Fact Sheet

IRS Clarifies Office of Appeals Policies

(Updated October 1, 2016)

 Background/Purpose:

In recent years, Appeals has initiated independence projects to ensure our policies and practices are consistent with our mission. Appeals’ role is to settle disputes on a fair and impartial basis that favors neither the government nor the taxpayer. Appeals should not perform compliance actions. Rather, we attempt to settle a case after IRS compliance functions (Accounts Management, Collection, and Examination) have made a determination with which the taxpayer disagrees.

In 2012, we began the Appeals Judicial Approach and Culture (AJAC) project, which resulted in a series of policy clarifications primarily for non-docketed cases. We adopted these key policies in phases from 2012 through 2014.

Since the AJAC-related changes focus on non-docketed cases, additional work was needed to ensure that examination cases docketed in the U.S. Tax Court receive consistent treatment. As a result of the Docketed Examination Assistance (DEA) project, we issued on July 24, 2016 interim guidance for requesting examination assistance on docketed cases. Effective October 3, 2016, the new guidance will apply to docketed cases where new information is provided to Appeals that, in the judgment of the Appeals Technical Employee, merits investigation or additional analysis by an IRS compliance function.

In general, the policy clarifications brought about by both projects ensure that IRS compliance functions are the finders of fact and Appeals does not take investigative actions. These policies ensure taxpayers have a true appeal right – where Appeals reviews a final determination made by a compliance function.

Key Collection Policy Clarifications:

• Appeals will not take investigative actions with respect to financial information provided by Financial information needing investigation or verification will be sent to Collection.
• Appeals will only consider assets that were documented by Collection or introduced by the taxpayer.

• Appeals will accept as “verified” those financial statements reviewed by Collection within the previous 12
• Appeals will not make recommendations to file Notices of Federal Tax
• All Offers in Compromise (OIC) submitted in Collection Due Process (CDP) or Equivalent Hearings will be reviewed by Collection for a preliminary recommendation or
• In non-CDP OIC cases, Appeals will only determine the acceptability of the OIC and will not offer other collection

The recent Docketed Examination Assistance interim guidance for Appeals cases can be found here. These policy changes are effective on October 3, 2016 and apply to docketed examination cases where a taxpayer submits new information or evidence or raises a new issue that merits investigation or additional analysis.

Key Examination Policy Clarifications:

• Appeals will attempt to settle a case based on factual hazards when not fully developed by Examination (e., cases will not be sent back to Examination for further development).
• Appeals will not raise new issues or reopen issues on which the taxpayer and Examination have reached an agreement, with limited exceptions.
• Most new non-docketed case receipts in Appeals must have at least one year remaining on the statute of Docketed case receipts in Appeals do not have similar statute of limitation concerns.
• Appeals will return non-docketed cases to Examination when a taxpayer submits new information or evidence or raises a new issue that merits investigation or additional
• Appeals will retain jurisdiction of docketed cases when a taxpayer submits new information or evidence or raises a new issue that merits investigation or additional analysis, but will request assistance from Examination in performing those If Examination does not provide assistance, Appeals will attempt to settle the case based on the hazards of litigation associated with the new information and the other information already in the case file.
• For most work streams, Appeals will engage Examination for review and comment when a taxpayer raises a relevant new theory or alternative legal argument.

What taxpayers need to know:

• Taxpayers should fully cooperate with IRS compliance functions during the development of their case so the file is complete when it comes to
• When appealing a compliance function’s decision, taxpayers should be specific in their protest about the item(s) in
• Introducing new information in Appeals may result in Appeals releasing jurisdiction over the case and returning it to the compliance
• Our recent policy changes help to preserve the opportunity for an impartial appeal for taxpayers by ensuring Appeals is reviewing a final determination made by a compliance function.
• In docketed cases, Appeals will share all communications received from the compliance function with respect to any examination assistance The taxpayer will have an opportunity to review the findings and respond to Appeals in attempting to resolve disputed issues.
• Although there will be a period of transition as these policies are implemented, we are confident that they will improve the appeals process by supporting Appeals’ mission and strengthening a taxpayer’s right to an independent appeal.