Overview

An unfavorable audit determination means the IRS examiner has proposed changes to your return that increase tax, penalties, or interest. You can usually challenge that decision either administratively through the IRS Office of Appeals or, depending on your notice, by taking the dispute to court. The administrative appeal is designed to provide an independent, impartial review and to settle disputes without formal litigation (IRS Office of Appeals) (see IRS: https://www.irs.gov/appeals).

In my practice advising clients for more than a decade, I’ve seen appeals resolve simple documentation gaps and complex legal disputes. The key to a strong appeal is organized evidence, timely action, and the right procedural choice for your case.

This article explains the common paths, deadlines, what Appeals considers, practical strategy, and next steps if the Appeals decision is unfavorable.

Before you appeal: read the notice and pick the right route

  1. Identify the notice type and the deadline. Common notices after an audit include:
  • A 30-day letter or Notice of Proposed Adjustment (gives an opportunity to request an Appeals review or to agree and sign an allowance/waiver). You generally have 30 days to request an administrative appeal. See IRS Appeals for details (https://www.irs.gov/appeals).
  • A Notice of Deficiency (the “90-day letter”) — if you receive this, you may petition the U.S. Tax Court within 90 days (150 if you are outside the U.S.) instead of paying the tax first. The Tax Court route preserves the right to litigate without first paying the disputed tax.
  • Collection notices (e.g., Notice of Intent to Levy or Notice of Federal Tax Lien) — these are eligible for Collection Due Process (CDP) hearings; CDP requests must generally be filed within 30 days using Form 12153 (see IRS Form 12153 information).

If you’re unsure which notice you received, read the top of the letter for the notice name and the required response window. Missing the deadline narrows remedies: you may lose administrative appeal rights and be forced to pursue limited post-payment refund litigation.

Administrative appeal to the IRS Office of Appeals

The Office of Appeals (Appeals) is separate from the examiner’s group and seeks independent settlement by applying tax law, hazards of litigation, and consideration of facts and equity.

Steps to file an administrative appeal

  • Request an appeal in writing or by following the instructions in the notice. For many audits, you’ll file a written protest if the amount in dispute meets the dollar threshold set in Publication 5. If the amount in dispute is below the threshold, a shorter statement may be accepted. See IRS Publication 5 for the current protest requirements (https://www.irs.gov/pub/irs-pdf/p5.pdf).
  • Include the required elements in a written protest when needed: taxpayer identification, tax periods, adjustments being protested, facts supporting your position, law or authorities supporting your position, and signature. Publication 5 lists the elements an Appeals officer expects.
  • Submit a Power of Attorney (Form 2848) if you want a representative (CPA, EA, or attorney) to handle the appeal on your behalf (https://www.irs.gov/forms-pubs/about-form-2848).
  • Expect a conference by correspondence, telephone, or in-person (virtual meetings are also common). Provide exhibits and a clear statement of your facts and law. Appeals officers assess both factual disputes and legal positions and will weigh the government’s likelihood of prevailing in litigation (hazards of litigation).

What Appeals evaluates

  • The facts: verifiable records, contemporaneous documentation, and credible explanations.
  • Legal authority: case law, IRS guidance, and statutes applicable to the issue.
  • Hazards of litigation: whether the government or the taxpayer is more likely to prevail in court.
  • Equitable considerations and collection alternatives for taxpayers in financial hardship.

Typical outcomes from Appeals include agreement on a reduced deficiency, concession of some items, settlement offers, or issuance of a Notice of Final Determination when Appeals denies relief.

If Appeals denies relief — what next?

Your next options depend on the path you have:

  • If you received a Notice of Deficiency earlier and have preserved the 90‑day filing window, you can petition the U.S. Tax Court without paying the disputed tax.
  • If you did not preserve a Tax Court petition right (e.g., you agreed to a deficiency or did not receive a NOD), you generally must pay the tax and then file a refund claim with the IRS and, if denied, sue in U.S. District Court or the Court of Federal Claims.
  • For collection matters, if you requested and lost a CDP hearing, you can seek review in U.S. District Court or the Tax Court in limited circumstances.

Timing and deadlines are strict: consult the exact notice language and seek counsel quickly if Appeals issues an unfavorable decision. The U.S. Tax Court filing deadline is typically 90 days from the date of the Notice of Deficiency (150 days if overseas) — check the Tax Court website for current filing rules (https://www.ustaxcourt.gov/).

Practical strategy and evidence checklist

Good appeals succeed on preparation. Use this checklist before you submit a protest or attend a conference:

  • Collect primary records: bank statements, invoices, receipts, contracts, payroll records, and contemporaneous logs.
  • Prepare a chronological summary that ties records to your return line items.
  • Produce third-party corroboration where possible: Forms 1099, employer letters, or vendor contracts.
  • Prepare a legal memorandum summarizing your position, relevant code sections, regulations, and supporting cases or IRS guidance.
  • Assemble a short, clear exhibit packet the Appeals officer can review quickly. Highlight key documents and provide a one-page cover explaining your bottom-line relief requested.
  • If you plan to use a representative, file Form 2848 early so your rep can access IRS records and speak for you.

For help organizing records before an appeal, see our guides on preparing documentation for audits and building a tidy audit file:

Common mistakes taxpayers make

  • Missing the appeal deadline — this is the most damaging mistake.
  • Submitting weak or unsourced explanations rather than primary documents.
  • Underestimating Appeals — Appeals officers are independent; demonstrating the hazards of litigation often leads to settlement.
  • Failing to authorize a representative (Form 2848) early — this delays access to records and conferences.
  • Confusing collection appeals (CDP) with examination appeals — they use different forms and timelines (see IRS Form 12153 for CDP requests).

Working with professionals

A competent tax professional (CPA, enrolled agent, or tax attorney) can:

  • Draft a persuasive written protest when required.
  • Assemble and summarize evidence targeted to Appeals’ standards.
  • Communicate legal authorities and hazard-of-litigation arguments.
  • Negotiate reasonable settlements and, if needed, advise on Tax Court strategy.

In my experience, cases with clear documentation and a focused legal argument are much more likely to settle favorably in Appeals. For complex factual disputes or significant legal questions, consider early consultation with a tax attorney to preserve litigation options.

Alternatives and concurrent options

  • Offer in Compromise or installment agreements may be available while you are pursuing an appeal if collection is a concern — but check how these options interact with Appeals procedures.
  • Innocent spouse relief, administrative waivers, or penalty abatement may be raised during appeals if facts support those remedies.

Example (realistic, de-identified)

A small-business client faced a $60,000 proposed adjustment for claimed business expenses lacking receipts. We created a packet of bank records, vendor correspondence, and contemporaneous project logs tying expenses to contracts. We submitted a written protest that emphasized the factual evidence and the hazards of litigation, and the Appeals officer reduced the adjustment to $8,000 after negotiating a compromise based on the likelihood of the IRS proving some items in court.

Final checklist before you file an appeal

  • Confirm notice type and the exact appeal/filing deadline on the IRS letter.
  • Decide whether to pursue an administrative appeal or preserve Tax Court rights.
  • Assemble primary documents and a one-page summary.
  • Prepare a written protest if required (follow Publication 5 guidance).
  • File Form 2848 if you’ll use a representative.
  • Submit the protest or request as instructed on the notice and keep proof of delivery.

Where to get authoritative help

Professional disclaimer: This article is educational and does not replace individualized legal or tax advice. Rules and forms change; consult a qualified tax professional for specific guidance on your case.

If you’d like, our articles on “How Appeals Differ from Audits” explain strategy and expected outcomes in more detail: https://finhelp.io/glossary/how-appeals-differ-from-audits-strategy-and-outcomes/