The IRS Office of Appeals resolves more than 100,000 tax cases each year. Employees staffed in this function are trained to resolve disputes taking into consideration the hazards of litigation as well as the benefits of efficient tax administration. They are not necessarily trained to advocate on behalf of the United States Government’s best interest as they are to resolve and close files. To that end the Internal Revenue Service updated existing rules on permissible communications between the Office of Appeals staff and pretty much all other parts of the IRS. The updated rules are in Revenue Procedure 2012-18.
The previous rules were issued in October 2000 so it was time that they were revisited. The new rules address ex parte communications, which are communications between the Office of Appeals and other parts of the IRS that take place without the taxpayer or the taxpayer’s representative being given an opportunity to participate in the communication.
“These rules implement a provision in the IRS Restructuring and Reform Act of 1998, aimed at ensuring that the Office of Appeals remains an independent and flexible vehicle for settling audit and collection-related disputes between taxpayers and the IRS. A part of IRS, but independent of the agency’s compliance functions, Appeals serves as one of the checks and balances built into the U.S. system of tax administration.”
In one key change IRS Appeals will no longer participate on issue management teams (IMT) but can be briefed by IMTs, as long as the discussion remains generic rather than case specific. IMTs include representatives from various IRS components, typically Compliance and Counsel, and the IMT meetings usually involve general discussions of how to handle technical issues or procedural matters.
Additionally when there is a breach of the ex parte communication rules, Appeals employees will now ask the affected taxpayer or their representative for input on the appropriate remedy and the appropriate remedy will be determined by a senior management official. The IRS Office of Appeals resolves more than 100,000 tax cases each year.