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More Changes to IRS Appeals’ Practices?

We have previously commented on changes at the Internal Revenue Service (IRS) Appeals Division, including: (1) the allowance of Appeals to invite representatives from the IRS Examination Division (Exam) and IRS Office of Chief Counsel to the Appeals conference, (2) the limitations on in-person conferences, and (3) the use of “virtual” conferences.

IRS Appeals Chief Donna Hansberry discussed these changes at a recent tax law conference held by the Federal Bar Association. According to reports, Ms. Hansberry wants feedback from practitioners on the compliance attendance and virtual conferences.

Regarding compliance attendance at Appeals conferences, Ms. Hansberry indicated that the IRS is still evaluating this pilot program, and noted that compliance is not routinely invited to attend the conferences. However, it appears that Appeals is finding the program helpful as a means to assisting Appeals Officers better understand the facts and relevant law.

Regarding the virtual conferences, Ms. Hansberry indicated that participants have given the program good ratings and would be open to utilizing it again. Thus, it appears that this program will continue to be offered by the IRS and it could be expanded.

Practice Point: Taxpayers and practitioners need to be aware of the ever-changing processes at the IRS, both at the Exam and Appeals divisions. From our experience, it is now common-place for members of the IRS examination team to attend and participate in the opening of an IRS Appeals conference. On some occasions, the IRS examination team remained mostly silent during the Appeals conference, while in other occasions, they were active participants. Whether the participation of the IRS examination team is helpful to the Appeal conference depends on numerous factors, including whether the Appeals Officer is able to maintain control over the conference, the personality and approach of IRS examination team, and the taxpayer’s and its representative’s ability to deal with IRS examination team’s participation. We typically advise against the IRS examination team participating in settlement negotiations during an Appeals conference. In several recent Appeals, we have experienced pressure from the Appeals Officer to include the IRS examination team as part of the negotiation process, in the same vein as a FastTrack settlement conference. Unless it makes strategic sense, we routinely counsel against their inclusion in the negotiations. From experience, the IRS examination team can become entrenched in their position, and not open to the typical “give-and-take” of an Appeals settlement negotiation. Moreover, the IRS examination team oftentimes has difficulty assessing the true “hazards of litigation,” the standard by which the Appeal Officer will analyze the case for settlement purposes on behalf of the IRS.

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About this Author

Andrew R. Roberson tax attorney McDermott Will. Andy handles tax cases in Federal court, United States Tax Court

Andrew R. Roberson is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  Andy specializes in tax controversy and litigation matters, and has been involved in over 30 matters at all levels of the Federal court system, including the United States Tax Court, several US Courts of Appeal and the Supreme Court. 

Andy also represents clients, including participants in the CAP program, before the Internal Revenue Service Examination Division and Appeals Office, and has been successful in settling...

Kevin Spencer, McDermott Will & Emery LLP , Tax Litigation Attorney

Kevin Spencer is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  He focuses his practice on tax controversy and litigation issues. 

Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions.

In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court.