3.1 Right to Administrative Appeal

The IRS must issue a 30-day notice of the right to appeal a proposed adjustment to the client’s taxes, notices of federal tax liens, notices of intent to levy, denial or termination of an installment agreement, or denial or termination of an Offer in Compromise. To obtain an appeal with the IRS Appeals Office, the taxpayer must file an appeal within 30 days of the notice. If this appeal deadline is not met, the taxpayer may face unnecessary levies. Missing the deadline may also limit the taxpayer’s remedy to a Tax Court petition, which entails additional costs and delays beyond an appeal to the IRS Appeals Office.

An appeal to the IRS Appeals Office is not a requirement for Tax Court review. Because the court’s review of initial determinations of tax liability or innocent spouse relief is de novo, proceeding through the IRS Appeals Office may not be necessary in those cases. However, for collection disputes, the failure to timely take an administrative appeal will, as a practical matter, prevent success in the Tax Court, which will employ an abuse-of-discretion standard and may decline to review issues not raised at the appeal hearing.1

• 1The abuse-of-discretion standard governs judicial review of collection due process appeal determinations on lien, levy, installment agreement, and offer-in-compromise decisions unless tax liability or innocent spouse relief issues are involved. Murphy v. Comm’r, 125 T.C. 301, 307 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006). Absent special circumstances, the Tax Court will not consider new evidence in an abuse-of-discretion case that is not related to an issue raised in the appeal hearing. See Giamelli v. Comm’r, 129 T.C. 107 (2007).