Proposed regs. address IRS Appeals’ review of tax controversies
Treasury and the IRS have proposed regulations (REG-125693-19) to clarify the types of federal tax controversies that may be appealed to the IRS Independent Office of Appeals. These regulations would implement provisions in the Taxpayer First Act (TFA), P.L. 116-25, making access to Appeals generally available and entitling taxpayers to a written explanation in some circumstances when access is denied.
Appeals is the IRS’s independent dispute resolution forum. Congress has taken steps to codify the administratively created office in the IRS Restructuring and Reform Act of 1998, P.L. 105-206, and the TFA, specifically at Sec. 7803(e). Sec. 7803(e)(3) specifies that the function of Appeals is to resolve federal tax controversies without litigation, while Sec. 7803(e)(4) says that the resolution process “shall be generally available to all taxpayers” (emphasis added).
Under the proposed regulations, Appeals would not consider appeals of (1) frivolous positions; (2) whistleblower awards; (3) issues settled by a closing agreement; (4) cases where Appeals issued the statutory notice of deficiency; (5) cases designated for litigation; and (6) cases withheld on the basis of sound tax administration, among others.