Tax Law Center Blog

The IRS Independent Office of Appeals, often seen as a crucial last stop for resolving tax disputes before litigation, is taking a significant step toward greater transparency. A blog post by the National Taxpayer Advocate (NTA) last week highlights a new internal policy that directly impacts tax practitioners and their clients.

Historically, the Appeals Office has been reluctant to share the Appeals Case Memorandum (ACM) with taxpayers. The ACM is a vital internal document that outlines the Appeals Officer’s analysis of a case, including the facts, applicable law, and the rationale behind their final determination. While this document has routinely been shared with IRS Compliance personnel, its inaccessibility to taxpayers created a critical information asymmetry that undermined a taxpayer’s ability to understand their case and decide on a path forward.

In response to the NTA’s long-standing advocacy for automatic disclosure, the Appeals Office has finally issued new internal guidance. While this guidance stops short of automatic sharing, it reminds Appeals agents that they are now to provide a copy of the ACM to a taxpayer or their representative upon an informal request. This is a positive and consequential development for several reasons:

• Upholding Taxpayer Rights: This change reinforces the Taxpayer Bill of Rights, which grants taxpayers the right to be informed and the right to a fair and just tax system. Providing the rationale behind an Appeals decision is fundamental to these rights.
• Leveling the Playing Field: The new guidance ensures that taxpayers and their representatives, particularly those who are well-informed and professionally represented, have access to the same critical information as the government. This allows for a more informed and potentially more effective resolution process.
• Empowering Practitioners: For tax professionals, this is a clear signal that you have the right to request and receive this document. It removes the ambiguity that previously surrounded these requests and provides an avenue to gain a deeper understanding of the IRS’s position, which is invaluable for advising clients on whether to accept an offer or proceed with litigation.

While this new policy is not a final solution and the NTA continues to advocate for automatic disclosure, it is an important victory for procedural fairness and transparency. As practitioners, it is now more important than ever to be aware of your right to this information and to leverage it strategically on behalf of your clients.

Contact us for a consultation to learn more about how our firm can assist you with your client’s tax controversy and appeals matters.