IRS Appeals: Your Second Chance

The IRS made a determination I disagree with. Can I appeal?

Yes! The IRS appeals process is one of the most important taxpayer rights, and it’s something I use regularly to get better outcomes for clients.

If you disagree with an IRS determination—whether it’s from an audit, a collection action, a penalty assessment, or any other IRS action—you generally have the right to appeal to the IRS Office of Appeals. This is an independent organization within the IRS that resolves disputes between taxpayers and the IRS.

Appeals are powerful because the Appeals Officers have more flexibility than regular IRS agents. They can consider “hazards of litigation”—meaning if your case went to Tax Court, what’s the likelihood you’d win? If there’s a reasonable chance you’d prevail in court, Appeals may settle for less than the full amount the IRS originally determined.

I recently handled an appeal for a Detroit medical practice. The IRS had audited three years of returns and assessed additional taxes of $78,000, claiming certain contract labor should have been classified as employees. We appealed, presented industry standards, showed their workers met independent contractor tests, and got the assessment reduced to $12,000.

What’s the Collections Due Process appeal, and when should I use it?

The Collection Due Process (CDP) hearing is a specific type of appeal that happens when the IRS is taking or threatening to take collection action—typically a levy or lien.

When the IRS files a Notice of Federal Tax Lien or sends a Final Notice of Intent to Levy, you have 30 days to request a CDP hearing. This is incredibly important for several reasons:

Collection action stops: Once you request a CDP hearing, the IRS must pause collection actions while your hearing is pending.

Review your case comprehensively: At the CDP hearing, you can challenge whether you actually owe the tax, propose collection alternatives, and raise any issues about the collection action.

Independent review: Your case goes to Appeals, not the revenue officer who’s been chasing you.

Extra time: The CDP process can take months, giving you breathing room to get your finances in order.

I used a CDP hearing to help a Chicago retail business owner facing levy action on his business bank account. The IRS was demanding full payment of $220,000 immediately. We requested the CDP hearing, which stopped the levy. At the hearing, we proposed an installment agreement that the original revenue officer had rejected. The Appeals Officer reviewed our financial documentation and approved the payment plan. The business was saved.

The key with CDP hearings is the 30-day deadline. Miss that window, and you lose your appeal rights. When you receive a lien or levy notice, contact me immediately.