Specific Types of Representation · Representing a taxpayer before Appeals

Enrolled agent appearance at an Appeals conference

The rule

An enrolled agent may represent a taxpayer at an Appeals conference on the same footing as an attorney or a certified public accountant. Circular 230 § 10.3(c) admits enrolled agents to practice before the Internal Revenue Service, and Appeals is part of the Internal Revenue Service. Nothing about an Appeals conference requires an attorney, and the enrolled agent’s authority there is limited only by the scope of the power of attorney on file.

The proceedings themselves are informal, and the regulation says so directly (Reg. § 601.106(c)). Proceedings before Appeals are informal; testimony under oath is not taken, although matters alleged as facts may be required to be submitted as affidavits or declared true under penalties of perjury. Taxpayers may represent themselves or designate a qualified representative, and the conference and practice requirements of Circular 230 and Subpart E govern who that may be.

Beyond that, Reg. § 601.106(f) sets out nine numbered rules governing practice before Appeals. Four of them shape how a representative should prepare.

• Rule I states the Appeals officer’s duty: to hew to the law and the recognised standards of legal construction, and to determine the correct amount of tax with strict impartiality as between the taxpayer and the Government, without favouritism or discrimination between taxpayers.
• Rule III gives the taxpayer a right of recourse against a reviewer. Where the Appeals officer recommends acceptance of the taxpayer’s settlement proposal, or in the absence of a proposal recommends action favourable to the taxpayer, and a reviewing officer in Appeals disapproves it in whole or in part, the taxpayer must be told and — on written request — is accorded a conference with the reviewing officer. The rule may be disregarded where delay would injure the Government, as with an imminent limitations expiry or dissipating assets.
• Rule VI is the evidence rule, and it bites. A taxpayer cannot withhold evidence from the examining function and expect to introduce it for the first time before Appeals, at a non-docketed conference, without being subject to having the case returned for reconsideration. Where newly discovered evidence is submitted for the first time to Appeals in a non-docketed case, Appeals may in its discretion transmit it back for consideration and comment.
• Rule VII limits the number of bites. Where the taxpayer has had the benefit of a conference before Appeals in the pre-statutory notice status, or where the opportunity for one was offered and not taken, there will be no conference before Appeals in the 90-day status after the statutory notice is mailed, absent unusual circumstances.

How it works in practice

Get the power of attorney right before anything else. Form 2848 must cover the type of matter, the tax form and the periods in dispute. A power of attorney drawn for an examination year does not carry into a related year Appeals decides to take up, and Appeals will not discuss a period the form does not name.

Ask for the case file. IRC § 7803(e)(7) entitles a specified taxpayer whose conference has been scheduled at their own request to the non-privileged portions of the case file on the disputed issues — excluding documents the taxpayer supplied — before the conference. Above the statutory thresholds the request is a courtesy, but it is still worth making. The point of the timing is preparation, which is why electing to expedite and receive the file on the day of the conference should be a deliberate trade rather than a default.

Prepare the conference as an argument about hazards, not a re-run of the audit. The Appeals officer is not reviewing the examiner’s work for error; they are deciding what the case is worth in light of what would happen in court. A representative who arrives with the same submission the examiner rejected has given the officer nothing new to weigh. What moves an Appeals conference is a clear statement of the disputed issue, the facts of record that support the taxpayer, the authority those facts satisfy, and a candid acknowledgement of where the record is weak.

Bring the evidence early or explain why it is late. Rule VI is the reason. Documents held back during the examination and produced for the first time at Appeals invite the case being sent back — which loses months and forfeits the goodwill the conference depended on. Where evidence is genuinely newly discovered, say so and say when it surfaced.

Communications are constrained in both directions. Section 1001(a)(4) of the IRS Restructuring and Reform Act of 1998 directed the Commissioner to ensure an independent appeals function, “including the prohibition … of ex parte communications between appeals officers and other Internal Revenue Service employees to the extent that such communications appear to compromise the independence of the appeals officers.” Revenue Procedure 2012-18 implements that directive, superseding Rev. Proc. 2000-43. Where Appeals needs to discuss a case with the originating function, the taxpayer or representative must be given an opportunity to participate: if no mutually acceptable time can be agreed, Appeals notifies the taxpayer of the date and time the discussion will occur, and afterwards shares the substance of it and gives a reasonable period to respond. If the rules are breached, Appeals employees are directed to ask the taxpayer or representative for input on an appropriate remedy, and the final decision on the remedy is made by a second-level manager. The rules do not apply to communications between Appeals and Counsel about cases docketed in the Tax Court.

Know the boundary of the enrolled agent’s authority. Representation before Appeals is squarely within practice before the IRS. Representation before the Tax Court is not: an enrolled agent may appear there only by being admitted to the Tax Court bar, which for a non-attorney requires passing the Court’s own examination. Where a case may be petitioned, that boundary should be discussed with the client before the 90 days start running, not after.

How this has changed

The nine rules of Reg. § 601.106(f) date to an era of district directors, regional commissioners and Appellate Divisions, and the vocabulary in the regulation has not been modernised. The substance has survived reorganisation: the informality of proceedings, the absence of oath, the evidence rule, the single-conference rule and the reviewer conference all continue to describe current practice, and IRM Part 8 restates them. A reader meeting these rules for the first time should read past the obsolete job titles rather than concluding the rules are dead letters.

Two things have genuinely changed. The IRS Restructuring and Reform Act of 1998 directed an independent appeals function and a prohibition on compromising ex parte communications; Rev. Proc. 2000-43 implemented it and Rev. Proc. 2012-18 superseded that, moving from a question-and-answer format to a narrative one, adding a taxpayer role in choosing the remedy for a breach, and confirming that the rules do not reach Appeals–Counsel communications in docketed cases. Then the Taxpayer First Act of 2019 put the independence of Appeals into the Code at IRC § 7803(e) and added the case file access right at § 7803(e)(7), which is the single most useful new tool a representative has in preparing a conference.

Exam focus

This item is tested lightly. Know that an enrolled agent may represent a taxpayer before Appeals without limitation beyond the power of attorney, and that Appeals proceedings are informal with no testimony under oath. Know that a taxpayer who was offered an Appeals conference before the statutory notice and declined it will not ordinarily get one afterwards. If the exam reaches the ex parte rules, the point being tested is that Appeals must give the taxpayer an opportunity to participate in communications with the originating function.

Check yourself

1. Which statement about proceedings before Appeals is correct?

A. Testimony is taken under oath and transcribed B. Proceedings are informal and no testimony under oath is taken C. Only attorneys may appear D. Proceedings follow the Federal Rules of Evidence

Answer: B. Facts may be required in affidavits or declared true under penalties of perjury, but no oath is administered.

2. A taxpayer was offered an Appeals conference after a thirty-day letter and did not take it. After the notice of deficiency is mailed, what is the position?

A. A conference will be granted automatically on request B. Ordinarily no conference will be granted in the 90-day status, absent unusual circumstances C. Two further conferences are available as of right D. The notice of deficiency is invalid for want of a conference

Answer: B. The rule applies whether the conference was had or merely offered and declined.

3. A representative produces significant documents for the first time at a non-docketed Appeals conference. What may Appeals do?

A. Nothing; Appeals must consider whatever is presented B. Transmit the documents to the examining function for consideration and comment, and return the case C. Refuse to consider the documents permanently D. Impose a penalty on the representative

Answer: B. A taxpayer cannot withhold evidence from the examining function and expect to introduce it for the first time at Appeals without risking the case being returned.

4. An Appeals officer recommends accepting the taxpayer’s settlement proposal and a reviewing officer disapproves it. What is the taxpayer entitled to?

A. Automatic acceptance of the proposal B. A conference with the reviewing officer, on written request C. An immediate notice of deficiency D. Referral to the Taxpayer Advocate Service

Answer: B — unless the interest of the Government would be injured by the delay, as with an imminent limitations expiry.

5. When do the ex parte communication rules not apply?

A. During a collection due process hearing B. When the taxpayer is unrepresented C. To communications between Appeals and Counsel about a case docketed in the Tax Court D. When the disputed amount is below the small case threshold

Answer: C. The restriction targets communications that would compromise the independence of Appeals from the originating function; docketed-case communications with Counsel are outside it.