Handling Response to Pre-Assessment 30-day letter: The Protest

A protest accompanies a request for a conference with the IRS’ Appeals Office following receipt of the administrative 30-day letter.  Depending on the circumstances and amounts involved, different actions may be required in order to request an appeals conference:

  1. If the total amount of proposed additional tax, proposed over assessment or claimed refund exceeds $10,000 for any taxable period, a written protest setting forth the facts, law, and arguments relied upon by the taxpayer, made under penalties of perjury, is required.
  2. If the total amount of proposed additional tax, proposed over assessment, or claimed refund exceeds $2,500 but does not exceed $10,000.   A brief written protest of disputed issues is required.
  3. An oral protest is sufficient to obtain Office of Appeals consideration in field audit cases involving $2,500 or less and in all office interview or correspondence examination cases.  However, it is customary for the Clinic to submit a written protest.

A protest should include the following:

  1. Taxpayer’s name, address and Social Security number
  2. Taxpayer’s Representative’s name and a copy of Form 2848 Power of Attorney
  3. Copy of or reference to the 30-day Letter and the audit report identifying the tax years involved and the proposed changes
  4. Statement that the protest is timely
  5. Request for an Appeals conference
  6. List of the changes made by the IRS to the taxpayer’s return that taxpayer disagrees with and why taxpayer disagrees
  7. Facts supporting taxpayer’s position
  8. Law or authority on which taxpayer bases his position
  9. Taxpayer’s signature or representative’s statement that she prepared the protest and knows the facts alleged to be true (to the best of their knowledge)
  10. Supporting documents may be attached

Appeal of Claim Disallowance

In addition, a request to the IRS for them to allow some additional claim on a return or to reconsider a disallowance of a prior claim may result in the IRS not granting that request and issuing what is termed a “Claim Disallowance” letter. The student should contact the IRS and clarify precisely what was denied. In many instances, while the letter indicates a denial of the claim, in fact the claim was allowed in part.  Then the student must determine if the amount disallowed was erroneous.

As in many actions with the IRS, those decisions can be appealed to the Appeals Division The Form 12203 is the general form used to appeal a matter to the Appeals Division except for appeals of offers in compromise (see OIC section for appeals of officers).

Generally, the IRS allows 30 days from the date of the “Claim Disallowance” letter to request Appeal’s consideration.  Therefore, the cover letter and the form 12203 should be returned within the 30 days even if there is not sufficient time to prepare an appeals notebook. Once the Form 12203 is returned timely, the student should immediately prepare the appeals notebook following the example format for appeals notebooks found on this website and have it ready, when an appeals officer is assigned.

Should the IRS overlook the request for a face-to-face conference with Atlanta Appeals, upon contact by an appeals officer in a city other than Atlanta, the student should without further discussion of the underlying issues in the case, request a face-to-face conference with Atlanta Appeals.

Resources

Documents

Sample Appeals Memorandum.doc
Appeal of Claim Disallowance Cover Letter.doc
Request for Appeals Review (Form-12203).pdf

Treasury Regulations

Treas.Reg. §601.105:  Examination of returns and claims for refund, credit or abatement; determination of correct tax liability

Treas.Reg. §601.106: Appeals Function

Documents on IRS.gov

Your Appeal Rights and How To Prepare a Protest If You Don’t Agree
IRS Publication No. 5

Examination of Returns, Appeal Rights, and Claims for Refund
IRS Publication No. 556