Once you have decided that filing a written protest in tax appeals is the correct strategy for addressing your dispute with the IRS, you must then prepare the written protest itself.
What Elements are Required in the Written Protest?
In order to be valid, your written protest in appeals must contain specific information. The IRS does not provide a tax appeals process template form for the written protest, IRS Publication 5 tells you how to appeal your tax case. The written protest must contain the following information:
- Your name and address;
- The date and symbols from the examination report listing the proposed adjustments;
- The tax periods or years involved;
- A statement of the adjustments being protested;
- A statement of facts stating the taxpayer’s position on contested factual issues;
- A statement of authority describing the law or authority on which the taxpayer’s argument relies.
The statement of facts included with the written protest must be signed under penalty of perjury, which can be done by including the following declaration:
“Under the penalties of perjury, I declare that I have examined the statement of facts presented in this protest and in any accompanying schedules and statements and, to the best of my knowledge and belief, they are true, correct, and complete.”
Sometimes, the written protest is submitted by a tax attorney who is acting as the taxpayer’s representative instead of the taxpayer. When this occurs, a substitute declaration can be used, as long as it contains the following elements: (1) statement that the representative had prepared the protest and any accompanying documents, and (2) statement indicating whether the representative personally knows that the statement of facts in the protest and any accompanying documents are true and correct.
Drafting a well-crafted written protest can provide the taxpayer with a tactical advantage prior to eventually facing the Appeals Officer in the formal appeals conference. In drafting the written protest, there are several tactics to keep in mind.
Tactic #1: Make Your Written Protest Fact-Oriented
The first factor to include when drafting a written protest is to make the protest fact-oriented. By supporting the fact-oriented written protest with affidavits, the taxpayer and his representative can gain an additional psychological advantage over the Appeals Officer during the appeals process. This can be an advantage because supporting documentation demonstrates to the Appeals Officer that the taxpayer and his representative have done their research and are prepared to document their case and support it at trial, if necessary. Attachments may also give the written protest an element of credibility and support, which helps the ultimate resolution of the matter in the taxpayer’s favor.
Tactic #2: Use Factual and Legal Authority to Your Advantage
Another tactic that can be used in drafting the ideal written protest is to present the factual and legal issues in such a way that will convince the Appeals Officer that the matter is inappropriate for litigation by the IRS. If the Appeals Officer is convinced that the Service is unlikely to win at Tax Court, then the IRS will be more likely to settle the matter with the taxpayer at the Appeals level. If the Service is concerned that the taxpayer might actually receive a windfall benefit by litigating, then they will be more likely to settle. In order to point out the hazards of litigation to the IRS at the appeals phase, the taxpayer and taxpayer representative should being by pointing out some fact or legal authority that the local revenue agent failed to consider or give appropriate weight. The IRS will be most persuaded by regulations, revenue rulings, or other IRS publications because they have nearly binding authority. Finally, in drafting the written protest, it is a good idea to include every argument in the taxpayer’s favor, even if you do not think it is the strongest argument possible. The Appeals Officer considering the case might decide that the cumulative effect of all the arguments in the taxpayer’s favor is enough to make the case appropriate for settlement.
Tactic #3: A Full Protest is Better than a Skeletal Protest
At appeals, the taxpayer has the burden of demonstrating that the local IRS made an improper determination. In order to successfully achieve this, it is better to write a full protest than a skeletal protest. A skeletal protest puts the taxpayer at a disadvantage because the entire case must then be made at the appeals conference. By the time the appeals conference takes place, the Appeals Officer might be less receptive to the taxpayer’s arguments because of the limited information previously received in the written protest. In contrast, a full protest gives the taxpayer ample opportunity to set forth his or her case in a thorough and persuasive manner. In that case, by the time the appeals conference takes place, the Appeals Officer will have already considered the arguments, making for a more meaningful and productive session. If there is insufficient time to draft a thorough written protest, then a skeletal one will suffice. However, that skeletal protest should be supplemented by a full memorandum of facts and law prior to the appeals conference to ensure the best outcome for the taxpayer.
How a Tax Attorney Can Help with Appeals
Submitting a well-crafted written protest in Appeals can go a long way to achieving a favorable outcome for the taxpayer. If you think that your tax situation might make you a candidate for an Appeals process, you should consult with a knowledgeable tax attorney. The Tax Lawyer - William D Hartsock Tax Attorney Inc. has been successfully helping clients with appeals since the early 1980s. Mr. Hartsock offers free consultations with the full benefit and protections of attorney client privilege to help people clearly understand their situation and options based on the circumstances of their case. To schedule your free consultation simply fill out the contact form found on this page, or call (858) 481-4844.