The IRS Appeals Office handles more appeals from Collection than appeals for Examinations.

1. Context.
   After examination, a taxpayer may disagree with the position taken by the IRS. Instead of using the court system to resolve the dispute, the taxpayer may appeal the case to the Appeals Office of IRS. The Appeals Office is separate and independent from the examiners of the IRS. An appeal allows someone with a new perspective to analyze the taxpayer’s argument. Appeals can consider only issues within the scope of the tax law, but may not consider issues based on moral, religious, political, constitutional, conscientious, or similar grounds.
2. Filing a Small Case Request
   1. To be eligible for a small claim request, the total amount of tax, penalties, and interest for each tax period must be less than $25,000.
   2. A small case request should request Appeals consideration and state and support the disagreements from examination.
3. Filing a Formal Protest
   1. Taxpayers that are challenging examination of an employee plan, of a partnership or S corporation case, or in all other cases that do not qualify under a small case request, must file a formal written protest.
   2. A formal protest should include contact information, a request for Appeals consideration, a copy of the letter showing the proposed findings that are being challenged, the tax periods involved, a list of the changes not agreed with, the facts and law supporting the challenging position, and the taxpayers signature under penalty of perjury.
4. Appeals Judicial Approach and Culture Initiative (AJAC)
   1. All Appeals officers must comply with AJAC. Appeals must refer cases back to Examination or Collections where there is new information or documentation presented. Appeals may not raise new issues and will not open closed ones.
   2. "Appeals may consider new theories and/or alternative legal arguments that support the parties’ positions when evaluating the hazards of litigation… but the officer will not develop evidence that is not in the case file." Memorandum for Appeals Employees, AP-08-0713-03, Attachment 5 (July 18, 2013)
5. Conference
   1. Appeals officers act both as a judge to find the correct interpretation of the law as applied to the facts, and also as the advocate for the IRS. At the hearing, the officer argues the position of the examiner. But during review, the officer must analyze the facts, law, and litigating prospects as objectively as possible.
   2. Appeals officer’s information is restricted to only the report made by the original examiner, and information presented by the taxpayer. Information presented by the taxpayer is not restricted by the Federal Rules of Evidence or the Tax Court Rules, therefore the Appeals officer may consider all relevant information. If settlement through Appeals is unsuccessful, all information disclosed by the taxpayer during the Appeals process may be used in later court proceedings as admission at a trial.
   3. The Appeals conference first goal is to enlarge areas of agreement of fact or issue. The taxpayer is then asked to make a specific proposal to dispose the issue, and the Appeals officer can either agree to or disagree with the settlement.
6. Settlement. Settlement is possible when the taxpayer can demonstrate that there is a substantial uncertainty, either in fact or law, or both, as to the correct application of the law.
   1. Non-Docketed Cases
      1. Settlements are not final until agreed upon by the taxpayer and by a reviewing officer in the Appeals Office.
      2. Non-Docketed Cases will be concluded when both parties agree on a settlement, and the statement is received by the Commissioner (Form 870) or accepted on behalf of the Commissioner (Form 870-AD).
   2. Docketed Cases
      IRS counsel and the Appeals Division share authority to make a settlement.
   3. Appeals officers are instructed to approach settlement using the "hazards-of-litigation" standard. The Appeals officer will consider:
      1. The provable facts;
      2. The effect of the testimony likely to be presented; and
      3. The expected interpretation and application by the court of the Code provisions and applicable regulations in the light of decided cases.
   4. Types of Settlement Offers. The Appeals Officer may consider offered by the taxpayer that demonstrate a good-faith effort to settle.
      1. Mutual concession settlements occur when the IRS and taxpayer both agree that there would be uncertainty if the issue went to litigation because of strengths in both parties’ arguments. Therefore, to settle the case both parties make concessions.
      2. Split-issue settlements occur when a trial would result in an all or nothing win for either the taxpayer, or the IRS, but not both. The settlement reflects the relative strengths of the arguments.
      3. Nuisance value settlements are offers to eliminate the inconvenience or cost of further negotiations or litigation and unrelated to the merits of the case. The IRS may not consider the nuisance value in settling a case.