IRS Appeals Implements Stupid Policy of Not Sending Initial Contact Letters

I have a client who filed a Tax Court petition in late September. She is disputing additional tax from an Automated Underreporting Unit (AUR) notice. She didn’t respond to the initial AUR notice, so the way to resolve this is to file a Tax Court petition and get this in front of IRS Appeals. I have a Power of Attorney for my client; I expected to hear from IRS Appeals in three to five months.

When I got in yesterday morning I had a message from someone identifying themselves as an IRS Appeals officer out of Philadelphia. When I returned the call I discovered he was the assigned Appeals Officer in the case. I also discovered that:

– In the past for a case sent to Tax Court the IRS sent a letter to the petitioner (and her representative) noting that the case was being assigned to an IRS Appeals Officer with the hope of settling the case;
– IRS policy has changed, and these letters are no longer being sent;
– Now the initial contact would be by phone with no letter being sent; and
– Even after my calling the Appeals Officer there’s no way for me to receive correspondence showing that the Appeals Officer has been assigned to the case.

In this particular case I am certain that this Appeals Officer is working on the case (he had details of the case that were not public). However, I do not want to just take the say-so of a voice on the phone. Hasn’t the IRS Appeals Office heard of identity theft? Perhaps they’ve heard of the IRS Phone Scams? This week also is “National Tax Security Awareness Week;” it appears that the IRS Appeals Office should consider how their security appears to tax professionals.

The IRS recently mandated that, “ALL initial taxpayer contacts to commence an examination must be made by mail using approved form letters. [emphasis in original]” Similar rules now apply for payroll tax examinations and FTD Deposit Alerts. The Appeals Office policy of calling first is, to be blunt, stupid.

An initial contact letter (or fax) costs a couple of dollars to send out. It informs the taxpayer and his representative that a specific individual has been assigned to the case, their contact information (address, phone and fax numbers), and gives official notification of the assignment. (It also usually gives the name of the Appeals Officer’s Manager.) The cost for sending out this letter is likely less than five dollars. This is a minimal cost. I don’t know exactly how much the Appeals Officer I spoke to yesterday makes, but I can guarantee he spent more than five dollars worth of his salary proving to me that he was assigned to the case.

Hopefully the powers that be at the IRS will realize that this is a very penny-wise, pound-foolish policy. In these days of identity theft and phony IRS phone calls how am I to know that Appeals Officer Smith really is an Appeals Officer rather than a scammer?

IRS, please reconsider.

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