How to Appeal IRS Penalties

Federal tax law allows you to appeal IRS penalties by following a multi-step process. While you can handle an appeal yourself, there are rules and deadlines that apply at each stage, so it is advisable to consult a tax lawyer for assistance. IRS penalties can be significant so losing your appeal can be costly.

When Are You Eligible to Appeal an IRS Penalty?

In order to file an appeal, all the following must have occurred:

• You received a letter that the IRS assessed a failure to file and/or failure to pay penalty to your individual or business tax account;
• You sent a written request to the IRS asking them to remove the penalty;
• The IRS denied your request for penalty abatement; and
• You received a letter denying your request, which gives you your appeal rights.

What Is the Process for Appealing an IRS Penalty?

The first step is to notify the IRS supervisor on your case that you disagree with the proposed penalty by filing Form 12009, Request for an Informal Conference and Appeals Review. This should be done within 30 days. If that fails to resolve the matter, you will receive a rejection letter and have another 30 days to request an appeal to the Appeals Office.

Appeals Office reviews are generally informal and may be conducted by mail, phone, or in person. It is important to provide specific facts and documentation supporting your argument.

The Appeals Officer can consider whether the penalty was correctly asserted and whether you are liable for the penalty. He or she will also consider any reason you have for disagreeing with the penalty except for moral, religious, political, constitutional, conscientious objection, or similar grounds. Penalties can be settled for less than the full amount in the appeal process.

You will be notified in writing of the decision. If you receive an adverse decision, you can still challenge it but you must pay the penalty in full and then file a Form 843, Claim for Refund.

If your refund claim is rejected, or the IRS does not take action on the claim within six months after the date you file the claim, you can bring an action in the U.S. District Court or the U.S. Court of Federal Claims.

Do You Need a Tax Attorney to Appeal an IRS Penalty?

You can represent yourself in an appeal, but in many cases, it is helpful to have a tax attorney represent you or advise you on how to present a strong case for appeal.

Our tax law firm has focused on assisting taxpayers with IRS and NYS tax problems for over 25 years. If you have been assessed a penalty by the IRS, contact us to discuss how we can help.