Taxpayers routinely resolve their tax controversy matters without resort to litigation. Indeed, good tax professionals will often seek to avoid costly and time-consuming litigation, if possible, by utilizing various administrative avenues within the IRS including the IRS Independent Office of Appeals (“IRS Appeals”). Formed originally in 1927, IRS Appeals serves as a quasi-independent government agency staffed with the purpose of, among other things, resolving certain tax controversy matters in a manner fair to both the United States and the taxpayer.
However, IRS Appeals does not hear all tax controversy matters. Rather, it has excepted from its jurisdiction certain tax matters which it feels are not within its scope of review. Generally, this has been accomplished through a hodgepodge of administrative guidance, including publication in revenue procedures and the Internal Revenue Manual (“IRM”).
On July 1, 2019, Congress codified the objectives and purposes of IRS Appeals in the Taxpayer First Act of 2019, Pub. L. No. 116-25 (“2019 TFA”). Thus, by statute, Congress provided that the IRS Appeals process “should be generally available to all taxpayers.” See I.R.C. § 7803(e)(4). Because the term “generally” denotes at least some type of exclusion, many taxpayers and tax professionals were left wondering how far the new statutory right extended.