Most Serious Problem: Appeals

The Office of Appeals’ Approach to Case Resolution Is Neither Collaborative Nor Taxpayer Friendly and Its “Future Vision” Should Incorporate Those Values

In several Annual Reports to Congress, the National Taxpayer Advocate has detailed a variety of concerns regarding programs and policies adopted by the IRS Office of Appeals (Appeals) that continue to disadvantage taxpayers. Among other things, taxpayers are experiencing limitations on their ability to obtain in-person conferences and are encountering  Appeals proceedings with narrowing scopes of substantive review. Appeals’ proposed five-year trajectory is set forth in its preliminary design for a Future State. However, this Concept of Operations (CONOPS) is limited by its reliance on a “one size fits all” model that is primarily bureaucratic- and enforcement-oriented.

The resource constraints to which Appeals recently has been subject present challenging issues that underlie Appeals’ CONOPS. For example, between Fiscal Years 2013 and 2016, the number of Appeals cases has dropped by seven percent, whereas the number of Appeals Hearing Officers (Hearing Officers) available to resolve those cases has dropped by 24 percent. Appeals’ need for operational efficiency and cost-effectiveness, however, is not, in the long run, best served by such steps as limiting access to in-person conferences or reducing the quality of substantive review. Rather, taxpayers who choose to engage in dialogue with the IRS through participation in the Appeals process should be encouraged, educated, and welcomed as partners in the voluntary tax system. The National Taxpayer Advocate urges Appeals to embrace a Future State that is premised on a collaborative model of tax administration, that recognizes the desire of most taxpayers to be compliant, and that is designed to work with them in furtherance of this goal.

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Related Content of the Report:

Most Serious Problem: ALTERNATIVE DISPUTE RESOLUTION (ADR): The IRS Is Failing to Effectively Use ADR As a Means of Achieving Mutually Beneficial Outcomes for Taxpayers and the Government

Legislative Recommendation: COLLECTION DUE PROCESS (CDP): Amend Internal Revenue Code § 6330 to Require Appeals Officers, in Considering Collection Alternatives, to Suspend CDP Hearings Pending Resolution of Challenged Non-CDP Liabilities or Precluded CDP Liabilities

Literature Review: Options for Alternative Dispute Resolution (ADR)

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