IRS Appeals to Confront Both Old and New Challenges in 2026

The recent appointment of a new permanent chief of the IRS Independent Office of Appeals provides an occasion to wonder where Appeals’ priorities will lie in 2026.

I stepped down as chief of Appeals in August, with several projects delayed or stalled, largely caused by the diversion of leadership’s attention to transition-related matters and significant staff losses (28% in Appeals alone) earlier in the year. While Appeals’ direction will be up to the new chief and IRS leadership, I offer my thoughts based on my time in Appeals.

Restoring confidence in the independence and quality of Appeals. When I got to Appeals in late 2022, we received no shortage of feedback lamenting the perceived decline in Appeals’ independence. Representatives told us that appeals officers were deferring to specialists, who were coming to settlement conferences with rigid ranges that didn’t reflect a taxpayer’s particular facts or arguments. Some even questioned whether it was appropriate to have specialists in Appeals.

While independent Appeals specialists serve an important role in helping appeals officers understand their cases and assess litigation hazards, it was clear something wasn’t working. We started by making significant changes to the coordinated issues program, and additional changes were in the works.

We also endeavored to train specialists and appeals officers in their respective roles and how to collaborate effectively. Although an in-person all-Appeals training scheduled for August (the first in over a decade) had to be converted to a virtual format due to new travel restrictions, this was to be a key theme. I hope that it continues to be a focus of Appeals leadership.

Enhancing efficiency of Appeals processes and reducing cycle time. The time it took cases to get to and through Appeals was also a problem. Cycle time reached a highwater mark in fiscal year 2021 of 372 days as a result of pandemic backlogs. With concerted focus and much-needed hiring, we reduced cycle time to 269 days by May of 2025, the lowest in six years.

Recent data from the National Taxpayer Advocate suggests that number might be rising again, which isn’t surprising given personnel losses. Adequate staffing in Appeals is only part of the equation, however, which leads to a third and related priority that is only partially within Appeals’ control.

Improving and maximizing the use of technology. Appeals is approximately halfway through conversion to a new inventory and case management system. This has been a monumental undertaking but was long overdue. The existing system, the Appeals Centralized Database System, is decades old and relies on outdated technology for which information technology support in the IRS was hard to obtain, leading at times to critical work stoppages.

ACDS is inflexible, making it nearly impossible to run management reports that weren’t contemplated when the system was created. It also relies heavily on manual input. This includes a time-consuming process called “carding-in.” When a case arrives at Appeals, personnel literally type into ACDS information from a paper compliance case file or alternatively cut and paste information from an electronic file.

The carding-in process highlights another larger issue with IRS technology: the dependency on multiple outdated systems incapable of speaking to each other. While the demise of ACDS will help enhance Appeals’ efficiency, it won’t alone solve the problem of Appeals needing to interact with at least 17 systems belonging to its suppliers of work (including Taxpayer Services; the Large Business & International, Small Business/Self-Employed, Tax-Exempt and Government Entities Divisions; and the Office of Chief Counsel).

The Enterprise Case Management project at the IRS promised to solve this problem, but after years of development has failed to materialize. Achieving more seamless access to information housed in other systems is critical to achieving efficiencies, including reducing the amount of time between when a compliance action is protested and when the case actually arrives at Appeals’ door.

Another larger IRS project that seems to have stalled is the Zero Paper initiative. Eliminating (through electronic filing) or digitizing paper upon entry—whether returns, forms, or correspondence—was the goal. As the downstream recipient of lots of paper from various sources, including paper files created internally by different functions within the IRS, Appeals tried to address its paper problem on its own.

We worked with our suppliers to require files be sent to us electronically. In cases where paper was still received, we acquired our own scanners and did what we could to convert paper files into electronic files. The goal was to eliminate the cycle time inherent in shipping a paper file around Appeals, sometimes multiple times.

Looking Ahead

Modernizing IRS technology is a must-have for taxpayers and their representatives. Current leadership at the Department of the Treasury seems to recognize this, suggesting it will make up for the loss in staffing with technology. Recently announced improvements to the Tax Pro Accounts are a step in the right direction, but much more remains to be done, and in my experience Appeals struggled to be more than an afterthought in those efforts.

At the same time, people are neither fungible nor instantly replaceable, and technology alone can’t achieve efficiencies. Appeals serves an important taxpayer right—the right to appeal an IRS decision in an independent forum. Although funded out of the enforcement budget, unlike the compliance divisions, Appeals doesn’t select its work—it hears, with few exceptions, every case it receives with whatever resources it has.

Appeals needs qualified, well-trained employees to accomplish its mission effectively and efficiently. It will take years to make up for the loss of institutional knowledge and expertise that abruptly walked out the door over the past year, especially if the current hiring freeze remains in place.

There are reasons to be hopeful. The appointment of a permanent chief is promising, and Frank Bisignano appears to be running the IRS like an experienced CEO, even promising “double-digit improvements in the Appeals process.” As Appeals approaches its 100th birthday in 2027, I hold out hope that it will be able to regain the stellar reputation for quality resolutions its dedicated and talented workforce deserves.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Elizabeth Askey is of counsel in Skadden’s tax controversy and litigation practice and the former chief of the IRS Independent Office of Appeals.

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