Awards & Recognition
If the IRS proposed adjustments to your federal tax return, your next move will often decide whether the matter ends in a negotiated civil resolution or snowballs into years of additional tax, penalties, and interest. In the wrong fact pattern, a poorly managed audit can also create “badges of fraud” that increase the risk of criminal tax referrals. At the Tax Law Offices of David W. Klasing, our dual-licensed Attorneys and CPAs build IRS appeals presentations that are fact-driven, legally grounded, and calibrated to how the IRS Independent Office of Appeals actually settles cases. We focus on controlling the record, reducing penalty exposure, and keeping matters civil whenever the facts allow.
What IRS Appeals is and Why it Works When You Do it Correctly
The IRS Independent Office of Appeals exists to resolve federal tax controversies without litigation on a basis that is fair and impartial to both the government and the taxpayer. Appeals does not “redo” your audit. Appeals evaluates your case through a different lens, including the hazards of litigation and the strength of the administrative record you present.
In January 2025, the Treasury Department finalized regulations under the Taxpayer First Act framework that govern how Appeals considers cases and identifies exceptions and procedural requirements. Those rules apply to requests for Appeals consideration made on or after February 14, 2025, which makes the current, procedure-focused strategy essential.
The Practical Timeline: 30-Day Letter, Notice of Deficiency, and Tax Court Protection
Most IRS exam disputes follow a predictable sequence, and deadlines drive strategy:
30-day Letter and Protest
In many examinations, the IRS issues a letter outlining proposed changes and providing appeal rights. You typically request Appeals through a written protest, and you must send it to the address shown on your IRS letter rather than to Appeals.
For eligible matters where the total amount for any tax period is $25,000 or less, the IRS generally allows a simplified request using Form 12203.
Statutory Notice of Deficiency
If you do not resolve the matter in Exam or you do not secure Appeals consideration before the IRS issues a notice of deficiency, you typically must protect your rights by filing a petition in the U.S. Tax Court within 90 days (150 days if the IRS addresses the notice to a person outside the United States).
The U.S. Tax Court currently requires a $60 filing fee, and you file petitions electronically through the Court’s DAWSON system.
Audit Reconsideration and AUR Disputes
If you missed earlier opportunities, moved, or never received correspondence, audit reconsideration may be an option in appropriate cases, particularly when you can provide new information or documentation. Underreporter notices (often CP2000 situations) have their own dispute path that can still reach Appeals in many cases through the correct process.
New York Fact Patterns that Commonly Drive Appeals Disputes
New York taxpayers and closely held businesses often encounter recurring audit themes that become winnable in Appeals when you rebuild the record correctly:
- Schedule C substantiation and “personal” expense reclassification (contractors, consultants, professional practices, and side businesses).
- 1099 and third-party mismatch cases (including payment platform reporting and bank deposit analyses).
- Real estate issues (depreciation, repairs vs. improvements, passive activity limits, short-term rental classification, and basis documentation).
- S corporation and partnership issues (basis, debt basis, distributions, reasonable compensation, and K-1 reconciliation).
- Payroll and employment tax disputes (worker classification, payroll shortfalls, and trust fund exposure that can become personal liability issues).
- Penalty cases (accuracy-related penalties, late filing and late payment penalties, and civil fraud assertions in high-risk audits).
Appeals outcomes turn on proof and credibility. You do not “argue” your way out of missing documents. You build a record that makes the IRS’s litigating position weaker than your documented position.
How We Build an Appeals Record that Appeals Can Actually Settle
1) Control the First Contact and the First Narrative
Your first written response and your first production decisions shape the file that Appeals later reviews. A measured attorney-routed response sets tone, preserves privilege where available, and prevents the IRS from building a willfulness narrative out of avoidable statements.
2) Fix the Administrative File Before it Reaches Appeals
Appeals officers decide cases from the record. We reconstruct income, basis, and deductions from bank data, third-party reports, accounting records, and credible supporting documentation. We present an indexed package that ties each exhibit to a specific adjustment. Publication guidance on the exam and appeals process supports this document-first approach.
3) Present Hazards of Litigation, Not Rhetoric
Appeals settles disputes by evaluating litigation risk and the strength of each side’s position. We frame issues under the Internal Revenue Code, Treasury Regulations, and controlling precedent. We identify factual gaps and legal exposure that make the IRS’s position harder to sustain if the dispute moves toward Tax Court.
4) Protect Appeals’ Independence and Enforce Process
Appeals must avoid prohibited ex parte communications that compromise independence. When process defects arise, we address them directly and keep the matter on a clean procedural track.
5) Use ADR tools when they shorten timelines or break impasse
For suitable cases, we consider Fast Track Settlement or Post-Appeals Mediation as tools to resolve narrow disputes efficiently.
Appeals Conferences: What to Expect
Appeals conferences often occur by phone, video, or in person, depending on the case, the posture of the issue, and scheduling realities. IRS guidance explains the general structure and expectations, including that Appeals gives the case a fresh look and evaluates strengths and weaknesses. You can authorize representation on Form 2848 when you want counsel to speak for you, and you should treat that step as part of risk control, not just convenience.
Avoidable Mistakes that Derail Strong Appeals
Missing Deadlines
You must calendar and meet each deadline. Even when narrow equitable tolling principles exist in limited contexts, you should never rely on them.
Overproducing Disorganized Records
Dumping unsorted files often expands the scope, prolongs the case, and creates new questions. At the Tax Law Offices of David W. Klasing, we deliver a curated, indexed evidentiary packet that proves the points we want proved and avoids volunteering harmful material.
Using the Wrong Messenger in Sensitive Cases
CPAs and EAs can represent taxpayers administratively in many settings, but only attorneys provide attorney-client privilege and work-product protection. In high-risk audits where intent and knowledge matter, that distinction can decide whether the case stays civil.
Contact the Tax Law Offices of David W. Klasing in New York for IRS Appeals Representation
You should treat an IRS audit appeal as a controlled litigation-prep exercise, not a paperwork exchange. Appeals officers settle cases by evaluating the hazards of litigation and the strength of the administrative record, so the quality of your record often determines the outcome. At the Tax Law Offices of David W. Klasing, our team builds appeals presentations that match how Appeals actually decides cases. We reconstruct income, basis, and deductions with forensic precision, resolve information-return mismatches with documentary proof, and submit a targeted, indexed evidentiary package that ties each exhibit to a specific adjustment. That approach narrows issues, reduces penalty exposure, and positions your case for a principled settlement rather than an arbitrary compromise.
Clients also choose us because we manage risk from the first contact and keep matters civil whenever the facts allow. When you retain the Tax Law Offices of David W. Klasing, you retain a legal team that includes a dual-licensed Attorney-CPA practice, and the firm’s CPAs are employees of the Tax Law Offices of David W. Klasing. We route communications through counsel and structure accounting work as part of the legal defense team to maximize attorney-client privilege and work-product protections where the law allows. That structure matters when the IRS asks intent-based questions, threatens penalties, or pushes for interviews that can create avoidable exposure. We also use the right procedural tools at the right time, including Fast Track Settlement or mediation options when they help resolve narrow disputes efficiently, and we maintain Tax Court readiness from the outset so the government takes your file seriously.
David’s proven proficiency is now available in New York city at our appointment-only satellite office, providing both legal and federal tax services in one place—at a single hourly billing rate. We have introduced a flexible scheduling option that allows our clients to reserve a 4-hour slot at any of our satellite locations. David W. Klasing will travel to any of our satellite offices to meet with you personally. This option must be preceded by a one-hour phone or GoToMeeting consultation to warrant incurring the travel expenses and opportunity costs. We have designed this service to benefit our clients, with no additional travel expenses added to your bill. Call us at 1-(808)-518-2380 or complete our online contact form today.
