Which statement best describes the role of Appeals during the IRS examination process?

• A. Appeals replaces the examiner's findings with its own final assessment automatically.
• B. Appeals only handles requests for information from taxpayers during examination.
• C. Appeals approves the examiner's proposed adjustments without review.
• D. Appeals reviews unresolved disputes and may modify or sustain findings, potentially avoiding litigation.

Answer: (D)

The main idea is that Appeals serves as an independent reviewer within the IRS to resolve disputes from an examination. When a taxpayer disagrees with the examiner’s proposed adjustments, they can bring the case to Appeals, where an Appeals officer reviews the facts, tax law, and the examiner’s reasoning. Appeals may modify the findings if the evidence or law supports a different outcome, or they may sustain them if the examiner’s position is solid. The goal is to settle the dispute without going to litigation, so Appeals often works toward an agreement that fits the tax rules and objective facts.

This isn’t a process that automatically replaces the examiner’s conclusions, nor is Appeals merely a channel for information requests. It is a true review and negotiation step aimed at resolving differences and, when possible, avoiding court proceedings.