Introduction

If you received an IRS notice resolving a paper audit and disagree with the findings, you can often escalate the matter to the IRS Office of Appeals. An Appeals conference moves the dispute from the examiner’s file to an independent Appeals Officer who reviews the facts, law, and hazards of litigation. In my practice as a CPA and CFP® for 15+ years, I’ve converted many paper audits to Appeals conferences successfully by acting quickly, preparing a focused packet, and framing the dispute around law and facts rather than emotion.

Why convert a paper audit to Appeals?

  • Appeals is independent: The Office of Appeals is separate from the exam function and aims to resolve disputes without litigation, using the hazards-of-litigation standard.
  • Opportunity to avoid penalties and litigation: Appeals may reduce or eliminate adjustments, remove penalties, or negotiate terms of settlement.
  • Flexible formats: Appeals conferences can occur by phone, video, or in person depending on what Appeals offers and the case’s complexity.

Key IRS references

  • IRS, Office of Appeals: https://www.irs.gov/appeals (overview and how Appeals works)
  • For options after an audit, see IRS guidance on appeals and notices available with the original notice (check your specific letter for deadlines). These links explain processes and rights (IRS Appeals Division).

Step-by-step process to convert a paper audit into an Appeals conference

1) Read the notice carefully and confirm your appeal rights

Most IRS audit notices explain the taxpayer’s right to appeal and include a deadline. Generally, you will have a short period (often 30 days) to request an appeal from the date on the notice; however, timeframes vary by notice type and case (collection cases and Notices of Deficiency follow different rules). Always confirm the deadline on your specific letter and act before it expires. (IRS Appeals Division)

2) Decide whether you need a formal written protest

If the proposed adjustment exceeds the IRS threshold for a formal protest (historically $25,000 for many types of tax deficiencies), you should prepare a formal written protest. For smaller adjustments, a clearly written statement that explains your position and the supporting facts often suffices. The IRS and Appeals want a concise explanation of why the IRS position is incorrect, a summary of facts, legal authority (if any), and the relief you seek.

3) Ask for Appeals—how to make the request

Follow the instructions on your notice. Typically, you may: (a) sign and return any appeals form included with the examiner’s report, (b) send a letter requesting Appeals review, or (c) file whatever written protest the notice requires. Label the correspondence as an appeal request and include the exam’s file number, tax year, and a daytime phone number.

4) Assemble a tight Appeals packet

Organize a single, indexed packet that contains:

  • A cover page with taxpayer name, EIN/SSN, year(s) under dispute, and exam file number
  • A one-page summary of disputed issues and the relief requested (start with the bottom-line ask)
  • Chronology of events (short timeline)
  • Key documents (receipts, invoices, bank records, contracts, correspondence)
  • Copies of tax returns and the examiner’s report/adjustments
  • Citations to relevant law, regs, or administrative guidance (if applicable)

In my experience, Appeals Officers appreciate a short executive summary up front — it focuses negotiations and respects their time.

5) Tactical framing: focus on facts, law, and hazards of litigation

Appeals resolves disputes based on the law and the ‘‘hazards-of-litigation’’ — that is, whether the IRS’s case would likely win in court and what risks each side faces at trial. Don’t centre the packet on emotion or volume of documents alone. Show how the facts support your tax treatment and note any weaknesses or uncertainties in the IRS’s position.

6) Prepare for the conference

  • Anticipate the IRS’s key arguments and prepare concise responses.
  • Make a list of concessions you are willing to consider and your walk-away point.
  • Bring a succinct, one-page summary and any documents you expect the Appeals Officer to request.
  • If you’ll be represented, ensure the representative has the power-of-attorney (Form 2848) filed in advance.

7) During the Appeals conference

The Appeals Officer will review your packet and discuss settlement options. Typical outcomes include full agreement for the taxpayer, partial concessions, a formal settlement with a closing agreement, or a decision that leaves the adjustment in place (with rights to further administrative or judicial review). Keep communications professional and focused.

Timing and likely timelines

How long Appeals takes depends on workload and case complexity. Straightforward issues may resolve in a few months; complex or multi-year disputes can take much longer. Expect several months as a realistic baseline; if Appeals requests additional information, respond promptly to avoid delay. For more on expected timelines and preparing your packet, see our guide: Preparing Effectively for an IRS Appeals Conference (https://finhelp.io/glossary/preparing-effectively-for-an-irs-appeals-conference/).

Common pitfalls and how to avoid them

  • Missing the deadline: This is the most fatal error. Act immediately after receiving a notice and calendar the appeals deadline. If in doubt, contact the examiner and confirm appeal rights in writing.
  • Overwhelming Appeals with clutter: Give Appeals a curated set of documents and a short summary. Too much unorganized paperwork makes it harder to see your strongest points.
  • Failing to quantify settlement objectives: Know your settlement floor and upper limits; document how you computed damages, penalties, and interest if negotiating.

Options if Appeals denies your request

If Appeals denies relief, you generally have the right to pursue judicial review. Typical next steps include: filing a petition with the U.S. Tax Court (if you have a Notice of Deficiency), paying the tax and suing for refund in U.S. District Court or U.S. Court of Federal Claims, or considering other administrative remedies. See our article Tax Court vs. IRS Appeals: Which Path Should You Take? for comparisons and strategy (https://finhelp.io/glossary/tax-court-vs-irs-appeals-which-path-should-you-take/).

Practical examples (anonymized)

  • Example 1: A small business owner received a paper audit disallowing vehicle expenses. We compiled mileage logs, client invoices, and a concise narrative matching trips to income receipts. Appeals accepted the documentation and restored most deductions.

  • Example 2: A freelance designer faced an unreported income adjustment from a 1099 mismatch. By providing bank deposits tied to invoices and vendor statements, we convinced Appeals the income was reported or previously taxed; the adjustment was removed.

Professional tips from my practice

  • Start with a one-page executive summary and a short evidence table so Appeals can see the core of your case in minutes.
  • If the dispute involves legal interpretation, include a short legal memo citing cases or revenue rulings that favor your view.
  • Use a binder or organized PDF bookmarks; label exhibits clearly.
  • Consider mediation or facilitation if Appeals offers alternative dispute resolution tools.

Interlink resources on FinHelp

Authoritative sources

Professional disclaimer

This article is educational and does not constitute legal or tax advice for your specific situation. Rules and deadlines vary by notice and by case type; consult a qualified tax professional or attorney for advice tailored to your circumstances.

Final checklist (quick)

  • Verify the appeals deadline on your notice and calendar it immediately.
  • Decide whether you need a formal written protest.
  • Prepare a concise appeals packet with a one-page summary and indexed exhibits.
  • File the appeal request per the notice instructions and request an Appeals conference.
  • Be prepared to negotiate using facts, law, and the hazards-of-litigation framework.

By following these steps and treating Appeals as a negotiated, evidence-driven forum rather than an adversarial courtroom, you improve your chances of resolving a paper audit without litigation.