According to the IRS’s own statistics, appeals on average result in a tax bill that’s 40% lower than the amount originally proposed.
IRS Appeals Officers are hired to settle cases and their performance is evaluated by how quickly they close appeals cases, not on how much revenue they manage to generate.
IRS statistics show that 70% of appeals cases are settled in a way that’s satisfactory to the taxpayer making the appeal.
The main advantage of filing an appeal is that it gives the taxpayer a chance to resolve the case without the expense of litigation.
A taxpayer or his representative may discuss and negotiate a case informally with the Appeals officer rather than in the stricter adversarial arena of a docketed case in Tax Court. Moreover, the rules of evidence are not adhered to in Appeals. A taxpayer may thus provide information in support of his position that would not be admissible at trial. For example, affidavits and documents may be submitted in lieu of the live (and often expensive) testimony of witnesses who are subject to cross-examination.
Requesting an appeals conference preserves the taxpayer’s rights to receive reasonable litigation costs.
The appeals process also delays payment of the amounts at issue.
The IRS will delay issuing a notice of deficiency if a case is in Appeals, provided sufficient time remains before expiration of the statute of limitations.