Bill Would Make Hearings Before IRS Office of Appeals a Taxpayer Right

Chris Gaetano
Published Date:
Jul 17, 2017

A bi-partisan bill introduced in the House, if passed, would make having a hearing before the IRS Office of Appeals a right that all taxpayers have, according to Accounting Today.

Currently, the IRS can decline to refer a case to the Office of Appeals if the Division Counsel or a higher level Counsel official determines that such a referral would not be in the interest of sound tax administration, according to IRS guidance. For instance, in a case involving a significant issue common to other cases in litigation for which it is important that the IRS maintain a consistent position, or in cases related to a case over which the Department of Justice has jurisdiction. The IRS can also decline to pass a case over to Appeals in the event it is "designated for litigation." A case could receive such designation for many different reasons, outlined in other IRS guidance, but generally happens when the IRS believes wants to establish a judicial precedent, conserve resources, or reduce litigation costs for the IRS and taxpayers. The IRS gave the example of industry-wide issues or tax shelter matters. 

The bill, The Preserving Taxpayers’ Rights Act, would only allow the IRS to designate a case for litigation only when it involves a tax abuse that is a recurring, significant legal issue affecting a large number of taxpayers. It would also require that the IRS use designated summonses that extend the time period for the IRS to assess a tax liability only when the taxpayer is uncooperative and refuses to prove information requested. It The bill would also prohibit the IRS from hiring an outside law firm to conduct a federal tax audit, out of concern that this could become a routine practice. 

The bill is sponsored by Rep. Jason Smith, R-Mo., and is co-sponsored by Judy Chu, D-Calif., Carlos Curbelo, R-Fla., George Holding, R-N.C., Terri Sewell, D-Ala., and Mike Thompson, D-Calif.

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