The IRS Independent Office of Appeals is one of the most powerful and underutilized tools available to tax practitioners. Appeals officers resolve the large majority of cases that come before them, often at amounts more favorable to the taxpayer than the original examination result. A practitioner who knows how to use the Appeals process is not just contesting a proposed adjustment; they are negotiating from a position of procedural and strategic strength that the examination itself does not provide.
This guide covers the complete Appeals workflow from the 30-day letter through post-Appeals options: when Appeals is the right next step and when it is not, what the 30-day letter actually says, the threshold and strategic difference between a small case request and a formal written protest, the seven required elements of a protest under Rev. Proc. 87-24, how to draft a statement of facts that protects the taxpayer's Tax Court position, the ex parte communication restriction and what it means for the practitioner, settlement authority mechanics, coordinated issues and the Counsel involvement that limits settlement, and what happens after Appeals whether the case settles or does not. This guide connects directly with the upstream IRS field and office examination guide, where the 30-day letter originates, and the downstream Tax Court petition guide for cases that do not resolve at Appeals.
All procedural references and IRM citations in this guide should be verified at IRS.gov before relying on them in any specific matter. This guide is informational and does not constitute legal advice. Practitioners handling Appeals cases involving coordinated issues, large-dollar adjustments, or potential penalty referrals should consider whether qualified legal counsel is appropriate.
When Appeals Is the Right Next Step
The IRS Independent Office of Appeals handles disputes at three stages of the IRS controversy process: examination disputes (after the examination produces adjustments the taxpayer contests), collection disputes (through the Collection Due Process hearing and Collection Appeals Program tracks), and penalty appeals (when penalties have been assessed and the taxpayer seeks abatement). This guide addresses the examination Appeals track.
For partnership clients whose BBA examination proceeds to Appeals or results in an imputed underpayment, see our K-1 Allocation Errors: BBA vs. Non-BBA Amendment Guide for AAR and push-out election options.
Examination disputes: the 30-day letter track
When a Revenue Agent or Tax Compliance Officer proposes adjustments at the close of an examination, the agent transmits a Revenue Agent Report with a 30-day letter (Letter 525 or Letter 531). The 30-day letter gives the taxpayer 30 days to request an Appeals conference. This is the pre-assessment Appeals track: the taxpayer can contest the proposed adjustments before the IRS assesses the resulting tax. The examination-side Appeals track is the subject of this guide. For collection-side Appeals access, see the IRS Collection Due Process hearing guide, which covers the CDP hearing as the collection-side Appeals mechanism.
When to take the case directly to Tax Court instead
There are scenarios where bypassing the pre-assessment Appeals conference and waiting for the Notice of Deficiency to petition Tax Court is the better strategy. If the case involves a purely legal issue that Appeals has no discretion to resolve differently from the IRS's published position (coordinated issues or issues governed by existing precedent that Appeals must follow), an Appeals conference may not produce a different result than the examination. In those cases, going directly to Tax Court may be more efficient. However, even in legal-issue cases, the docketed Appeals conference after Tax Court filing often produces a favorable resolution. The decision between pre-assessment Appeals and Tax Court requires a case-specific analysis.
The 30-Day Letter: What It Contains and What It Does Not Concede
The 30-day letter transmits the examination report (the Revenue Agent Report) and formally notifies the taxpayer of the proposed adjustments. Understanding what the 30-day letter contains and what it represents is the starting point for every protest.
What the examination report contains
The examination report (Form 4549 for individual and most business returns) itemizes each proposed adjustment: the issue, the amount of the adjustment, the legal authority the agent cited, and the resulting tax, interest, and penalties. The report reflects the agent's position at the close of the examination. It does not reflect any agreed concessions by the IRS; everything in the RAR is a proposed adjustment that the IRS has not yet assessed.
What the 30-day letter does not concede
The proposed adjustments in the examination report are the IRS's position going into Appeals, not a final determination. Appeals officers have independent authority to evaluate the hazards of litigation on each issue and settle cases based on their assessment of those hazards. This means that adjustments the agent was unwilling to negotiate during the examination may be resolved favorably at Appeals, even if the agent's position was technically defensible. The 30-day letter is the opening of the Appeals negotiation, not the closing of the dispute.
MISSING THE 30-DAY DEADLINE: WHAT ACTUALLY HAPPENS
Missing the 30-day letter response deadline eliminates the pre-assessment Appeals conference, but it is not the taxpayer's final opportunity to contest the adjustment. When the 30-day window passes without response, the IRS issues a Notice of Deficiency (the 90-day letter). The taxpayer retains the right to petition the U.S. Tax Court within 90 days of the deficiency notice. The 30-day deadline is not the last chance; it is the deadline for the pre-assessment Appeals track. If the deadline is missed, act immediately to preserve the Tax Court option.
Small Case Request vs. Formal Written Protest: The Threshold and Strategic Difference
The choice between a small case request and a formal written protest is the first strategic decision in every Appeals case. The threshold is mechanical; the strategy is not.
The $25,000 threshold
A small case request is available when the total amount of proposed additional tax plus penalties is $25,000 or less for each tax year in dispute. The threshold applies per year, not in aggregate across multiple years. A case with two years under examination, each with $20,000 in proposed adjustments, qualifies for small case procedure even though the total across both years is $40,000. The small case request requires only a brief written statement of the taxpayer's disagreement and the reasons for it; the formal written protest requirements do not apply.
When small case procedure is strategically inferior
Even when the case qualifies for small case procedure, the formal protest is often the better choice. Small case procedure offers a more informal conference, but it also creates a thinner record. If Appeals does not resolve the case favorably, the small case record provides less support for a Tax Court case than a well-drafted formal protest would. The formal protest forces the practitioner to articulate the legal and factual position in detail, which strengthens the Tax Court position if needed. For any case with a realistic chance of proceeding to Tax Court, the formal protest is the better procedural investment.
When small case procedure makes sense
Small case procedure is appropriate when the factual issue is narrow, the adjustment is below the threshold, the taxpayer has strong documentation that should resolve the issue at the conference, the case is unlikely to proceed to Tax Court regardless of the Appeals outcome, and the cost of drafting a formal protest (practitioner time and client cost) is disproportionate to the amount at stake. These scenarios do exist, and in those cases the small case request is the more efficient tool. The decision requires a judgment about the complexity of the issues, the strength of the record, and the realistic path of the case.
Formal Written Protest Requirements Under Rev. Proc. 87-24
A formal written protest must comply with the requirements stated in Rev. Proc. 87-24. A protest that is missing any required element may be returned as deficient or may result in the case being treated as not properly before Appeals. The seven required elements are:
Request for Appeals conference
The protest must include a statement that the taxpayer is requesting a conference with the IRS Office of Appeals. This should be explicit, not implied. The statement establishes the document as a protest and initiates the Appeals process; without it, the document may be treated as a response to the examination rather than a request for Appeals review.
Taxpayer identification information
Include the taxpayer's name, address, and taxpayer identification number (Social Security number for individuals, EIN for business entities). For business entity cases, include the entity name, the responsible party's name and contact information, and the EIN. If the case involves multiple related entities or individuals, identify each separately.
Letter date and symbols
Identify the date of the 30-day letter and any identifying symbols or reference numbers on that letter. This allows the Appeals office to match the protest to the correct examination file. Include the Revenue Agent's name, group number, and office location if identified on the 30-day letter.
Tax periods and types involved
Identify each tax year and each tax type that the protest covers. A protest that covers only some of the years at issue will be treated as applying only to those identified years; any year not specifically included will be treated as accepted or not contested. Be precise about year and return type (Form 1040 for 2023, Form 1120-S for 2022, etc.).
Itemized schedule of disputed adjustments
The protest must include an itemized schedule specifically identifying each proposed adjustment the taxpayer is contesting. Adjustments not included in this schedule are treated as accepted. This schedule should mirror the adjustment line items in the Revenue Agent Report so that the Appeals officer can match each contested adjustment to the RAR item. Adjustments the taxpayer concedes should be noted as conceded (not simply omitted) to make the record clean.
Statement of facts under penalties of perjury
A statement of the facts supporting the taxpayer's position on each disputed adjustment is required and must be signed under penalties of perjury. The perjury declaration is a required element; a protest without it is deficient. The statement of facts is also strategically critical: it is the taxpayer's official factual account of the disputed transactions or activities and will be part of the record if the case proceeds to Tax Court. Drafting this statement carefully is the most important single act in the protest process.
Statement of law and authority
The protest must include a statement of the law or other authority supporting the taxpayer's position on each disputed adjustment. This is the legal argument: the IRC provisions, Treasury Regulations, Revenue Rulings, court cases, and other authority that support the taxpayer's return position. This statement does not need to be as detailed as a legal brief, but it should cite specific authority, not merely assert that the IRS is wrong. A legal argument with citations gives the Appeals officer something to evaluate; a general disagreement without legal support does not advance the case.
Drafting the Statement of Facts to Pre-Position for Tax Court
The statement of facts in a formal protest is not merely a narrative for the Appeals officer's benefit. It is the taxpayer's sworn factual account that will be part of the record if the case proceeds to Tax Court. This dual audience (Appeals officer and potential future Tax Court judge) shapes how it should be drafted.
Write to the worst-case scenario
Draft the statement of facts as if Appeals will not resolve the case and the statement will be read by a Tax Court judge. Every factual assertion that is accurate and helpful to the taxpayer's position should be included. Facts that the taxpayer would be embarrassed to state under oath should not be stated at all (which also means the underlying conduct needs to be evaluated for whether it changes the legal analysis). The statement should be specific, chronological, and supported by the documentation in the file.
Avoid overstatement
The perjury declaration is not a formality. Facts stated in the protest as sworn facts that later turn out to be inaccurate, overstated, or contradicted by the client's own records create serious credibility problems at Tax Court. Draft the statement conservatively: state what the records support, not the best version of the story that might be arguable. An Appeals officer or Tax Court judge who finds that the protest overstated the facts will be significantly less receptive to the taxpayer's legal arguments.
Address each adjustment separately
Organize the statement of facts by the adjustment items from the Revenue Agent Report. For each contested adjustment, state the facts that support the taxpayer's position on that adjustment specifically. A general narrative about the taxpayer's business activity is less effective than a focused factual account addressing each proposed disallowance directly.
Drafting the Legal Argument: Citing Authority and Building the Perjury-Statement Framework
The legal argument in a formal protest serves two purposes. For the Appeals officer, it demonstrates that the taxpayer's position has a supportable basis in law, which affects the hazards-of-litigation calculation that governs the Appeals settlement. For Tax Court purposes, it establishes that the return position was based on legal authority, which is relevant to the reasonable basis or substantial authority standards that affect preparer penalties and negligence penalties.
Start with the primary authority
The strongest legal argument cites the applicable IRC provision directly (with the subsection and effective date if relevant), then the Treasury Regulation if there is one interpreting that provision, then any relevant Revenue Ruling or Revenue Procedure, and then case law. Courts and Appeals officers give controlling weight to the IRC, significant deference to Treasury Regulations, and substantial weight to Revenue Rulings and court decisions from the relevant circuit. Private letter rulings are not binding on Appeals but can demonstrate IRS position consistency on similar facts.
Address the agent's legal theory directly
The Revenue Agent Report states the legal authority supporting each proposed adjustment. The protest legal argument should address that authority directly, explaining either why it does not apply to the facts of this case or why the taxpayer's cited authority produces a different result. A protest that ignores the agent's cited authority and simply cites favorable authority for the taxpayer's position leaves the Appeals officer without a clear reason to prefer the taxpayer's reading; a protest that explains why the agent's authority is distinguishable or less persuasive gives the Appeals officer the analytical framework for a favorable settlement.
Filing the Protest: Mailing Requirements and Intake Procedures
The protest is filed with the IRS office that issued the 30-day letter, not directly with the Appeals office. The 30-day letter identifies the address to which the protest should be sent, typically the examining group's address.
Certified mail and documentation of timely filing
Send the protest by certified mail with return receipt requested. The date of mailing (the postmark date for certified mail) is the date of submission for timeliness purposes. Retain the certified mail receipt and the return receipt as evidence of timely filing. If the IRS subsequently claims the protest was late, these documents are the proof. Do not submit the protest by regular mail for any case where the timing is close to the deadline.
What happens when the protest arrives
The examining group receives the protest and reviews it to confirm it meets the threshold requirements (contains the required elements for a formal protest or qualifies as a small case request). If the protest is acceptable, the case file is transferred to the Appeals office. The transfer takes time; the practitioner should not expect immediate contact from the Appeals office. The practitioner can confirm case transfer status by contacting the examining group. Once the case is docketed at Appeals, the Appeals officer will contact the practitioner to schedule the conference.
The practitioner must have a valid Form 2848 on file to receive Appeals correspondence and appear at the conference. If the practitioner's authorization on file with the CAF unit does not specifically cover Appeals matters, a new or amended Form 2848 should be submitted. Verify the authorization covers the specific years and the Appeals proceeding. The practitioner's CAF number is required for Appeals representation. For assistance with e-services account setup and CAF number management, see the IRS e-services practitioner guide.
The Appeals Conference: Format, Ex Parte Rules, and How to Prepare
The Appeals conference is the practitioner's primary opportunity to present the taxpayer's position to an independent reviewer who has authority to settle the case. Understanding the conference format and the rules that govern it is essential preparation.
Conference format options
Appeals conferences are conducted by telephone, by correspondence (for cases where a conference is not requested or necessary), or in person at an IRS Appeals office. Telephone conferences are the default for most examination Appeals cases; in-person conferences are appropriate for complex cases involving substantial amounts, multiple issues, or situations where personal presentation of evidence or testimony is important. The practitioner can request an in-person conference; the Appeals officer has discretion in granting the request.
The ex parte communication restriction: what it means for practitioners
The ex parte communication restriction under RRA 1998 Section 1001 is one of the most frequently misunderstood rules in the Appeals process. The restriction applies to Appeals employees, not to practitioners. Specifically, it prohibits Appeals officers from having one-sided substantive conversations about the merits of a pending case with IRS Examination personnel or Chief Counsel without the taxpayer's representative present or given the opportunity to participate. The purpose is to protect the independence of the Appeals function by preventing examination personnel from influencing Appeals decisions without the taxpayer's participation.
The practitioner's communications with the Appeals officer are unrestricted by the ex parte rule. The practitioner may call the Appeals officer, submit additional documents, present legal arguments, propose settlement terms, and advocate freely. The ex parte rule governs what the Appeals officer can say to IRS Examination, not what the practitioner can say to the Appeals officer.
Verify current Appeals ex parte communication policy in IRM 8.1.7 at IRS.gov for the specific requirements applicable at the time of the conference.
How to prepare for the conference
Before the conference, organize the file by adjustment: for each contested item, have the protest position, the supporting documentation, and the legal authority tabbed and ready. Know the hazards-of-litigation analysis for each adjustment: what is the strongest point in the IRS's favor on that issue, and what is the strongest point in the taxpayer's favor? The Appeals officer will conduct their own hazards analysis; the practitioner who understands both sides of each issue can address the IRS's strongest arguments proactively rather than reactively. Come prepared to propose specific settlement terms on each issue, not just to argue that the IRS is wrong.
Settlement Authority: What the Appeals Officer Can and Cannot Agree To
Appeals officers have meaningful but limited settlement authority. Understanding those limits helps the practitioner direct the negotiation efficiently and avoid spending conference time on proposals that the Appeals officer cannot accept.
Standard settlement authority
For most examination cases involving factual disputes or legal issues with genuine hazards of litigation on both sides, the Appeals officer has authority to settle the case at a percentage of the proposed adjustment that reflects the estimated probability that the IRS would prevail in Tax Court. An issue where the IRS has a strong legal position but weak factual support might settle at 50 cents on the dollar; an issue where the IRS has both strong legal and factual support might settle at 80 cents or more. The practitioner's job is to shift the Appeals officer's assessment of those hazards in the taxpayer's favor. Verify the current delegation orders governing Appeals officer settlement authority in IRM 8.6 at IRS.gov.
Limits on settlement authority: coordinated issues and Counsel sign-off
Certain categories of issues require Counsel involvement or territorial manager approval before Appeals can settle them. Verify the current delegation orders governing settlement officer authority at IRS.gov (IRM 8.6); settlement officers cannot approve certain coordinated issues or cases requiring Counsel sign-off without appropriate delegation. Coordinated issues are issues on which the IRS Chief Counsel has taken a formal position or issued coordinated issue guidance; Appeals officers are generally bound by that guidance and cannot settle coordinated issues below the Counsel-approved position without Counsel approval. If a case includes a coordinated issue, the practitioner should expect a more structured negotiation with less Appeals officer discretion on that specific issue.
KNOW WHICH ISSUES ARE COORDINATED BEFORE THE CONFERENCE
Coordinated issues are identified in the IRS's Coordinated Issue Papers, which are publicly available on IRS.gov. If the examination report cites a coordinated issue paper, the practitioner should read it before the conference to understand the IRS's official position and what flexibility (if any) exists. Presenting a settlement proposal on a coordinated issue that the Appeals officer cannot accept wastes conference time; structuring the proposal around the Counsel-approved framework is more productive.
Appeals Coordination Cases: When Chief Counsel Is Involved
When a case involves coordinated issues or issues that have been designated by Counsel for coordinated treatment, the Appeals process changes. The Appeals officer remains the point of contact for the taxpayer's representative, but Counsel is involved in reviewing and approving any settlement proposal that affects the coordinated issue.
Coordination cases take longer to resolve than standard Appeals cases because each proposed settlement on a coordinated issue requires Counsel review. Practitioners working coordinated issue cases should factor additional time into their expectations for the Appeals process and should ensure that the client understands the longer timeline. For cases involving significant coordinated issues where Counsel involvement makes Appeals settlement unlikely, the decision to petition Tax Court early (to access the docketed Appeals conference with Counsel participation) may be more efficient than pursuing pre-assessment Appeals.
If Appeals conduct in a specific case raises concerns about whether the ex parte restriction or other procedural rules were followed, see the IRS OPR investigation and Circular 230 guide for the procedures governing misconduct referrals and practitioner obligations when facing procedural violations in IRS proceedings.
After Appeals: Executing the Closing Agreement and Form 870-AD
When Appeals settles a case, the settlement is memorialized in writing. The form that closing takes depends on the type of settlement and the stage at which it occurs.
Form 870-AD: the standard Appeals closing document
Form 870-AD (Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and of Acceptance of Overassessment) is the standard document used to memorialize a settlement with IRS Appeals. It waives the taxpayer's right to receive a Notice of Deficiency before assessment and reflects the agreed settlement amounts. The mutual concession language in Form 870-AD (the taxpayer waives certain rights; the IRS agrees not to reopen the settlement for the same year on the same issues absent specific grounds) provides stronger finality protections than Form 870 executed at the examination level. Review the Form 870-AD carefully before signing; the agreed amounts and the issues covered must match the settlement that was reached at the conference.
Closing agreement (Form 906)
For cases where the parties want the settlement to have the force of a closing agreement (binding on both the taxpayer and the IRS as to the specific facts and issues addressed), a formal closing agreement under IRC 7121 (Form 906 or Form 907) is used. Closing agreements are appropriate when the settlement involves facts or law applicable to future years, when both parties want finality on complex issues, or when the IRS wants to ensure the taxpayer cannot take a different position on the same issue in a later year. Closing agreements require Counsel approval and take longer to execute than Form 870-AD settlements.
When Appeals does not resolve the case
If the Appeals conference does not produce a settlement, the case returns to the standard post-examination path. The IRS issues a Notice of Deficiency, and the taxpayer's primary remedy is to petition the U.S. Tax Court within 90 days. The Tax Court petition practitioner guide covers the DAWSON electronic filing procedure, the small case procedure eligibility for Tax Court, and what the IRS concession rate in Tax Court means for settlement leverage after filing. A case that did not settle at pre-assessment Appeals often settles in the docketed Appeals conference that occurs after a Tax Court petition is filed.
Appeals as Tax Court Negotiation Leverage: How a Filed Petition Changes the Dynamic
One of the most valuable and least understood dynamics in IRS controversy practice is the change in Appeals settlement posture that occurs when a Tax Court petition has been filed. This dynamic affects how practitioners should think about the relationship between Appeals and Tax Court as a unified controversy strategy, not two separate sequential steps.
The docketed case conference
When a taxpayer petitions Tax Court after a Notice of Deficiency, the case is docketed and assigned to an IRS Counsel attorney, who handles the case on the IRS side. Before trial, the IRS routinely returns docketed Tax Court cases to Appeals for a settlement conference. This docketed conference often produces more favorable settlements than the pre-petition Appeals conference for two reasons: the IRS has incurred costs and the Counsel attorney now has a realistic assessment of trial risk; and the taxpayer's Tax Court petition signals that they are prepared to litigate, which changes the IRS's hazards-of-litigation calculation in the taxpayer's favor.
Using the petition as settlement leverage
A practitioner who understands this dynamic can use the Tax Court petition as a strategic tool even when the actual intent is to settle rather than try the case. Filing the petition is not a commitment to trial; it is an action that changes the incentive structure for both parties. The practitioner must be prepared to follow through to trial if the IRS does not make a reasonable settlement offer; using the petition purely as a bluff, without genuine litigation preparation, is a strategy that experienced IRS Counsel attorneys can identify and exploit. The petition should be filed only when the practitioner is genuinely prepared to represent the client through trial if settlement is not reached.
The most efficient appeals posture begins during the examination itself, before a 30-day letter is issued. The correspondence exam IDR response and upgrade prevention guide covers how to manage the IDR response process in a correspondence examination to contain scope, reduce the issues that reach the protest stage, and prevent an upgrade to a more resource-intensive field examination.
IMPORTANT: THIS GUIDE IS INFORMATIONAL, NOT LEGAL ADVICE
This guide is informational and does not constitute legal advice. IRM references and procedural details should be verified at IRS.gov before relying on them in any specific matter. Cases involving large-dollar adjustments, coordinated issues, or potential Tax Court litigation may benefit from legal counsel with experience in IRS controversy practice.
Regulated Claims and Verification Requirements
The following items in this guide are subject to IRS policy, IRM updates, or statutory changes: (1) Ex parte communication restriction: the restriction under RRA 1998 Section 1001 applies to Appeals employees communicating with other IRS functions, not to the practitioner; verify current Appeals ex parte policy in IRM 8.1.7 at IRS.gov. (2) Settlement officer authority: verify current delegation orders in IRM 8.6; settlement officers cannot approve certain coordinated issues or cases requiring Counsel sign-off without appropriate delegation. (3) Missing the 30-day letter deadline: the taxpayer retains Tax Court rights after receiving the Notice of Deficiency, even if the 30-day deadline was missed; the 30-day deadline eliminates the pre-assessment Appeals conference, not all contest options. (4) Rev. Proc. 87-24 formal protest requirements: verify that no subsequent guidance has modified these requirements at IRS.gov before filing. (5) Coordinated issue cases: verify which issues are designated as coordinated in the IRS Coordinated Issue Papers at IRS.gov before the conference.
Related Guides in the IRS Controversy Cluster
Appeals is one step in the IRS controversy workflow. These guides cover the adjacent stages:
- IRS Field and Office Examination Practitioner Guide: the upstream stage from which the 30-day letter and proposed adjustments originate
- Tax Court Petition Practitioner Guide: the downstream step when Appeals does not resolve the dispute, covering DAWSON electronic filing, S-case procedure, and settlement leverage
- IRS Collection Due Process (CDP) Hearing Guide: the collection-side Appeals track, which runs separately from the examination-side Appeals process covered here
- IRS OPR Investigation and Circular 230 Guide: OPR referral procedures relevant when Appeals misconduct or practitioner conduct during the Appeals process is at issue
- IRS e-Services Practitioner Guide: CAF number management and e-services account setup required for Appeals representation
Frequently Asked Questions
What is the difference between a small case request and a formal written protest?
A small case request is available when the proposed additional tax plus penalties is $25,000 or less per tax year. It requires only a brief statement of the disagreement. A formal written protest is required when the amount exceeds $25,000 per year and is the better strategic choice in most cases because it creates a more complete record for potential Tax Court use. The formal protest must include all seven required elements under Rev. Proc. 87-24, including a statement of facts under penalties of perjury and a statement of legal authority.
What are the required elements of a formal protest under Rev. Proc. 87-24?
The seven required elements are: (1) a statement requesting an Appeals conference; (2) taxpayer name, address, and identification number; (3) the date and symbols from the 30-day letter; (4) the tax periods and types involved; (5) an itemized schedule of each disputed adjustment; (6) a statement of facts supporting the taxpayer's position, signed under penalties of perjury; and (7) a statement of the law or other authority supporting each disputed position. A protest missing the perjury declaration on the statement of facts is deficient.
Does the ex parte communication restriction limit what a practitioner can say to the Appeals officer?
No. The ex parte communication restriction under RRA 1998 Section 1001 applies to Appeals employees communicating with other IRS functions (Examination, Counsel), not to the practitioner. The practitioner may communicate freely with the Appeals officer: call them, submit additional evidence, present arguments, and propose settlement terms without restriction from the ex parte rule. The rule protects the independence of Appeals by preventing IRS Examination from influencing Appeals decisions without the taxpayer's representative present. Verify current Appeals ex parte policy in IRM 8.1.7 at IRS.gov.
What happens if the taxpayer misses the 30-day letter deadline?
Missing the 30-day letter deadline eliminates the pre-assessment Appeals conference but is not the final opportunity to contest the adjustment. The IRS will issue a Notice of Deficiency (90-day letter), and the taxpayer retains the right to petition Tax Court within 90 days of that notice. The 30-day deadline is not the last chance to fight the adjustment; it is the deadline for the pre-assessment Appeals track. If the deadline is missed, act immediately to preserve the 90-day Tax Court window after the deficiency notice issues.
How does a Tax Court petition change the Appeals settlement dynamic?
Filing a Tax Court petition changes the IRS's incentives. The case is docketed and assigned to an IRS Counsel attorney; IRS Appeals then holds a second conference on the docketed case before trial. This docketed conference often produces more favorable settlements because the IRS has incurred costs, Counsel has assessed trial risk, and the taxpayer's petition signals genuine willingness to litigate. A practitioner who understands this dynamic can use the Tax Court petition as settlement leverage, but only when genuinely prepared to litigate if the IRS does not settle. The petition should not be filed as a bluff.