When can I appeal an IRS decision?

Whenever the IRS proposes a tax change, denies a refund, assesses a penalty, or takes a collection action you disagree with. The appeal must be filed within the deadline stated on the IRS notice (usually 30 to 90 days). After the deadline, your options narrow significantly.

Does an appeal automatically pause collection?

An accepted appeal usually pauses collection while it is reviewed by the IRS Office of Appeals. Filing alone is not enough; the appeal has to be properly drafted and accepted. We file in a way that triggers the pause.

What is the IRS Office of Appeals?

An independent office within the IRS that resolves disputes without litigation. Officers there have authority to settle cases on a 'hazards of litigation' basis, meaning they can negotiate based on what would likely happen in court, not just what the auditor decided. It is a real shot at a different outcome.

Can I appeal a state tax decision the same way?

The process varies by state, but most states have a formal appeals procedure for sales tax, franchise tax, and income tax decisions. We handle state appeals alongside federal, which is common when an IRS adjustment cascades into state liability.

How long does the appeal process take?

From filing to resolution, IRS appeals typically take 6 to 12 months. State appeals vary from 3 to 18 months depending on the state and the complexity of the case. Most are resolved before reaching court.

What does an appeal cost?

The cost depends on the complexity of the case, the amount in dispute, and whether state and federal appeals are running together. We give an exact quote after reviewing the underlying notice and the company's tax history.

IRS and state tax appeals

Sometimes the IRS, or a state revenue department, makes a decision the founder thinks is wrong. A penalty assessed against a small mistake. A deduction denied without enough explanation. A back-tax demand based on an audit that missed key documents. A sales tax adjustment that ignores the company's nexus position. Each of these is a candidate for appeal.

Most founders, on receiving the notice, either pay it or freeze. Both responses are usually wrong. The right course is to read the notice carefully, identify the deadline, and decide whether the underlying decision merits a challenge. Below is the framework we walk every client through when one of those notices arrives.

The deadline is non-negotiable.

Every IRS notice and every state assessment includes a deadline by which an appeal must be filed. The deadline is printed clearly, usually 30, 60, or 90 days from the notice date. After it passes, the appeal route is closed.

If the deadline is missed, the remaining options are to pay the assessment and sue for a refund (a much harder path), or to negotiate an offer in compromise (a much narrower path). Neither preserves the strong leverage the appeals process gives.

First step on every notice: identify the deadline. Second step: decide whether to appeal. Both should happen within the first week of receiving the notice.

What the IRS Office of Appeals actually does.

The IRS Office of Appeals is an independent office within the IRS, separate from the agents who proposed the original adjustment. Its officers are explicitly empowered to settle cases based on the 'hazards of litigation' standard: what would likely happen in court if the case were tried.

That standard is what makes the appeals process useful. The auditor who proposed the adjustment is not allowed to consider the hazards of litigation; they apply the rules as written. The appeals officer can. Many cases that look unwinnable at the audit stage settle favorably at appeals because the officer is allowed to weigh the practical realities, not just the regulation.

An appeal is not a complaint. It is a structured legal protest that the IRS Office of Appeals is required to consider on its merits, not on the auditor's first call.

Cases we appeal.

There are several recurring categories where we file appeals on behalf of clients. The pattern is similar across them: a federal or state agency made a decision, the company has a substantive disagreement, and the appeal preserves leverage to settle.

IRS audit adjustments proposing additional tax
Penalty assessments (failure to file, failure to pay, accuracy-related)
Denials of refund claims
Trust fund recovery penalties on responsible officers
Innocent spouse or injured spouse relief denials
Collection due process appeals (CDP) on liens or levies
State sales tax assessments after a nexus or audit dispute
State franchise tax adjustments

What we draft and file.

An appeal is built around a formal written protest. The protest has to identify the items in dispute, state the specific legal and factual basis for disagreement, and request an appeals conference. We draft the protest, attach supporting documentation, and file it within the notice's deadline.

Once accepted, the case moves to an appeals officer. We represent the company at the appeals conference, negotiate, and finalize the resolution. If the case settles, we document the settlement and confirm it with the agency. If it doesn't, the case can move to Tax Court, but that is a different engagement.

A representative reviewing case papers ahead of an appeal.

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Months from filing to typical IRS appeals resolution

When a state appeal runs in parallel.

An IRS adjustment frequently cascades into the state. If the IRS recomputes federal taxable income, the state automatically recomputes state taxable income based on the federal change. If the state then assesses additional state tax, that assessment also has to be appealed within the state's own deadlines.

We coordinate the federal and state appeals when both are open, so settlements at the IRS level translate cleanly to the state. Without coordination, founders settle the federal issue and find a state assessment waiting six months later that uses outdated numbers.

A US government building at night, the institutional context of every tax appeal. — We file appeals in every state and at the federal level for clients across the 50 states.

What the appeal does not do.

An appeal does not erase the underlying issue. It is a structured negotiation about what the right answer is. If the IRS audit was correct on the merits, the appeal will not change the outcome; it will just confirm it. The appeal works when there is a substantive disagreement, when documentation supports a different position, or when the original decision over-applied a rule.

We tell you, after reviewing the notice, whether we believe the appeal has a real shot. If we don't, we recommend a different path (penalty abatement, installment agreement, or simply paying and moving on). The appeal is a tool, not a default.

IRS appeals.