can add after an audit.

Is Fast Track Settlement a better route?

Sometimes. Fast Track Settlement brings an Appeals mediator into the case while it is still with the examiner. For small business and self-employed taxpayers, the IRS aims to resolve these cases within 60 days after the application, Form 14017, is accepted, and Publication 5022 estimates the process may shorten the combined examination and appeal time by at least a year. It requires fully developed issues, a short written response to the IRS position, and a limited number of issues.

	Traditional appeal	Fast Track Settlement (small business and self-employed)
When	After the 30-day letter, or once a case is docketed in Tax Court	During the examination, before a 90-day letter is issued
How to start	Small case request or formal written protest	Form 14017, completed jointly with the examiner
Who settles	You and an Appeals officer who can settle the case	The parties, with an Appeals mediator who may propose terms
Target time	No fixed goal	60 days from acceptance
If it fails	Notice of deficiency and the option of the Tax Court	You keep your usual appeal rights

Fast Track is not available for every case. Publication 5022 excludes, among others, correspondence examinations handled solely at an IRS campus, issues already docketed in court, and cases where the taxpayer did not act in good faith during the audit. Either side may withdraw at any time.

What if Appeals and you still disagree?

If no settlement is reached, the IRS issues a notice of deficiency, and the dispute can become a tax litigation matter: you can petition the U.S. Tax Court within 90 days (150 days if the notice is addressed to someone outside the United States) without paying first. Publication 5 also describes refund suits in a U.S. District Court or the U.S. Court of Federal Claims, generally available only after you pay in full and file a timely refund claim. If you petition the Tax Court without having gone to Appeals first, Publication 5 says you will normally have a chance to try settlement with Appeals while the case waits for trial. How that referral works is explained in whether a Tax Court case can settle before trial. Section 7803(e)(5) adds a safeguard at this stage: if you hold a notice of deficiency and ask for referral to Appeals and the IRS denies the request, it must give you a detailed written explanation and a way to protest the denial, unless the issue is a frivolous position.

The same knowledge of the issues that served you at Appeals is what a court case is built on, which is one reason the protest deserves care. Your rights during an IRS audit include the right to appeal and to be represented throughout.

What changes the answer

Docketed or not. A case already in the Tax Court is not subject to the 365-day requirement (Publication 5); one still at the examination stage is.
Your size. The right to see the case file before the conference applies to individuals with adjusted gross income of $400,000 or less and to other taxpayers with gross receipts of $5 million or less for the year in dispute (section 7803(e)(7)). You can also elect to receive the file by the conference date instead of 10 days before, to speed things up.
The kind of case. Fast Track Settlement is not available for Collection Appeals Program, Collection Due Process, offer in compromise or trust fund recovery cases, among others (Publication 5022). Collection disputes reach Appeals by their own routes, such as a Collection Due Process hearing.
What the record already contains. Evidence the examiner never saw slows the case, because Appeals generally asks the examiner to analyze it in writing first (Publication 4227).
A denied referral. If you hold a notice of deficiency and the IRS refuses to refer the case to Appeals, section 7803(e)(5) requires a detailed written explanation and a way to protest, unless the issue is a frivolous position.

For example: a business deduction dispute at Appeals

For example, imagine a self-employed consultant whose audit ended with the examiner disallowing most of her vehicle and travel deductions and proposing a 20 percent accuracy penalty. The total for the year is above $25,000, so she files a formal protest that lists each adjustment, the facts and the authority she relies on. Because her adjusted gross income is under $400,000, she can review the nonprivileged case file before the conference.

At the conference she produces a mileage log the examiner never saw. Under Publication 4227, Appeals would generally send the log to the examiner for a written opinion, share that opinion with her, and let her respond before going further. Her arguments on the travel costs would turn on the substantiation rules in section 274(d), covered in what records the IRS requires to support business deductions. Whether and on what terms the case settles would depend on the record and the law; this is a hypothetical, not a real case or result.

Common mistakes at Appeals

Arguing fairness instead of law. Appeals cannot consider objections based only on moral, political, constitutional or similar grounds.
Saving documents for the conference. New evidence sends the case back to the examiner and adds time.
Letting the assessment date run short. Without enough time, Appeals will not accept a non-docketed case.
Sending a representative without the paperwork. Publication 4227 requires a Form 2848 signed by you and the representative.
Not asking for the case file. Eligible taxpayers who skip it argue without seeing what the examiner relied on.

What to do this week

Confirm the protest was sent on time and keep the proof of mailing.
Check the assessment date for each year and decide how you would answer a consent request.
Make a one-page list of every IRS position you disagree with and how you read the facts and law on each, which Publication 4227 asks you to provide.
Send any documents the examiner has not seen now, not at the conference.
If someone will represent you, sign and file Form 2848 with that person.
If you qualify, ask for the nonprivileged case file before the conference date.

Frequently asked questions

Can you bring someone with you to the conference?

Yes. Publication 4227 says you may bring a person to support your position. Only an attorney, certified public accountant or enrolled agent authorized to practice before the IRS can represent you, and our page on how a tax attorney represents you before the IRS explains the form that requires.

Does the Appeals officer talk to the examiner without you?

Appeals limits contact with other IRS employees where it would compromise its independence (Publication 4227). If Appeals needs clarification from the examiner on the substance of the issues, it says it will invite you to take part in the call.

Does interest stop while the appeal is pending?

No. Interest generally continues to run during an appeal (Publication 1035). Publication 3498 explains that an advance payment or a deposit under section 6603 can stop it from growing on the amount you expect to owe.

Can you appeal if the IRS refuses Fast Track Settlement?

No. Publication 5022 says a decision to reject the application cannot be appealed, but the regular 30-day letter procedures in Publication 5 remain open.

How do partnership cases reach Appeals?

Partnerships under the centralized audit regime follow their own procedures, and Publication 5 requires a formal protest in partnership and S corporation cases at any amount. See how partnership audits differ under the centralized audit regime.

What does the notice of deficiency mean if Appeals does not settle?

It is the legal step that opens the Tax Court. The deadlines for that petition, and how they are counted, are on our page about what to do when you receive a notice of deficiency.

Preparing for Appeals with counsel

An Appeals conference rewards preparation: a clear statement of each issue, the documents that prove the facts, and the authority that supports your reading of the law. Kathryn Meyer, who spent more than two decades inside the IRS Office of Chief Counsel, can prepare the protest, represent you at the conference and assess whether Fast Track fits your case. Contact the firm or call (571) 560-8674 to talk through your options.

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