When an examination finishes in disagreement, the file does not go straight to court. It goes to the Independent Office of Appeals, whose function is to resolve disputes without litigation.
The distinction that matters is what Appeals may weigh. A revenue agent applies the law to the facts as developed and proposes an adjustment. Appeals is permitted to consider the hazards of litigation — the realistic prospect that the government would lose, in whole or in part, if the case were tried. That single difference is why cases that looked immovable at examination frequently settle here.
How a case gets to Appeals
Usually by filing a written protest in response to the examination report, within the period the letter states. Where the amount in dispute is small enough, a shorter small case request is permitted instead.
A protest is not a complaint. It is a legal document, and a good one does specific work: it identifies the adjustments in dispute, sets out the facts with reference to the evidence, states the law relied on, and explains why the government would have difficulty sustaining its position. A protest that simply asserts disagreement invites a conference that goes nowhere.
What an Appeals conference is actually like
Less formal than most people expect. It is usually a telephone or video conference with a single Appeals officer who has read the file. There is no judge, no rules of evidence, and no transcript.
The officer will generally have views about the weak points on both sides. The conversation is about what the case is worth given the risk each side carries, which is a different conversation from the one that happens with an examiner.
What Appeals can and cannot do
- It can settle an issue on a percentage basis, reflecting litigation risk
- It can consider new arguments, and in some circumstances new evidence, though introducing material the examiner never saw may cause the case to be returned for review
- It can resolve penalties separately from the underlying tax
- It cannot be approached by the examiner privately about the merits — the independence is structural, not merely stated
- It cannot help if the protest deadline was missed, though other routes may remain
Appeals is the last inexpensive stop. After it, the route is a Notice of Deficiency and a petition to the United States Tax Court, which is a different order of time and cost. Cases are worth preparing properly here rather than treating Appeals as a formality on the way to something else.
If Appeals does not resolve it
The IRS issues a Notice of Deficiency. That letter starts a 90-day period to petition the United States Tax Court, and in most circuits the deadline is treated as jurisdictional — it should not be relied on as extendable. What that notice means is set out here.
Filing a petition often returns the case to Appeals in any event, but from a stronger position, because the government is then evaluating a case it may actually have to try.
What to do now
If you have an examination report and disagree with it, find the deadline stated in the letter for filing a protest and treat it as firm. Then work out which adjustments are worth contesting, which is a question about evidence and litigation risk rather than about how unfair the result feels.
Preparing a protest?
The quality of the protest shapes the conference. Send the examination report and the deadline stated in it. No charge for that conversation.
If your notice has a date on it, start now.
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