What Is the Difference Between a Small Case Request and a Formal Protest in an IRS Appeal?

 Posted on April 30, 2025 in Tax Appeals

There are many reasons why taxpayers may wish to appeal the decisions made by the IRS. After conducting a tax audit, the IRS may determine that taxes and penalties are owed, but the taxpayer may believe that these assessments are incorrect. As well, the IRS may reject a claim for a refund or tax credit, but the taxpayer may believe that they qualify for these tax benefits. Appeals may also address a variety of other tax-related issues, and specific procedures must be followed in these cases.

Because of the complex laws surrounding tax appeals, it is crucial to work with an experienced attorney when addressing these issues. A lawyer with a strong understanding of tax law can help taxpayers understand their options and provide effective representation when interacting with the IRS or pursuing appeals in U.S. Tax Court, U.S. district courts, or the U.S. Court of Federal Claims.

When Can a Taxpayer File an Appeal?

Many IRS actions can be appealed, including:

• The results of a tax audit showing that a taxpayer owes taxes, is ineligible for a refund or credit, or is required to pay a penalty

• The assessment of penalties for late payment, failure to file, or other alleged violations of a taxpayer’s requirements

• The IRS’s denial of a request for penalty abatement

• The IRS’s rejection of an offer in compromise

• The IRS’s denial of a request for innocent spouse relief

Options for Filing an IRS Appeal

When a taxpayer wishes to appeal the decisions made by the IRS, they will usually first attempt to address these issues with IRS officials before taking their case to court. Appeals are handled by local IRS appeals offices, and a taxpayer can request a conference with an appeals officer. When doing so, they will use one of two methods:

Small Case Request

This type of request may be made if the total amount of taxes and penalties owed for a single tax period, as well as any interest that may apply, is less than $25,000. If an appeal addresses multiple tax periods, the total of taxes, penalties, and interest or refunds claimed for each of the periods must be under $25,000.

In these cases, a taxpayer can submit a brief statement in writing detailing the issues that are being disputed and explaining why they believe the decisions made by the IRS are incorrect. Instead of submitting a statement, the taxpayer may file the appeal request form that was included with the letter they received from the IRS, or they may file Form 12203 (Request for Appeals Review).

Formal Written Protest

In cases where the total amount of taxes, penalties, and interest for any period being addressed in an appeal exceeds $25,000, a formal protest will be required. These protests are more detailed than small case requests, and a taxpayer will be required to provide:

• Identifying information, including their full name and address and a telephone number where they can be reached during the daytime

• A copy of the letter from the IRS that specifies the findings of an audit, the amounts owed, and any proposed tax adjustments

• A statement detailing all of the issues that are being disputed, including the tax periods being addressed and the reasons the taxpayer disagrees with the IRS’s decisions

• The facts that support the taxpayer’s position on the issues being disputed

• The applicable laws or court rulings that form the basis of the taxpayer’s arguments

• A statement that the taxpayer believes the information provided is accurate and complete

Because of the detailed requirements involved in formal protests, taxpayers are advised to work with a legal representative who can make sure their arguments have a valid legal basis. An attorney with experience in tax appeals can ensure that appeals are filed correctly while also providing representation when interacting with appeals officers and advocating on the taxpayer’s behalf.

Contact Our San Jose, CA Tax Appeal Lawyer

At John D. Teter Law Offices, we work with taxpayers to respond to tax audits, file appeals, and address other matters involving the IRS. We can advocate for solutions that will protect our clients’ financial interests, making sure appeals are handled correctly or pursuing litigation in federal court. To arrange a consultation and get the legal help you need with your appeal, contact our San Jose tax appeal attorney today at 408-866-1810.