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MSP #09: APPEALS

Staffing Challenges and Institutional Culture Remain Barriers to Quality Taxpayer Service Within the IRS Independent Office of Appeals

TAS Recommendations and IRS Responses

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1.

TAS RECOMMENDATION #9-1

Continue efforts to increase hiring of APS personnel and AOs while designing career paths that encourage advancement and retention within Appeals.

IRS RESPONSE TO RECOMMENDATION: IRS agrees to implement the TAS recommendation in full.

We appreciate the National Taxpayer Advocate’s recognition that Appeals has taken steps to increase the hiring of APS personnel and Appeals Officers while designing career paths that encourage advancement and retention within Appeals.

Appeals has developed an ambitious and tailored recruitment strategy to attract qualified applicants. We promote job openings during external job fairs and on college websites, through social media, and using a QR code that takes interested candidates directly to USAJobs.gov opportunities in Appeals for external candidates. Appeals also leverages Servicewide programs to attract diverse candidates and veterans, as well as Servicewide incentive opportunities, including the Employee Bonus Referral Program. We developed two IRS publications – Publications 5484 and 5502 – to describe career paths available in Appeals and created templates to assist specifically with APS recruitment by describing skills, knowledge, value, role, impact, and salary range. We’ve also partnered with the Human Capital Office to examine our position descriptions for APS vacancies with a goal of improving qualified candidate pools.

To encourage advancement and improve retention within Appeals, we created career ladders for our Appeals Officers that increase their promotion opportunities. We are also exploring options to enhance the career path for APS tax examiners who are responsible for the administrative intake and closing of cases, which is critical to the appeals process.

CORRECTIVE ACTION: N/A – Actions have already been completed.

TAS RESPONSE: TAS commends Appeals for the steps it has taken to hire and retain APS personnel and Appeals Officers. These efforts should help reverse the erosion of personnel and expertise that have jeopardized the achievement of Appeals’ mission in recent years. Reinforcing the resiliency of Appeals’ staffing should help taxpayers achieve fair and timely administrative case resolutions.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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2.

TAS RECOMMENDATION #9-2

Dedicate resources, including circuit riding to cities without an Appeals presence, to provide meaningful in-person conferences expeditiously and without the need for burdensome travel on the part of taxpayers and practitioners.

IRS RESPONSE TO RECOMMENDATION: ​​IRS agrees to implement the TAS recommendation in full.

Appeals is committed to leveraging available conferencing options for all taxpayers and representatives, regardless of where an individual resides. We are updating our policies and communications to ensure taxpayers and representatives understand that Appeals offers conferences by telephone, video, and in person, and that it is generally their choice how to meet with us. We are taking steps to improve access to in-person conferences across Appeals, including in campus cases. We offer in-person conferences to all taxpayers, including those who reside in states with little or no permanent Appeals presence, at locations that are reasonably convenient to all parties. The assigned Appeals Officer can travel to hold an in-person conference at an IRS facility closer to the taxpayer, as needed. Appeals’ ability to hold an in-person conference in the taxpayer’s preferred location, though, may be limited due to regulatory requirements or the availability of Appeals technical employees with subject matter expertise.

CORRECTIVE ACTION: Appeals is committed to leveraging available conferencing options for all taxpayers and representatives, regardless of where an individual resides. We are updating our policies and communications to ensure taxpayers and representatives understand that Appeals offers conferences by telephone, video, and in person, and that it is generally their choice how to meet with us. We are taking steps to improve access to in-person conferences across Appeals, including in campus cases.

TAS RESPONSE: Appeals’ emphasis on providing taxpayers and their representatives with a range of conference options is well-tailored to meet the various needs of taxpayers. Likewise, TAS appreciates the efforts Appeals is undertaking to make in-person conferences readily available to all taxpayers, regardless of their location. We urge Appeals to continuously expand its geographic footprint and the scope of its circuit riding as budgets and staffing permit.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 4/15/2024

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3.

TAS RECOMMENDATION #9-3

Empower AOs to make independent decisions on their assigned cases, with technical guidance coordinators and other subject matter experts limited to advisory roles in all but the rarest situations.

IRS RESPONSE TO RECOMMENDATION: ​IRS agrees to implement the TAS recommendation in part.

Appeals empowers Appeals Officers to make independent decisions on their assigned cases. We regularly emphasize their important role as impartial arbiters who listen to taxpayers to understand and resolve their disputes with the IRS. We provide our employees with best-in-class training and many continuing education opportunities.

In certain specialized cases, the Appeals Officer may coordinate with other Appeals employees, such as international specialists, Technical Guidance Coordinators, engineers, appraisers, and economists, for assistance – akin to how a law or accounting firm may employ in-house experts on specialty topics. These individuals are all Appeals employees located in designated Appeals offices, and many are trained Appeals Officers. Indeed, Appeals’ international specialists have individual cases they work as an Appeals Officer and also engage in issue coordination activities with Appeals Officers working other cases. It is essential to taxpayer fairness for Appeals to have a way to coordinate issues and ensure consistency in settlements nationwide. See IRM 8.7.3.2.2, Appeals Coordinated Issues.

CORRECTIVE ACTION: N/A – Actions have already been completed.

TAS RESPONSE: Independent Appeals Officers who are empowered to make case-specific decisions based on the facts before them are integral to a quality administrative appeals function. Appeals emphasizes the importance of objective and unbiased proceedings, which are an important element of independence. We have no issues with the occasional use of various experts and other resources by individual Appeals Officers, provided that these officers retain the ability to arrive at their own independent case resolutions. While the desire for consistency among case outcomes is understandable, Appeals must be careful that this effort does not preclude Appeals Officers from addressing cases on their own unique merits. A one-size-fits-all approach is antithetical to the mission of Appeals, and Appeals should not seek to impose uniformity. Instead, it should limit the discretion of Appeals Officers in only the rarest of circumstances.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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4.

TAS RECOMMENDATION #9-4

Change the IRM to require that all ACMs be shared with both the taxpayer and the Compliance function and, where post-settlement conferences are held, taxpayers must be invited to attend, even if in a monitoring capacity.

IRS RESPONSE TO RECOMMENDATION: IRS does not agree to implement the TAS recommendation.

The appeals process involves two-way negotiation between the taxpayer and Appeals Officer with the objective of resolving a tax dispute in a manner that fairly represents the hazards of litigation to the taxpayer and the government. Appeals conferences are the key way in which Appeals hears the taxpayer’s position, understands the legal and factual considerations informing the taxpayer’s dispute with the IRS, and is able to propose a resolution to the taxpayer. During the conference, the taxpayer and their representative engage with Appeals in discussing potential settlements. At the conclusion of their case, the taxpayer and representative should clearly understand exactly how and why their case was resolved. Appeals settlements resolve only the tax years at issue, and the settlement is not binding in future tax years of that taxpayer and sets no precedent for other taxpayers.

Compliance is generally not present for the settlement discussions. Appeals shares the final Appeals Case Memorandum (ACM) memorializing the case resolution with Compliance so that Compliance can also understand the reasons for the settlement reached between the taxpayer and Appeals. ACMs have no precedential value.

Similarly, post-settlement conferences are held to help Compliance understand the rationale for the Appeals decision. Post-settlement conferences are available only in cases originating from the IRS’s Large Business & International Division and worked by an Appeals Team Case Leader in Appeals, some of the largest and most complex cases received in Appeals. These conferences are informational only. They are not a forum for Compliance to express disagreement with or critique the Appeals resolution. See IRM 8.7.11.13, Post Settlement Conference.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS appreciates the care that Appeals puts into taxpayer conferences, including the emphasis on negotiation and the importance of the taxpayer and representative understanding the rationale for the settlement. Nevertheless, when Appeals prepares ACMs or holds post-settlement conferences to communicate case resolutions to Compliance, there is every reason to offer these communications to taxpayers as well. Doing so would increase transparency and allow taxpayers certainty that, as Appeals assures TAS, these communications are purely informational, have no precedential value, and are not an invitation for Compliance to critique the resolution.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A