How to Appeal Tax Penalties
If you disagree with a tax penalty assessed to you by the Internal Revenue Service (IRS), you may file an appeal. There are many ways to appeal an IRS penalty, ranging from informal conferences at your local appeals office to filing formal written protests. In some cases, you may even take your case to a federal court. The IRS provides detailed instructions regarding how to use their appellate process in the paperwork they provide you and posts all relevant forms, publications and detailed appeal instructions on its official website.
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Instructions
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Review the paperwork the IRS sent you regarding your tax penalty. If you do not agree with the IRS findings, you can request a meeting in person or on the telephone with the supervisor of the IRS employee who made the findings in your case. The name and contact information of the IRS employee is included in the paperwork you receive.
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Send a request for an appeals conference to your local IRS Appeals Office if you still don't agree with the findings after your meeting with an IRS official. The instructions regarding how to request an appeals conference and the mailing address of the Appeals Office will be included in the initial paperwork you receive from the IRS. You can also obtain the contact information of the nearest Appeals Office at irs.gov.
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File a small case request if the total penalty amount for the tax period in question is $25,000 or less and your appeal does not deal with an employee plan, exempt organization, partnership or S corporation. Send a letter requesting an appeal; specify the findings with which you do not agree and provide any information supporting your position. Your initial paperwork will instruct you regarding where to send a small case request.
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File a formal written protest with the Appeals Office listed in your IRS paperwork if your appeal involves an employee plan, exempt organization, partnership, S corporation or other case for which you are required to file a formal written protest. Write a letter including your name, address, daytime telephone number, a list of the tax years involved and a copy of the IRS letter with the findings you wish to appeal. State that you want to appeal the IRS findings, list every finding with which you do not agree and explain why you do not agree. Include any facts you feel support your position and any laws upon which you rely. Sign the protest and include the following language with your signature: "Under the penalties of perjury, I declare that I examined the facts stated in this protest, including any accompanying documents, and, to the best of my knowledge and belief, they are true, correct, and complete."
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Tips & Warnings
You may represent yourself in the appeals process or have an attorney, certified public accountant (CPA) or another person qualified by IRS represent you. Contact your local Appeals Office for a list of professionals qualified to represent you during an appeal.
If you lose your appeal, you may be able to take your case to a United States District Court, United States Court of Federal Claims or United States Tax Court. The requirements to take your case to court depend on the circumstances surrounding your appeal. Consult an experienced tax attorney to help you find the right venue for appealing your case.
Check your initial letter from the IRS for any deadlines and be sure to make all requests and file all paperwork in a timely fashion. Failure to do so could result in waiver of your right to appeal. The IRS will explain in your paperwork if you have a specific time period after the assessment of a penalty during which to file an appeal.
