Effective October 1, 2016, the IRS has revised the Internal Revenue Manual (IRM) instructing Appeals Officers that most Appeals conferences will be held by telephone instead of in person. The changes to the IRS are in response to the dwindling IRS budget and lack of manpower. IRM Section 184.108.40.206.1 instructs Appeals officers that all conferences are to be held by telephone unless the taxpayer requests a face-to-face meeting in a case which meets certain criteria. The revisions to the IRM provide guidance for when an in-person conference is appropriate. Appeals will consider the following facts and circumstances in making the decision to hold in-person conferences:
- There are substantial books and records to review that cannot be easily referenced with page numbers or indices;
- The Appeals employee cannot judge the credibility of the taxpayer’s oral testimony without an in-person conference;
- The taxpayer has special need (e.g. disability, hearing impairment ) that can only be accommodated with an in-person conference;
- There are numerous conference participants (e.g. witnesses) that create a risk of an unauthorized disclosure or breach of confidentiality;
- An alternative conference procedure (e.g., Post Appeals Mediation or Rapid Appeals Process) involving separate caucuses will be used; and
- Another IRS section specific to the workstream calls for an in-person conference.
If the case does not meet any of these criteria for a face-to-face meeting, the Appeals officer is instructed to offer the taxpayer or representative a virtual conference as an alternative.
The decision by the IRS to do away with face-to-face Appeals conferences in conjunction with cases being assigned to Appeals offices anywhere in the country has raised substantial concerns. For example, an IRC Section 183 hobby loss case involving a cattle ranch in Texas may be assigned to an Appeals officer in another state. The rancher/taxpayer may doubt that the Appeals Officer based in another state will have adequate knowledge of market forces, weather conditions and other ranching issues that may be central to the case. In addition, the inability of the Appeals officer to judge the credibility of the taxpayer’s oral testimony regarding the time and effort expended at the ranch may require a taxpayer to seek judicial review, when a face-to-face meeting with an Appeals officer would have resolved the case.
A link to the revised IRM Appeals Conference section is here.