The former Hearts defender was dismissed in the second half of the triumph against the Galabankies for fouling Jack Steele in the penalty area.
Referee Paul Robertson had no hesitation in awarding a spot-kick but also showed Wallace a straight red card.
Although the player himself reluctantly accepted the verdict and left the field of play, captain Lee McCulloch's own protests were so strong he was cautioned in the aftermath.
Having reviewed footage of the incident at Murray Park, manager Ally McCoist feels the decision to remove the 25-year-old from the match early was harsh.
And after careful consideration, the Light Blues have exercised their right to appeal against the ruling.
It is understood the consequent hearing will not take place at Hampden Park until next Thursday due to the festive period.
That being the case, Wallace would therefore be free to play against Elgin City this weekend then Clyde on Boxing Day.
Meanwhile, Andy Little feels he is now back to full fitness again after scoring the crucial second goal in the win over Annan.
The Northern Ireland international said: "I'm definitely starting to find my feet again and getting a little run of games has really helped me.
"Being out for six or seven weeks and missing games makes it hard to hit top form when you're thrown straight back into the team.
"I think now, having got a few matches behind me, I'm starting to feel a bit better and more like myself again."