IRS Office of Chief Counsel

In October 2016, the Internal Revenue Service (IRS) revised the Internal Revenue Manual (Manual) 8.6.1.4.4 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. Many tax practitioners opposed this change, believing that it undermines the independence of Appeals and may lead to a breakdown in the settlement process.

In May 2017, the American Bar Association (ABA) Section of Taxation submitted comments recommending the reinstatement of the long-standing Manual provision regarding the limited circumstances for attendance by representatives from Exam and Counsel at settlement conferences. Additionally, the Tax Section’s comments were critical of the practice whereby some Appeals Team Case Leaders (ATCLs) in traditional Appeals cases are “strongly encouraging” IRS Exam and the taxpayer to conduct settlement negotiations similar to Rapid Appeals or Fast Track Settlement, such that many taxpayers do not feel they can decline such overtures. The Tax Section comments suggested that the use of Rapid Appeals Process and Fast Track Settlement should be a voluntary decision of both the taxpayer and IRS Exam and the use of these processes should be the exception rather than the rule. Continue Reading Appeals Large Case Pilot Program Draws Criticism

We have covered on several occasions the changes in the past year to the IRS Appeals process. See here, here, here, here and here. The reactions from taxpayers and practitioners to the recent changes has, for the most part, been negative.

On May 9, 2017, the American Bar Association Section of Taxation provided comments to the Commissioner of the Internal Revenue Service regarding the recent changes at IRS Appeals (Comments). The comments, which can be found here, can be summarized as follows:

  • First, we recommend that Appeals reinstate the long-standing Internal Revenue Manual (Manual) provision regarding limited circumstances for attendance by representatives of the Service’s Examination divisions (Compliance) and the IRS Office of Chief Counsel (Counsel) at settlement conferences.
  • Second, we recommend that Appeals return the option for face-to-face settlement conferences to taxpayers.
  • Third, we recommend that Appeals publicly reaffirm that independent Appeals Technical Employees may, in all cases, evaluate the hazards of litigation on positions taken by Counsel.
  • Fourth, we offer some observations and suggestions regarding informal issue coordination in Appeals.
  • Fifth, we support the recent reaffirmation of Appeals Team Case Leader (ATCL) unilateral settlement authority.
  • Finally, we reiterate our recent comments with respect to docketed cases in Appeals’ jurisdiction.

Practice Point: We are observing many of the same changes in practices that are discussed in the Comments. Taxpayers and their advisors need to understand and be prepared for the different procedures and approaches being employed at IRS Appeals. These changes appear to be leading down a road where settlements may be more difficult to accomplish and, as a result, we may see an increase in tax litigation.

In further changes to the Internal Revenue Service (IRS) Appeals Division, it was recently announced that Donna C. Hansberry will replace Kirsten B. Wielobob as chief of IRS Appeals. Ms. Hansberry is currently the deputy commissioner of the Tax Exempt and Government Entities Division. She started as a trial attorney for the IRS Office of Chief Counsel in 1987 and was previously assistant to the commissioner (attorney-advisor for tax). Ms. Weilobob will move to the position of deputy commissioner for services and enforcement.

There have been very significant changes to IRS Appeals during the last several months that challenge whether the division will continue to be a successful tool for taxpayers and the IRS to resolve difficult cases that are stuck at the Exam Division. The “changing of the guard” may be a sign of more changes to come. Indeed, Ms. Hansberry was formerly a trial attorney and was in charge of the Joint International Tax Shelter Information Centre, director of global high wealth and abusive transactions. For prior coverage on changes at IRS Appeals, see our previous articles:

“More Changes to IRS Appeals Procedures”

“IRS Appeals – Changes Afoot?”

“IRS Updates Rules Regarding Appeals Conferences”