16. APPEAL PROCEDURE

§ 5:82 In General

You must submit a written protest to the assertion and assessment of the Trust Fund Recovery Penalty. An oral protest is inadequate. No interest will accrue during the pendency of your protest Therefore, delays by the Internal Revenue Service in processing a protest usually are to the client’s benefit. Upon receipt of a protest, the Revenue Officer will prepare a rebuttal and submit the file through Special Procedures function (SPF) to the Office of Appeals. [IRM 5.7.6.1.3]

§ 5:83 Appeals Conference

The appeal is considered by the Office of Appeals, which also hears appeals on audit matters. Your client has the right to have a personal conference with an Appeals Officer. He or she may be represented by an accountant or attorney and present evidence and witnesses on his or her behalf. [See also Representation Before the Appeals Division of the IRS, another Tax Practice Workbook]

If you convince the Appeals Officer that your client is not a responsible person, he or she will recommend nonassertion of the Penalty. If you fail to convince the Appeals Officer, an assessment will be made by the Service without your client being granted the right to go to Tax Court.

§ 5:84 Hazards Of Litigation

Appeals Officers are authorized to look at the litigation hazards of a case and to settle it based on those hazards. Therefore, even if you don’t totally prevail at the conference, you may offer a partial settlement based on the merits of your respective case. If you have a high probability of winning in court, you might be able to settle for some small sum of money. Conversely, if your case is not that great, the amount required to settle goes up proportionally. [See also Representation Before the Appeals Division of the IRS, another Tax Practice Workbook]

§ 5:85 Economic Considerations

The author has found Appeals Officers to be much more flexible during negotiations than Revenue Officers. Many look for settlement options and are open to suggestions which benefit all parties. However, most Appellate Conferees will not recommend settlement based upon economic hardship of the responsible person. Economic considerations are left to the Department of Justice attorneys in litigation cases and the Collection Division in nonlitigation cases.