An administrative appeal is not risk free. In addition to finding more support for a revenue agent’s adjustment, it is possible that an Appeals officer may raise new issues. New issues are not to be raised unless the ground for such action is substantial and the potential effect on tax liability is material. New issues cannot be raised for bargaining purposes. Nevertheless, it is somewhat more likely that a new issue will be raised by an Appeals officer than by District Counsel where a taxpayer chooses to go to Tax Court.
If the Appeals officer does raise a new issue in a nondocketed case, the burden of proof is on the taxpayer, whereas the burden is on the IRS for any new issue raised in its answer to the Tax Court petition.