On August 24, 2016, the IRS issued revised procedures relating to Appeals "Conference and Issue Resolution" under Internal Revenue Manual (IRM) section 8.6.1. The changes are effective October 1, 2016.

The IRM revisions have eliminated prior procedures related to transfers of cases for the convenience of the taxpayer and transfers of cases within Appeals. The new revisions reflect that most Appeals conferences are conducted by telephone and specify that a telephonic, rather than an "in-person" conference, will be offered to taxpayers in the first instance (IRM 8.6.1.4.1, par. 2). If a taxpayer declines the invitation for a telephonic conference and requests an in-person conference, a virtual conference should be offered as the next best alternative (IRM 8.6.1.4.1, par. 3). If a taxpayer declines the virtual conference alternative, it is in the sole discretion of the Appeals Team Manager (ATM) to allow an in-person conference. In deciding when an in-person conference is appropriate, the ATM is instructed to consider the following facts and circumstances (IRM 8.6.1.4.1, par. 4):

1. Whether there are substantial books and records to review that cannot be easily referenced with page numbers or indices
2. Whether an in-person conference is necessary to judge the credibility of the taxpayer's oral testimony
3. Whether the taxpayer has special needs that can only be accommodated with an in-person conference
4. Whether there is a risk of an unauthorized disclosure or breach of confidentiality due to numerous conference participants
5. Whether an alternative conference procedure (e.g., Post Appeals Mediation (PAM) or Rapid Appeals Process (RAP)) involving separate caucuses will be used
6. Whether another IRM section calls for an in-person conference

Revised IRM 8.6.1.4.2 states that an assigned Appeals Technical Employee (ATE) will refer a taxpayer directly to the ATM to discuss any concern raised by the taxpayer about the ATE, including questions around perceived (lack of) impartiality, as well as any request to have the case reassigned. The ATM will evaluate the request and/or concerns and will directly communicate the decision to the taxpayer/representative on whether to transfer the case to another ATE.

The revisions also include guidance for requesting case assistance (IRM 8.6.1.4.1.1). The revised procedures state that the assigned ATE will request case assistance from an assisting ATE who will participate in the in-person conference when the assigned ATE's Post of Duty: (1) does not accommodate in-person conferences, (2) is not reasonably convenient for the taxpayer or representative or (3) does not conduct circuit riding.

In addition, new language in IRM 8.6.1.4.4 states that Appeals has the discretion to invite Counsel and/or Compliance to the conference but must not violate the ex parte communication provisions (Revenue Procedure 2012-18)

Implications

The revised Appeals procedures could adversely affect how taxpayers' Appeals hearings are conducted in the future. Specifically, it will likely be more difficult to have a case transferred to a local Appeals office and to obtain an in-person or face-to-face Appeals hearing with an Appeals Officer under the new procedures. In addition, it is unclear how having another ATE and/or Counsel/Compliance participating in the Appeals conference will affect a taxpayer's case and taxpayers should be mindful of the ex parte communication provision to ensure they are properly notified of any discussions of their case among IRS personnel. Taxpayers should strategically consider the changes in the IRM going forward when developing their tax controversy strategy for issues that may not be resolved with the Compliance (Examination) function of the IRS.

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