If you are not happy with the decision of a IRS agent and or a ruling IRS ruling your next step is to go to the IRS appeals function.
There is no magic wand in going to the Appellate Division of Internal Revenue Service for any reason.I am a former IRS agent and teaching instructor with the IRS.
There are strict standards, formulas, methodologies, and internal revenue manuals that guides and govern every action that any IRS agent takes whether it is a collector, auditor, or any other agent.
The same is true for the IRS appeals function.
So, if you are not happy with the outcome of your case the next step is to go to the appeals function and there you will find a willing IRS agent ready to work your case and it is critical you understand the “IRS hazards of litigation in appeals.”
The IRS hazards of litigation is going to be something that the appellate agent will use find out whether they want to accept or deny the case.
It is not an exact science.
More importantly, the hazards of litigation theory is simply based on the fact whether the IRS agent feels confident they will take the case to Tax Court and WIN or its best to settle.
There are certain factors that run in the mind of the IRS appellate agent to make this determination, most is based on tax law, precedents and if they have already dealt with this issue.
Existing Tax Law Governs Appeals Cases.
The Appeal Function is not about “sympathy”, its about existing tax law, winning or losing an many times they have seen your issues many times over.
Also the appeals agent has a manager to review and approve all cases, so you really have two people to appease.
The IRS Hazards of Litigation
1. Penalties may be settled based on hazards of litigation. Unlike Compliance, Appeals may consider the hazards of litigation in attempting to reach a settlement.
The proper use of this settlement authority given to Appeals is critical in fulfilling its mission.
2. The settlement process is based on the ATE’s experience and judgment after considering the facts and the law.
3. ATEs must evaluate the facts pertinent to the issue under consideration, the applicable law, and the potential outcome in the event the case is litigated.
4. The hazards of litigation are the uncertainties of the outcome of the court’s decision in the event of a trial.
5. Litigating hazards generally fall into three categories:
1. factual,
2. legal, and,
3. evidentiary.
Note: Lack of case law should not be considered a hazard of litigation.
6. Appeals may weigh these factors and determine an appropriate settlement range for the issue and obtain a realistic settlement.
An example of what may run through the mind of the IRS appellate agent during the process of passing litigation.
An agent is looking at your case and they think they have a 70% chance of winning based on tax law, experience, and the general precedent.
That Agent may determine to take 30% off of the settlement because they believe they have a 70 per cent chance of winning.
Remember this is just a theory that comes into play.
Every agent has their own mindset as to what they want to accept and more importantly what their manager is going to approve.
If you need help with any appeals, contact former IRS agents that know the system and have taken hundreds of cases to the Appellate Division in the past.
