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MEMORANDUM TO: Joaquin Smith FROM: Mell Hamlyn, Tax Advisor DATE: January 20, 2024 SUBJECT: In-Depth Guidance on IRS Audit Appeals Process and Recommendations for Strategic Approach Dear Joaquin Smith, I hope you are doing well. I am writing per our previous correspondence related to the subject matter. Accordingly, as we progress from the IRS examination of your Form 1040, I believe we must consider planning and preparing for the next step, which is the audit appeals process. This phase offers an opportunity to challenge the IRS's initial findings and to seek a more favorable resolution. In line with this, I’ve written this memo to outline the process and provide some strategic insights on the matter. 1 Comprehensive Overview of the Audit Appeals Process As I have mentioned before, the Internal Revenue Service (IRS) appeals process is a pivotal mechanism for taxpayers seeking to challenge the IRS's decisions. This process is a critical juncture in tax disputes, providing a pathway for resolution outside the traditional court system, thereby saving time and resources. Nonetheless, experience has taught me that it would be best for taxpayers to know this process as it allows another level of opportunity to question any decisions of the IRS without too much hassle and resources needed to do so. 1 Initiating the Appeals Process with a Written Protest The cornerstone of the appeals process is the written protest. It is for this reason that this document should not only contain your formal objection but also provide complete and in-depth details about your disagreements with the IRS's findings. Based on my experience, the protest should be meticulously crafted, presenting a well-structured argument that combines factual data with pertinent tax law references. Every point of contention must be clearly articulated, supported by evidence, and aligned with specific tax codes, regulations, and relevant case law precedents. Studies show that the main goal is to create a cohesive and persuasive document that effectively communicates your stance and its legal basis.[Owens, J., & Pemberton, J. L. (2021). Cooperative Compliance: A multi-stakeholder and sustainable approach to taxation. Kluwer Law International BV.] 2 The Role of the IRS Appeals Office: Per the Internal Revenue Manual (IRM), this office functions independently from the IRS examination division, ensuring an impartial review of your case. However, while the Appeals Office is designed to settle disputes through administrative procedures, understanding in great detail the operational framework of the Appeals Office is critical to further improve one’s fighting chance to win the case. In short, their approach is informed by the "hazards of litigation" principle, where they assess the likelihood of different outcomes if the case were litigated.[Olson, N. E. (2020). Institutionalizing Advocacy: Some Reflections on the Taxpayer Advocate Service's Evolution as an Advocate for Taxpayers. Pitt. Tax Rev., 18, 11.] 2 Delving into Options and Tax Court Considerations As I have mentioned earlier, engaging in the IRS appeals process requires a strategic (and well-prepared) approach, starting with an attempt at resolution through direct dialogue with the IRS auditor or thei...