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Representation

You maintained all records required by the Internal

Revenue Code.

You can represent yourself at your appeals conference, or

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You cooperated with all reasonable requests by the

you can be represented by any federally authorized practi-

IRS for information regarding the preparation and

tioner, including an attorney, a certified public accountant,

related tax treatment of any item reported on your

an enrolled actuary, or an enrolled agent.

tax return.

If your representative attends a conference without you,

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You had a net worth of $7 million or less and not

he or she can receive or inspect confidential information

more than 500 employees at the time your tax liabil-

only if you have filed a power of attorney or a tax informa-

ity is contested in any court proceeding if your tax

tion authorization. You can use a Form 2848 or any other

return is for a corporation, partnership, or trust.

properly written power of attorney or authorization.

You can also bring witnesses to support your position.

The burden of proof does not change on an issue

Confidentiality privilege. Generally, the same confiden-

when another provision of the tax laws requires a

tiality protection that you have with an attorney also applies

specific burden of proof with respect to that issue.

CAUTION

to certain communications that you have with federally

authorized practitioners. See Confidentiality privilege

Use of statistical information. In the case of an indi-

under If Your Return Is Examined, earlier.

vidual, the IRS has the burden of proof in court proceed-

ings based on any IRS reconstruction of income solely

Appeals to the Courts

through the use of statistical information on unrelated tax-

payers.

If you and the IRS still disagree after the appeals confer-

Penalties. The IRS has the burden of initially producing

ence, you may be entitled to take your case to the United

evidence in court proceedings with respect to the liability of

States Tax Court, the United States Court of Federal

any individual taxpayer for any penalty, addition to tax, or

Claims, or the United States District Court. These courts

additional amount imposed by the tax laws.

are independent of the IRS.

If you elect to bypass the IRS’ appeals system, you may

Recovering litigation or administrative costs. These

be able to take your case to one of the courts listed above.

are the expenses that you pay to defend your position to

However, a case petitioned to the United States Tax Court

the IRS or the courts. You may be able to recover reasona-

will normally be considered for settlement by an Appeals

ble litigation or administrative costs if all of the following

Office before the Tax Court hears the case.

conditions apply.

If you unreasonably fail to pursue the IRS’ ap-

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You are the prevailing party.

peals system, or if your case is intended primarily

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to cause a delay, or your position is frivolous or

CAUTION

You exhaust all administrative remedies within the

groundless, the Tax Court may impose a penalty of up to

IRS.

$25,000. See Appeal Within the IRS, earlier.

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Your net worth is below a certain limit (see Net worth

requirements, later).

Prohibition on requests to taxpayers to give up rights

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You do not unreasonably delay the proceeding.

to bring civil action. The Government cannot ask you to

waive your right to sue the United States or a Government

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You apply for administrative costs within 90 days of

officer or employee for any action taken in connection with

the date on which the final decision of the IRS Office

the tax laws. However, your right to sue can be waived if:

of Appeals as to the determination of the tax, inter-

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est, or penalty was mailed to you.

You knowingly and voluntarily waive that right,

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You apply for litigation costs within the time frames

The request to waive that right is made in writing to

provided by Tax Court Rule 231.

your attorney or other federally authorized practi-

tioner, or

Prevailing party, reasonable litigation costs, and reason-

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The request is made in person and your attorney or

able administrative costs are explained later.

other representative is present.

Note. If the IRS denies your award of administrative

costs, and you want to appeal, you must petition the Tax

Burden of proof. For court proceedings resulting from

Court within 90 days of the date on which the IRS mails the

examinations started after July 22, 1998, the IRS generally

denial notice.

has the burden of proof for any factual issue if you have

met the following requirements.

Prevailing party. Generally, you are the prevailing

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party if:

You introduced credible evidence relating to the is-

sue.

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You substantially prevail with respect to the amount

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You complied with all substantiation requirements of

in controversy or on the most significant tax issue or

the Internal Revenue Code.

set of issues in question, and

Page 9

Publication 556 (Rev. August 2005) - Examination Of Returns, Appeal Rights,and Claims For Refund Page 9

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