IRS Appeals – How Long Does it Take?

87% of all IRS appeals cases relate to these four disputes:

• Collection Due Process cases (38%): Taxpayers can request a Collection Due Process (CDP) appeal if they receive a notice of lien or a notice or levy. The notice will inform the taxpayer of his or her right to a hearing. When requesting a CDP hearing, taxpayers can propose collection alternatives, request innocent spouse relief, request penalty abatement. If a lien was issued, taxpayers can request lien subordination, discharge or withdrawal.. Taxpayers may also contest the tax liability owed if they did not have a prior chance to do so.
• Examination cases (29%): These are cases related to audits. Of the almost 1 million audits completed in 2018, appeals received only 27,290 (around 3%).
• Penalty appeals cases (10%): In these situations, the taxpayer is contesting an adverse penalty relief determination.  Taxpayers who have audit penalties can also contest them in examination cases.  In 2017, only 11% of all IRS penalties assessed were abated.
• Offer in Compromise cases (9%): Of the 59,000 OICs applications filed in 2018, over 15% of the OIC determinations were settled in appeals. Appeals may be a good option for many OICs as there are many disagreements in OICs.  In 2018, only 40% of all IRS OICs submitted were accepted by the IRS.  In 2019, only 33% were accepted.

One reason many tax professionals and taxpayers may opt out of going to IRS appeals is because they want their disputes to end sooner, rather than later. A recent U.S. Government Accountability Office (GAO) study showed that taxpayers wait a long time to get into IRS appeals. When they finally arrive, the process does not go quickly.

For these four common appeals cases, the average wait times to arrive at IRS appeals ranged from 2 to 3 1/2 months, depending on the issue. However, those times likely increased substantially during the COVID-19 pandemic. Total case resolution times were almost a year long for regular IRS examination cases (taxpayers with assets lower than $10 million).

Here is what the GAO found:

Until this study, it was not apparent how long it took to get an IRS appeal reviewed and how long it took to resolve an appeal. Tax practitioners who regularly practice before the IRS Independent Office of Appeals kept their own scoreboard to evaluate times to better set expectations with their clients. In the future, the IRS has agreed to be more transparent with historical resolution times to complete a case with the IRS Independent Office of Appeals. Surprisingly, even with decreased staffing at the IRS and especially in the IRS Independent Office of Appeals (11% drop in appeals officers from 2017 and 2018), the IRS still closed more appeals cases than it received.

If you are in a dispute with the IRS, going to appeals is a waiting game. You can reduce your time in appeals by submitting a complete protest that outlines the facts, your disputes, your interpretation of the tax law versus any differences with IRS interpretation, and a clear proposal of your solution to resolve the case.  It is always best to do the work for the IRS, and you may see lower resolution times and better results. As far as the time to get to IRS appeals, watch how the IRS reacts to GAO recommendations. In lean times at the IRS, we can still expect these wait times to continue.

Do you have additional questions?

For assistance creating a strategy to address your tax issue, visit Jackson Hewitt’s Tax Resolution Hub to see the various ways we can help you.

About the Author

Jim Buttonow, CPA, CITP, is the Senior Vice President for Post-Filing Tax Services at Jackson Hewitt. He’s been a leader in helping taxpayers and tax professionals resolve tax problems with the IRS, where he had worked for 19 years in various compliance-enforcement positions. Prior to his current role, Jim’s consulting practice focused on the areas of tax controversy and tax administration, which included leading product development on tax problem software for tax professionals, testifying before Congress, advocating for IRS transparency and efficiency, and proposing innovative large-scale solutions for taxpayers and tax professionals. Jim is also the author of Tax Problems and Solutions Handbook, a publication aimed at helping tax pros work more effectively in post-filing matters and resolving their clients’ most common tax problems.

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