Overview: Why the Office of Appeals matters

If you disagree with an IRS audit adjustment, the Office of Appeals (Appeals) provides an independent, informal way to resolve the dispute without immediate litigation. Appeals is organizationally separate from the audit function and focuses on fair, impartial resolution—typically by weighing the strengths and weaknesses of each side’s position and the “hazards of litigation.” See the IRS Appeals homepage for official guidance (IRS: https://www.irs.gov/appeals).

In my practice advising taxpayers for more than 15 years, I’ve found Appeals to be the most productive next step: it’s faster and less costly than court, and officers often propose practical compromises that preserve taxpayer rights while minimizing administrative burden.

Who can use Appeals and when should you escalate?

Anyone who receives an audit adjustment, a notice of deficiency, or certain collection actions can seek review by Appeals. Typical triggers include:

  • A disagreement after an audit adjustment (office, correspondence, or field audits).
  • A statutory notice of deficiency (note: this notice gives you the option of going straight to Tax Court within 90 days).
  • Certain collection notices where you request a Collection Due Process (CDP) hearing.

If the audit examiner stands firm but you have credible documentation, or if the issues involve judgment calls (valuation, business purpose of deductions, attribution of income), it’s often appropriate to request Appeals. For guidance on when escalation makes sense, see When to Escalate an Audit Dispute to the IRS Office of Appeals.

Interlink: When to Escalate an Audit Dispute to the IRS Office of Appeals: https://finhelp.io/glossary/when-to-escalate-an-audit-dispute-to-the-irs-office-of-appeals/

How the appeals process works — step by step

  1. Read the notice and meet the deadline
  • Carefully review the audit notice or statutory notice of deficiency. Deadlines vary by notice type; many audit-related notices allow 30 days to request Appeals review, while a notice of deficiency gives 90 days to petition Tax Court. When in doubt, follow the instructions on the notice and contact Appeals immediately. (IRS: https://www.irs.gov/appeals)
  1. Request an Appeals conference
  • You typically request an Appeals conference in writing. For routine adjustments, a formal written protest is required when changes exceed a certain dollar threshold and the case will not be resolved at the examiner level. The IRS explains protest requirements on its Appeals pages.
  1. Prepare a focused protest or position letter
  • A proper protest explains why you disagree, cites facts and law, and includes relevant documentation. Keep it concise and organized — Appeals officers read large numbers of cases and favor clear, well-supported positions. For help with filing after an audit adjustment, see How to File an Appeal After an Audit Adjustment.

Interlink: How to File an Appeal After an Audit Adjustment: https://finhelp.io/glossary/how-to-file-an-appeal-after-an-audit-adjustment/

  1. Provide the administrative file and engage with the officer
  • Appeals will request and review the administrative file (the audit workpaper package). You’ll be assigned an Appeals officer who reviews both the file and your written arguments. Most cases resolve during document review, but you may request a face-to-face or teleconference hearing to present additional evidence.
  1. Negotiation, settlement, or closing
  • Appeals approaches cases by assessing litigation risk to both sides. Officers may recommend full agreement, a partial concession, or a settlement under agreed terms. If Appeals accepts a settlement, you’ll receive a written closing agreement or decision. If not, the decision letter will explain further rights, including court options.
  1. If Appeals declines relief
  • If Appeals upholds the IRS position and you still disagree, you may pursue litigation (U.S. Tax Court, U.S. District Court, or U.S. Court of Federal Claims), or (for collection matters) request a Collection Due Process hearing or pursue other administrative remedies. Timelines for court petitions are strict — consult an attorney or enrolled agent immediately.

What to expect at an Appeals conference

  • An impartial Appeals officer, independent of the original examiner.
  • Access to the administrative file and an opportunity to present written evidence and legal arguments.
  • A focus on settlement: Appeals analyzes the practical risks of taking the case to litigation and tries to reach a compromise based on that analysis.
  • A formal written decision or closing agreement when the matter is resolved.

In my experience, clear organization and a short, prioritized packet (summary letter with exhibits) improves the chance of a favorable early resolution.

Timelines: how long will an appeal take?

There is no fixed timetable: simple issues can conclude in a few weeks; more complex disputes commonly take several months. Many cases resolve within 60–180 days after Appeals receives a complete protest and file, but intricate factual or legal questions can stretch the process longer. Be prepared for follow-up requests for clarification or additional records.

What Appeals looks at — and what it won’t change

Appeals evaluates the facts, the law, and the hazards of litigation. Officers are more likely to favor a taxpayer when:

  • Documentation is complete and credible.
  • The legal position has reasonable support.
  • Litigation risks (for the government) are significant.

Appeals will not ignore statutory law; it cannot rewrite tax statutes or make decisions that contravene governing law. Also, Appeals will not engage in ex parte bargains that circumvent required procedures.

Practical preparation checklist (what I do for clients)

  • Assemble a short cover letter summarizing the dispute and the relief requested.
  • Include a clear index and tabbed exhibits: tax returns, 1099s/W-2s, bank records, contracts, contemporaneous business records, and expert reports (if any).
  • Prepare a concise legal argument: cite statutes, regulations, and IRS guidance selectively — avoid legal flooding.
  • Calculate the numeric exposure (proposed change, penalties, and interest) and propose settlement parameters if you’re open to compromise.
  • Appoint a representative if you prefer: CPAs, enrolled agents, or tax attorneys can represent you — file Form 2848 to authorize a representative.

For help assembling an audit file that Appeals will take seriously, see Tax Audits and Appeals — Responding to an Audit: Building a Clear Audit File for the IRS.

Interlink: Tax Audits and Appeals — Responding to an Audit: Building a Clear Audit File for the IRS: https://finhelp.io/glossary/tax-audits-and-appeals-responding-to-an-audit-building-a-clear-audit-file-for-the-irs/

Common mistakes taxpayers make

  • Waiting too long to request Appeals review or missing the deadline.
  • Submitting disorganized or incomplete documentation.
  • Treating Appeals like a court; oral testimony is often less critical than documents and a sound legal argument.
  • Failing to consider settlement options or the hazards-of-litigation perspective.

Alternatives to Appeals and next steps after an adverse decision

If Appeals does not produce a satisfactory result, taxpayers may:

  • File a petition with the U.S. Tax Court (often following a statutory notice of deficiency).
  • Pursue relief in U.S. District Court or the Court of Federal Claims (in some situations, usually after paying the assessment).
  • For collection disputes, pursue Collection Due Process or levy re-evaluation procedures.

Choosing the right next step depends on deadlines, whether you must pay before suing, and the legal issues involved — consult counsel promptly.

Special programs and dispute-resolution options

Appeals manages several alternative dispute-resolution tools: early referral, Fast Track Settlement (in appropriate cases during audit), and mediation programs for select case types. These tools can speed resolution and reduce costs when both parties agree to their use. See IRS Appeals alternative dispute resolution information (IRS: https://www.irs.gov/appeals/alternative-dispute-resolution).

Fees, penalties, and interest: what to consider

Appeals can negotiate reductions in penalties when reasonable cause is shown or when the law favors mitigation. Interest is set by statute and generally cannot be abated by Appeals except in narrow circumstances. Make sure your settlement calculations include projected penalties and interest to measure the true exposure.

Practical negotiation tips from practice

  • Be factual, concise, and professional; Appeals officers respond better to credible, calm presentations.
  • Emphasize contemporaneous records and third-party corroboration (bank statements, vendor invoices, signed contracts).
  • Don’t over-claim: present the strongest positions first and be ready to explain why weaker theories should also be resolved favorably.
  • Use expert reports sparingly; they help where technical issues exist (valuation, medical necessity, etc.).

Final checklist and next steps

  1. Read the notice, calendar the deadline, and request Appeals promptly if you disagree.
  2. Prepare a focused protest: clear facts, law, and exhibits.
  3. Consider representation and file Form 2848 if you retain a proxy.
  4. Be ready to negotiate and understand that Appeals seeks settlement rooted in litigation risk.
  5. If Appeals declines relief, consult counsel immediately about court options and deadlines.

Sources and further reading

Professional disclaimer: This article is educational and does not constitute legal or tax advice. For personalized guidance, consult a CPA, enrolled agent, or tax attorney who can review your specific facts and deadlines.