IRS Appeals Large Case Pilot Program Ends

By and on May 6, 2020

More than three years ago, the Internal Revenue Service (IRS) revised the Internal Revenue Manual to provide IRS Appeals Division (Appeals) with discretion to invite representatives from the IRS Examination Division (Exam) and IRS Office of Chief Counsel (Counsel) to the Appeals conference. The IRS also started a three-year initiative for taxpayers under the Large Business & International (LB&I) Division with cases assigned to Appeals Team Case Leaders (ATCLs). Under the initiative, LB&I personnel from Exam and Counsel were invited to the non-settlement portion of the taxpayer’s Appeals conference to test whether the participation of both parties would assist Appeals in narrowing and resolving complex factual and legal differences.

The IRS announced that the initiative ended on May 1, 2020. The IRS has invited comments from the public about the initiative and its effectiveness. Such comments should be submitted by August 31, 2020.

The practice of inviting Exam team members and Counsel to the taxpayer’s Appeals conference generated significant controversy. In response to taxpayer concerns, certain clarifications were made. These included making clear that personnel from Exam and Counsel were not to participate in settlement discussions and mediation should not be used by ATCLs as a method of securing a settlement.

We have represented several taxpayers where Exam team members and Counsel have participated in the taxpayer’s Appeals conference. In some instances, Exam and Counsel did not hesitate to interrupt our presentation, disrupting the flow of the conference. When this occurred, we would request that the ATCL exert more control over the conference and prevent any interruptions until we had finished a point. We also had instances where ATCLs would ask Exam and Counsel what they thought was a fair settlement, which we did not view as appropriate.

Practice Point: Taxpayers and practitioners, particularly those anticipating upcoming Appeals conferences, may want to consider submitting comments on this issue. Our experience is that it is much easier to resolve matters on favorable terms when taxpayers and their representatives can speak directly to ATCLs without having everything filter through Exam team members and Counsel. Moreover, there is a mechanism in which you can change a typical Appeals conference into more like a mediation where Exam is involved in the negotiations; it is called Rapid Appeals. But when Exam is entrenched in its position, from our experience, the sooner you can discuss the issue directly and solely with the Appeals Officer, the better.

We have previously commented on changes at Appeals.

Andrew R. Roberson
Andrew (Andy) R. Roberson focuses his practice on tax controversy and litigation matters. He represents clients before the Internal Revenue Service (IRS) Examination Division and Appeals Office and has been involved in over 75 matters at all levels of the federal court system, including the US Tax Court and Federal District Courts, several US Courts of Appeal and the Supreme Court. Andy has experience settling tax disputes through alternative dispute resolution procedures, including Fast Track Settlement and Post-Appeals Mediation, and in representing clients in Compliance Assurance Process (CAP) audits. In addition to representing corporations and partnerships in tax disputes, he also represents high net-worth individuals and assists taxpayers needing to make voluntary disclosures. Read Andy Roberson's full bio.

Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.