current update on irs appeals division and other acronyms ......feb 20, 2014 · appeals mission...

Current Update on IRS Appeals Division and Other Acronyms, Including AJAC, RAP, ADR and NII

Sheldon M. Kay Troy L. Olsen February 20, 2014

©2014 Sutherland Asbill & Brennan LLP

Polling Question

How many times have you been before Appeals? A. More than 10 B. 5-10 C. Less than 5 D. What’s Appeals?


Overview

• Appeals mission, structure and statistics • Appeals Judicial Attitude and Culture (AJAC) • Alternative Dispute Resolution (ADR) changes • Rapid Appeals Process (RAP) • New Information Initiative (NII) • Practice tips


Appeals Mission

Resolve tax controversies, without litigation, on a basis which is fair and impartial to both the government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Internal Revenue Service.


Statistical Snapshot

FY 2011 FY 2012 FY 2013

Total Staffing* 2,111 1,981 1,829

Total Receipts 148,327 135,061 123,113

Receipts Mix % Collection % Exam

59% 42%

55% 45%

54% 46%

Total Closures 142,553 144,453 131,176

* Total On-Rolls at Year End


Appeals Receipts

WORKSTREAM FY 2012 FY2013

Collection Due Process (CDP)

51,126 44,684

Offers-in-Compromise 9,496 9,695 Innocent Spouse 2,703 4,284 Penalty Appeals 11,507 10,336 Coordinated Industry Cases

120 98

Industry Cases 2,276 2,153 Examination/TE/GE 42,454 38,306 Other 15,379 13,557


Office of Appeals – Current State (Post-Realignment)

Kirsten Wielobob Chief, Appeals

Michael Julianelle Deputy Chief, Appeals

Nikole Flax Special Assistant

Jennifer Vozne Director,

Specialty Ops

De Lon Harris Director,

Field Ops, West

Bryan Musselman Director,

Strategy and Finance

Susan Latham Director,

Policy, Quality and Case Support

VACANT Director,

Campus Ops

Scott Reisher Director,

Field Ops, East

Area 1 Philadelphia

Area 2 (Collection) Charlotte

Area 3 Nashville

Area 4 Philadelphia

Area 13 (Collection) Nashville

Area 7 Oklahoma

Area 8 San Francisco

Area 9 Riverside

Area 11 (Collection) San Francisco

International Operations

Domestic Operations

ATCL Operations

Art Appraisal Services

Area 5 Brookhaven

Area 6 Memphis

Area 10 Ogden

Area 12 Fresno

Account & Processing Support

Technical Support

TPP Exam, TE/GE & ADR

TPP Collection & Processing

AQMS

Business Systems Planning

Learning and Education

Human Capital Programs

Strategic Planning/ Measures Analysis

Finance


Appeals Independence

• IRS Restructuring and Reform Act of 1998 (RRA 98), section 1001(a) requires the IRS to: Ensure an independent appeals function within the IRS,

including the prohibition of ex parte communications between Appeals Officers and other IRS employees to the extent that such communications appear to compromise the independence of the Appeals Officers.


Appeals Independence (cont’d)

• An “ex parte communication” is: A communication that takes place between any Appeals

employee (e.g., Appeals Officers, Settlement Officers, Appeals Team Case Leaders, Appeals Tax Computation Specialists) and employees of other IRS functions, without taxpayer/representative being given an opportunity to participate in the communication.

• Administrative guidance: Rev. Proc. 2012-18 (effective 5/15/12).

• What are your options if there has been a violation of the ex parte rules?


Polling Question

What is the remedy for a breach of the ex parte communication rule?

A. The ex parte breach tax credit B. The right to challenge interest accrued during the Appeals

process C. Criminal charges against the offending IRS employees D. The right to transfer the case to another Appeals employee

or office E. No specific remedy


Appeals Judicial Approach and Culture

• History Project initiated two years ago in response to concerns

raised by internal and external stakeholders, including Appeals employees.

• Policy Changes December 2012: two Trust Fund Recovery related changes. July 2013: Interim Guidance issued on 12 policy changes

(see AP-08-0713-03 at www.irs.gov/file_source/pub/foia/spder/AP-08-0713-03.pdf).

Implementation of remaining changes planned for FY 2014.

http://www.irs.gov/file_source/pub/foia/spder/AP-08-0713-03.pdf


Appeals Judicial Approach and Culture (cont’d)

• Overview Procedural changes are being implemented to improve

efficiency and perceptions of Appeals independence. Returns Appeals to a quasi-judicial approach in case

management so it can fulfill its mission of resolving disputes in an impartial manner without performing compliance roles. Appeals Officers are not investigators or examiners. Instead, Officers are tasked with weighing the merits of

each parties’ positions and litigation prospects.



• Interim Guidance (AP-08-0713-03) effective 7/18/13 – Key Changes to Examination Cases Appeals will not raise new issues or reopen issues agreed to

by taxpayer and Compliance (revised Policy Statement 8-2). New issues in docketed cases. New issues versus new arguments.

Centralizes dissent procedures. Appeals will attempt to settle a case on hazards when case

submitted by Compliance is not fully developed and taxpayer presents no new information or evidence.

Clarifies that Appeals hearing officers should not assist Compliance with case development.



• Interim Guidance (AP-08-0713-03) – Key Changes to Collection Cases Appeals will accept any Collection Information Statement that Collection

reviewed within 12 months. In Offer in Compromise (OIC) cases, Appeals will only consider assets

documented by Collection or introduced by taxpayer. In OIC cases, Appeals will not value an asset in excess of value

determined by Collection. Clarifies when Appeals can reject an OIC for reasons not considered or

documented by Collection. Clarifies when Appeals can consider an alternative basis for an OIC. Clarifies Appeals’ authority to accept an OIC even if Counsel disagrees. In Collection Appeals Program (CAP) hearings, limits Appeals

consideration to whether action was appropriate. In CAP hearings, limits decisions to sustaining Collection or directing

Collection to take corrective action.



• New Information Initiative Changes will cover various topics, including new procedures

for handling certain new information provided to Appeals. Appeals will release jurisdiction or get Large Business and

International’s (LB&I) analysis when new information is received from taxpayer.

Criteria for release may vary based on workstream and circumstances.

On large cases not meeting the release criteria, LB&I will be given an opportunity to review and comment while the case remains in Appeals.

Changes will help ensure Appeals employees are not performing investigative functions and taxpayers are afforded a true appeal.


Polling Question

Which of the following Appeals programs have you participated in? (Answer all that apply)

A. Traditional Appeals B. FTS C. FTM D. RAP E. Early Referral F. Arbitration G. Post Appeals Mediation


Rapid Appeals Process (RAP)

• Overview Uses mediation techniques to convert Appeals

preconference into working meeting for Appeals, LB&I and taxpayer.

Voluntary process. Traditional Appeals process used if either party objects.

Appeals is decision maker for all disputed issues for IRS. Either party may withdraw at any time.

• Program Benefits Can significantly reduce time in Appeals. Uses best practices from Fast Track Settlement.


Alternative Dispute Resolution (ADR)

• Fast Track Settlement (FTS) • Early referral • Post-Appeals mediation • Arbitration


ADR – Update

• May 2013 – Appeals detailed a team to implement ADR reforms recommended by several sources, including the Harvard Negotiation and Mediation Clinical Program.

• August 2013 – SB/SE FTS expanded nationwide. • January 2014 – new ADR pages went live on www.irs.gov,

including: New mediation self-help tool to explain to taxpayers and

practitioners what mediation programs are available and how to apply.

Toll-free hotline to help taxpayers and practitioners with questions about SB/SE FTS. Toll-free within the U.S. (855) 857-9769. Outside of the U.S. (not toll-free) (281) 721-7140. Messages will be returned within 1-2 business days.

http://www.irs.gov/


Alternative Dispute Resolution (ADR) – Receipts

PROGRAM FY 2012 FY2013

Fast Track Settlement – SB/SE

64 165

Fast Track Settlement – LB&I

124 105

Fast Track Settlement – TE/GE

6 11

Post-Appeals Mediation (Non-Collection)

71 88

Post-Appeals Mediation (OIC/TFRP)

23 11


Considerations when Preparing Protests

• Evaluate whether to make arguments or concede issues – credibility consideration.

• Weigh benefits of filing a full protest versus a skeletal protest.

• Protest should only address specific issues raised by the Agent.

• Order of issues – strongest to weakest. • Schedule of issues.


Common Errors in Protests

• Personal, aggressive attacks on exam personnel. • Protest does not address the core issue causing the

disagreement or challenge the Agent’s conclusions and authorities.

• Protest does not “stand-alone.” • Statement of facts not developed to support

taxpayer’s position.


Best Practices for an IRS Appeal

• Be proactive Communicate early, often and openly. Agree to timeframes and meet them. Be prepared to discuss specifics at first meeting.

• Set reasonable expectations • At conferences

Be organized. Be thorough. Be open. Be prepared.


Questions?

Sheldon M. "Shelly“ Kay Partner [email protected] 404.853.8965 Atlanta

Troy L. Olsen Counsel [email protected] 202.383.0963 Washington, DC

current update on irs appeals division and other acronyms ......feb 20, 2014 · appeals mission...

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