New procedures designed to restore confidence in Appeals' independence, improve efficiency.

• Author: Burquest, Patti
• Position: IRS Office of Appeals

The IRS Office of Appeals operates independently from the IRS's compliance functions (Examination, Collection, and Accounts Management) and from the Office of Chief Counsel. Its mission is to resolve tax controversies administratively, without resorting to litigation, on a basis that is fair and impartial to both the government and the taxpayer and in a manner that enhances voluntary compliance and public confidence in the IRS's integrity and efficiency.

Consistent with its mission, Appeals should not perform compliance activities or undertake investigative actions or fact finding. The compliance functions should conduct those matters, leaving Appeals to focus solely on the impartial resolution of taxpayers' unagreed technical or factual matters. Appeals reviews the facts of the particular issue and applies statutory, judicial, and administrative authorities to determine an appropriate resolution. Appeals also holds the delegated authority to settle issues on the basis of hazards to the IRS if it were to litigate a case.

Appeals settles the majority of cases that come under its jurisdiction; however, it is believed to have historically sustained less than 50% of the adjustments proposed by Examination. Despite this low sustention rate, many Appeals officers try to salvage poorly developed cases that come to them by performing additional factual development themselves to ensure a good factual foundation on which to base a settlement. When this occurs, Appeals risks creating the perception that it is not independently evaluating the case because the Appeals officer has a "stake" in the additional factual development. Thus, any settlement of the issue could be perceived as not impartial and not a fair resolution.

The Appeals Judicial Approach and Culture (AJAC) project began in 2012 as a review of Appeals policies and procedures to ensure consistency with its mission. The project's findings have resulted in a number of policy changes that have begun to be implemented. New provisions of the Internal Revenue Manual (IRM) have been drafted and circulated (see "Memorandum for Appeals Employees," AP-08-0714-0004, July 2, 2014, and "Memorandum for SB/ SE Examination Executives," SBSE-040814-0064, Aug. 28, 2014, available at tinyurl.com/lk7uvpx and tinyurl.com/ n9psacr, respectively). These changes affect not only Appeals procedures, but also how Examination develops its cases and how taxpayers access Appeals. The general effective date for these new policies was Sept. 2,2014, for cases that come into Appeals after that date. Key...