5.1.9. Collection Appeal Rights

(1) The collection appeal rights and procedures discussed in this IRM section include Collection Due Process (CDP) and Collection Appeals Program (CAP) rights.

(2) Collection Due Process (CDP) appeal rights:

• IRC 6320 gives the taxpayer the right to appeal the filing of a Notice of Federal Tax Lien (NFTL).

• IRC 6330 gives the taxpayer the right to appeal before the proposed levy action and after a jeopardy levy, a disqualified employment tax levy, a levy on state tax refunds, and a federal contractor levy.

(3) Collection Appeals Program (CAP) rights:

• IRC 7122 (e) gives the taxpayer the right to appeal the IRS’s rejection of installment agreement (IA) requests. Under CAP, IRC 6159(e), and 26 CFR 301.6159-1, the taxpayer has the right to appeal proposed and actual terminations of IAs and proposed and actual modifications of IAs.

• Under CAP, the taxpayer also has the right to appeal proposed or actual filing of an NFTL, denials of lien related certificates and NFTL withdrawals, proposed or actual levy, or seizure actions and rejected, modified, or terminated IAs, and 6343(d) and 6343(b) claims. A third party subject to a special condition NFTL (e.g., nominee, alter ego) has the right to appeal the filing under CAP.

(4) Taxpayers have additional appeal rights, including those related to assessment of the trust fund recovery penalty, rejection of offers in compromise, abatement of penalty assessments due to reasonable cause, and jeopardy levies.

(5) The IRS Independent Office of Appeals will be hereafter referred to as Appeals throughout the remainder of this IRM.

(1) Authorities relating to this section include:

• IRC 6159 – Agreements for payment of tax liability in installments

• IRC 6320 – Notice and opportunity for hearing upon filing of notice of lien

• IRC 6330 – Notice and opportunity for hearing before levy

• IRC 7122 – Compromises

• 26 CFR 301.6159-1 – Agreements for payment of tax liabilities in installments

• 26 CFR 301.6320-1 – Notice and opportunity for hearing upon filing of notice of Federal tax lien

• 26 CFR 301.6330-1 – Notice and opportunity for hearing prior to levy

• Rev. Proc. 2012-18 – Ex Parte Communications between Appeals and Other Internal Revenue Service Employees

(1) The Director, Collection Policy, is responsible for the policies and procedures to be employed by collection personnel.

(2) The Collection Policy Program Manager, Campus Policy, is responsible for developing the policies and procedures described in this IRM.

(3) Revenue officer managers are responsible for ensuring the guidance and procedures described in this IRM are followed.

(4) Revenue officers are responsible for following the procedures in this IRM.

(1) Integrated Collection System (ICS) is used by Collection field employees for inventory control and history documentation. ICS provides controls and reports to ensure hearing requests are timely processed to Appeals.

(2) ICS provides weekly group level reports and monthly Area reports to ensure hearing requests are timely processed.

(1) Case reviews are conducted by managers to ensure compliance with this IRM. Managers approve transfer of appeal requests.

(2) Operational reviews are conducted by territory managers and area directors to evaluate program delivery and conformance to administrative and compliance requirements.

(3) Targeted program reviews are performed by Collection Policy to assess IRM guidance and procedures.

(4) Systemic controls are built into the ICS system to prevent a levy from being generated on a module when the required notices have not been issued or while a case is in CDP status. The Automated Lien System (ALS) ensures the required CDP notices are issued. ICS CDP application and forms used to transmit the request to Appeals provide managers with CDP controls.

(1) The table lists commonly used acronyms and their definitions.

(1) The ICS User Guide, Chapter 33 – Collection Due Process, provides procedures for tracking CDP requests using ICS.

(2) The Collection Procedures Knowledge Base web page provides information related to Collection Appeals. See Collection Procedures Knowledge Base.

(3) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see Taxpayer Bill of Rights.

(4) Additional information regarding appeal rights can be found, as applicable, in:

• IRM 5.7.6.4, Appealing the Proposed Assessment

• IRM 5.8.7.7.5, Rejection Appealed

• IRM 5.11.3.7, Appealing the Jeopardy Levy

• IRM 20.1, Penalty Handbook

(1) The Collection Due Process hearing provisions give taxpayers an opportunity for an independent review to ensure that the levy action that has been proposed or the NFTL that has been filed is warranted and appropriate. In Field Collection, attempted contact with the taxpayer and alternative methods for resolving the case, such as installment agreements (IAs) and offer in compromise (OIC), should be considered before proposing levy or filing an NFTL. Refer to IRM 5.11.1.3.3.3, Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in Field Collection, and IRM 5.12.2.3, Notice of Federal Tax Lien Filing Determination (Pre-filing Considerations).

(2) IRC 6320 gives taxpayers the right to request a hearing during the 30-day period that begins on the day after the five-business-day period after the filing of a NFTL. Refer to IRM 5.12.6, Appeals Processes Involving Liens, and IRM 5.1.9.3.2.1, Timeliness of the CDP Hearing Request.

1. Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, will be given in person, left at the dwelling or usual place of business, or sent by certified or registered mail to the last known address not more than five business days after the day of the filing of the NFTL.

2. This notice is required only once for the taxable period and unpaid tax which is the subject of the NFTL filing. A second notice is not required if a NFTL for the same tax liability is filed in other jurisdictions. An additional CDP notice is not required for new assessments of interest and penalty accruals for the tax previously included on a CDP notice. Refer to IRM 5.12.6.3.6.2, CDP Notice for NFTL on Additional Assessments.

3. For a joint income tax liability, each spouse will individually be sent to their last known address a Letter 3172 explaining the right to a hearing. Two separately addressed notices are sent in separate envelopes even if both spouses are at the same address.

4. If Automated Lien System (ALS) is not used to generate the Letter 3172, it is the responsibility of the employee making the NFTL filing determination to ensure that the CDP notice is issued timely. Information regarding how the notice was issued should be documented in the case history. Refer to IRM 5.12.6.3.7, Preparation and Delivery of Manual CDP Notices.

(3) IRC 6330 gives taxpayers the right to request a hearing during the 30-day period that begins the day after the date of the Notice of Intent to Levy and Notice of Your Right to a Hearing. Refer to IRM 5.11, Notice of Levy.

1. This Notice of Intent to Levy and Notice of Your Right to a Hearing will be given in person, left at the dwelling or usual place of business, or sent by certified or registered mail, return receipt requested, to the taxpayer’s last known address not less than 30 days before the day of the first levy. USPS certified or registered mail service is available in all U.S. territories, including American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands. USPS certified or registered mail is also available in certain U.S. protectorates: including the Federated States of Micronesia, Republic of the Marshall Islands, Republic of Palau, Johnson Atoll, Midway Islands, Marshall Islands, and Wake Island. USPS certified or registered mail service may not be available in other U.S. protectorates. In those jurisdictions, a private delivery service (UPS, FedEx, DHL, etc.) may be used to provide delivery in person or to the taxpayer's residence or usual place of business, in accordance with IRC 6330(a)(2)(A) and (B). You must retain a copy of the signed receipt or the signature of the private delivery service employee affirming that they left the notice at the taxpayer's residence or usual place of business. Where use of a private delivery service may be prohibitively expensive in relation to the amount of tax expected to be collected, contact Counsel for guidance.

2. Information regarding how the notice was sent, delivered, or left at the dwelling or business must be documented in the case history. In addition, request input of appropriate TC 971 action codes (AC).

3. This notice is required only once for the taxable period and unpaid tax which is the subject of the pre-levy notice. A second notice is required if levy action is planned to collect additional taxes that were assessed for the taxable period after the original notice was issued. An additional CDP notice is not required for new assessments of interest and penalty accruals for the tax previously included on a CDP notice. Refer to IRM 5.11.1.3.2, Required Notices.

4. For a joint income tax liability, when a Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, is issued in the field, each spouse will individually be given or sent, to their last known address, the letter explaining the right to a hearing. Two separately addressed notices are sent in separate envelopes even if both spouses are at the same address.

5. For a partnership employment or excise tax liability, the Letter 1058 is issued to the partnership when partnership assets are to be levied. If the IRS intends to levy on the property of the individual general partners to collect the employment or excise taxes, then the Letter 1058 needs to be issued to the individual general partners.

(4) There are exceptions to the pre-levy notice requirements of IRC 6330. They are:

1. When the collection of tax is in jeopardy under IRC 6331(a)

2. A levy is served on a State to collect a Federal tax liability from a State tax refund

3. A disqualified employment tax levy is served

4. A Federal contractor levy is served

(5) A post-levy CDP notice is issued when the taxpayer did not have a prior opportunity for a CDP hearing under IRC 6330. Refer to IRM 5.1.9.3.13, Jeopardy Levy, State Income Tax Levy Program (SITLP) and Federal Payment Levy Program (FPLP), and IRM 5.1.9.3.14, Disqualified Employment Tax Levy, IRM 5.11.3.5, Forms and Letters for a Jeopardy Levy without a Jeopardy Assessment, IRM 5.19.9.3.4, SITLP Notices, IRM 5.11.1.5.4, Issuing Notice of Levy/Notice of a Right to a Hearing in Field Collection, and IRM 5.11.1.6.3, Issuing Notice of Intent to Levy and Notice of Your Right to a Hearing in Field Collection FEDCON Case. Post levy CDP notices include:

• Letter 2439, Notice of Jeopardy Levy and Right of Appeal

• CP 92 or CP 242, Notice of Levy on Your State Tax Refund, Notice of Your Right to a Hearing

• Letter 1058-D, Post Levy Collection Due Process (CDP) Notice

• Letter 1058-F, Post Levy Federal Contractor Collection Due Process

(6) If a case has been referred to the Department of Justice (DOJ) or is otherwise under DOJ jurisdiction, remind the taxpayer that any CDP hearing with Appeals may be held in abeyance until the litigation is resolved.

(1) If contact is made with the taxpayer after the issuance of the CDP notice, attempt to resolve the account or issue with the taxpayer. In some situations it may be useful to have the group manager intercede in discussions with the taxpayer in an effort to resolve the case. Advise taxpayers entitled to request an appeal under the CDP provisions of the requirements and time frames for filing an appeal. Be sure to let taxpayers know that discussions with Collection do not suspend the running of (or otherwise extend) the 30-day period during which taxpayers may request a CDP hearing.

(2) If the taxpayer wants to file a request for a hearing,

1. It must be in writing;

2. It must be filed on or before the date that is 30 days after the date of the Notice of Intent to Levy and Notice of Your Right to a Hearing or on or before 30 days after the five-business-day period following the filing of the NFTL; and

3. If the hearing request is filed late, the taxpayer may be entitled to an Equivalent Hearing (EH) but only if specifically requested. Refer to IRM 5.1.9.3.2.1, Timeliness of the CDP Hearing Request, and IRM 5.1.9.3.2.2, Equivalent Hearing (EH) and Timeliness of Equivalent Hearing Requests.

(3) Taxpayers generally use Form 12153, Request for Collection Due Process or Equivalent Hearing, to request the hearing. This form is included with the CDP notice. If this form is not used, the taxpayer may submit a written request for a CDP hearing signed by the taxpayer or authorized taxpayer representative.

(4) The written request for a hearing must be dated and must include the following information:

1. The taxpayer's name, address, daytime telephone number (if any), and taxpayer identification number (SSN, ITIN, or EIN).

2. The type of tax involved.

3. The tax period(s) at issue.

4. A statement that the taxpayer requests a hearing concerning the proposed levy or in the case of post levy CDP requests, the actual levy action, or the filing of the NFTL.

5. The reason(s) why the taxpayer disagrees with the action.

   Note: The IRS can disregard any portion of a hearing request that is based on a position identified as frivolous by the IRS in a published list or reflects a desire to delay or impede the administration of federal tax laws. If the entire hearing request meets one or both of these criteria, the taxpayer may be denied a hearing entirely. Refer to IRM 5.1.9.3.15, Hearing Request with Frivolous, Delaying, or Impeding Issues, for procedures for disregarding portions of hearing requests or denying hearing requests altogether. For a list of positions identified by the IRS as frivolous, see Notice 2010-33 or any successor guidance.

6. The signature of the taxpayer or the taxpayer's authorized representative.

(5) For a tax liability involving a partnership:

• If the CDP notice is issued to a partnership, then a partner with authority to represent the partnership could request a hearing for the partnership.

• If a CDP NFTL notice is issued to an individual partner listed on the NFTL, then that partner could request a hearing as an individual partner.

• If a CDP levy notice is issued to a general partner because the IRS intends to levy the individual property of the general partner, then that partner could request a hearing as an individual partner.

(6) The CDP hearing request includes all applicable periods listed on the CDP notice even if not listed on the hearing request. The taxpayer can exclude a specific tax period on the CDP notice if they are not disputing the collection action for a specified tax period.

• If the taxpayer includes periods that are not subject to the CDP hearing, the taxpayer may be requesting an EH for the other periods. Refer to IRM 5.1.9.3.2.2, Equivalent Hearing (EH) and Timeliness of Equivalent Hearing Request. If the taxpayer is not entitled to a CDP hearing or an EH, i.e., has not been issued a CDP hearing notice, previously received a CDP hearing or the time frame has expired for requesting an EH, notify the taxpayer and advise the taxpayer of their available rights such as those available through CAP or retained jurisdiction. If the time frame for requesting an EH has expired, send the hearing request to Appeals for a separate timeliness determination. If Appeals agrees the request is late, notify the taxpayer of their available rights such as CAP or requesting assistance from TAS. Refer to IRM 5.1.9.3.2.5, Separate Timeliness Determinations.

(7) If the taxpayer received a CDP notice for both NFTL filing and proposed levy action, the taxpayer may appeal both notices. Appeals should consolidate the requests for the CDP hearing.

(8) The taxpayer must send or hand-deliver the CDP hearing request to an IRS office and address on the CDP notice. The taxpayer may contact the Revenue Officer for electronic methods of submitting the CDP hearing request, such as using the Document Upload Tool (DUT) or through Secure Messaging, if available. The taxpayer can also fax the CDP hearing request to the fax number listed on the notice, if the notice provides a fax number. If a fax number is not provided on the notice, the taxpayer may call the toll-free number on the notice or call toll-free 1-800-829-1040 to obtain the fax number of the appropriate office. The taxpayer may also hand-deliver the request to the local taxpayer assistance center within the 30-day period.

1. If the hearing request is delivered by mail to any of the addresses shown on the CDP notice and is postmarked timely for delivery to an IRS address listed in the CDP notice and is received timely, then the received date is the date of request for hearing.

2. If the hearing request is delivered by mail to any of the addresses shown on the CDP notice and is postmarked timely for delivery to an IRS address listed in the CDP notice but is not received timely, then the postmark date is the date of request for hearing.

(9) If a Form 12153 or equivalent is received at an incorrect office for processing, forward the CDP hearing request, including all supporting documents and the envelope, within one business day (by EEFAX or priority mail) to the office where the hearing request is to be sent as directed in the CDP Notice.

1. If the hearing request was mailed to an incorrect address not listed on the CDP notice, timeliness will be determined based on when the request is received at the IRS address on the CDP notice.

2. If the hearing request was mailed to an address listed on the CDP notice (for example, the address for submitting payment rather than the address for mailing the request), the request should be considered timely if postmarked timely.

(10) If the CDP notice does not include the address of the office that sent the notice, and the taxpayer sends the hearing request to the wrong office, timeliness should be determined by the postmark, meter, time stamp or fax date not the date actually received by the office listed on the CDP hearing notice.

(11) If the taxpayer states they submitted a hearing request to another office, check IRS systems such as Account Management System (AMS) history, ICS or Integrated Data Retrieval System (IDRS). If no record, ask the taxpayer to provide a copy of the request for processing.

(1) Upon receipt of a hearing request:

1. Determine if the hearing request is complete and can be processed. If the request is missing information, try to perfect the hearing request with the taxpayer. See IRM 5.1.9.3.2.3, Perfection of Hearing Requests.

2. Determine if the hearing request is timely. See IRM 5.1.9.3.2.1, Timeliness of the CDP Hearing Request, and IRM 5.1.9.3.2.2, Equivalent Hearing (EH) and Timeliness of EH Requests. A late filed request requires a Separate Timeliness Determination. See IRM 5.1.9.3.2.5, Separate Timeliness Determination.

3. If the hearing request is timely and can be processed, document receipt on the ICS CDP application as soon as possible, but no later than 10 calendar days from receipt.

   Note: Do not add nonprocessable hearing requests or separate timeliness determinations to the ICS CDP application.

   Note: Hearing requests received and processed by Insolvency and COIC are not added to the ICS CDP application.

4. When the module is added to the ICS CDP application, a TC 971 will be systemically generated with AC 275 (timely CDP) and AC 630 if CDP levy, or AC 278 (EH).

   Note: If the module is not added to the ICS CDP application or if the applicable TC 971 with action code cannot be systemically generated using ICS, use Form 4844 to request input of the TC 971 with applicable action codes. Forward requests for input to CCP via email using secure messaging to *CTR PHI CS GCP.

(2) Taxpayers are encouraged to continue to work with Collection to resolve the tax issue after a hearing request is submitted. Review the hearing request to determine the issues raised and collection alternatives proposed. If information needed by Appeals to consider the issue can be secured or if the case can be resolved prior to Appeals consideration, it expedites the process for the taxpayer.

(3) If the taxpayer raises a collection alternative,

1. Contact the taxpayer within ten calendar days of receipt to secure information needed to resolve the issue. Letter 5139, CDP Contact Letter, can be used to request delinquent returns, financial statement information, or both, as needed to address the collection alternative raised by the taxpayer.

   Note: A taxpayer can be placed in currently not collectible (CNC) hardship, even if the taxpayer has not filed all required returns. Refer to IRM 5.16.1.2.9, Hardship.

2. If the taxpayer responds to the request, the RO should continue to work with the taxpayer towards resolution. If resolution is reached, ask the taxpayer if they want to voluntarily withdraw the hearing request. Refer to IRM 5.1.9.3.3.1, Processing Withdrawal of Request for Collection Due Process Hearing.

   Note: If resolution is reached, e.g. full pay, IA secured, CNC determination reached, and the taxpayer does not withdraw, send the hearing request to Appeals.

3. If the taxpayer responds to the request but resolution cannot be reached, offer the taxpayer the opportunity to discuss the issue with the group manager in an effort to reach resolution prior to sending the request to Appeals. The group manager should try to hold the conference with the taxpayer within five business days. If the taxpayer does not wish to have the conference with the group manager, send the request to Appeals.

   Note: If discussions are at an impasse because an appropriate collection resolution, e.g., IA, could not be reached, the sole appeal rights will be through the CDP or EH already requested by the taxpayer.

4. If the taxpayer does not respond to the request for information needed, the RO should, within 15 calendar days of the deadline established, send the request to Appeals.

(4) If a CIS is secured, conduct the necessary financial verification (Refer to IRM 5.15.1.4, Verifying Financial Information) before transferring the case to Appeals. Appeals relies on Collection to conduct the appropriate review and verifications of a CIS secured prior to referral to Appeals. Appeals will accept the CIS information as accurate unless corrections/revisions to the form are noted in the case history.

(5) If not previously done, make a Notice of Federal Tax Lien (NFTL) filing determination. Refer to IRM 5.12.2.3, Notice of Federal Tax Lien Filing Determination (Pre-filing Considerations). The authority to file an NFTL is not suspended during the hearing. If the determination is to file a NFTL and the taxpayer disagrees, explain the CAP procedures to the taxpayer.

(6) If the taxpayer raises a non-frivolous issue relating to the unpaid tax, such as missing or misapplied payments, determine whether additional research or a payment tracer is necessary to resolve the issue.

(7) If the taxpayer raises doubt as to liability issues take the necessary steps to address the issue with the taxpayer. Allow the taxpayer the opportunity to file an amended or corrected return, or determine whether an adjustment is necessary. Appeals will determine if the taxpayer can raise liability issues during the hearing. A taxpayer may challenge the underlying liability in a CDP hearing if the taxpayer did not:

• Receive a notice of deficiency or

• Sign a consent to assessment or otherwise

• Have a prior opportunity to dispute the tax liability

(8) If the taxpayer raises innocent spouse issues, secure Form 8857, if the taxpayer did not include it with the hearing request. Forward the claim to the Cincinnati Centralized Innocent Spouse Operation (CCISO) for consideration. Refer to IRM 25.15.8.5.2.2, Processable Form 8857, for additional information. Include a copy with the hearing request sent to Appeals.

(9) If it has been 45 days since receipt of the hearing request, secure group manager concurrence to continue working with the taxpayer for an additional 45 days. The taxpayer’s willingness to address the hearing issues with Collection beyond a 45-day period should be documented in the file. If resolution is not expected or withdrawal not secured within the next 45 days, send the request to Appeals. Even after the request is sent to Appeals, action to resolve the collection issues may continue. Refer to IRM 5.1.9.3.5, Collection Action during the Period of the CDP or EH.

(10) In some instances it may be appropriate to refer the hearing request immediately to Appeals because resolution is unlikely. In these instances, promptly, within 15 days, send the hearing request to Appeals.

• Collection alternatives have already been explored and discussions are at an impasse when the taxpayer requests a CDP hearing; or

• The taxpayer raises frivolous issues (Refer to IRM 5.1.9.3.15, Hearing Requests with Frivolous, Delaying or Impeding Issues); or

• The taxpayer is not seeking to resolve the issue but using the CDP process as a method for delay, e.g., pyramiding in-business trust fund taxpayer; (Refer to IRM 5.1.9.3.3.2.1, Rapid Response Appeals Process (RRAP)) or

• The taxpayer has other recently filed hearing requests pending in Appeals, or

• The taxpayer files bankruptcy after the hearing request has been filed. Appeals will suspend the hearing until after the bankruptcy. Refer to IRM 8.22.6.8, Bankruptcy.

• The taxpayer does not want to work with Collection after making the request for a CDP hearing.

Note: Document the reason for the immediate transfer to Appeals on the Form 14461.

(11) In situations where the taxpayer contests the TFRP liability, Appeals will first review the ICS history to determine if Letter 1153 was hand-delivered or mailed. If the Letter 1153 was hand-delivered, the ICS history entry would serve as a contemporaneous recording and prima-facie evidence and, therefore, the taxpayer will not be able to challenge the liability at the CDP hearing. If the Letter 1153 was mailed, Appeals will request a copy of the Letter 1153 and certified mailing listing from Advisory. Appeals must verify that the taxpayer received the Letter 1153.

(12) CDP notices issued by automated levy programs (FPLP, SITLP, and Alaska Permanent Fund Program) direct the taxpayer to file the CDP request with the ACS campus CDP units. If a request is received on a case assigned to a RO, the CDP units will document the ICS system notifying the RO of the request. If the RO has had contact with the TP, the RO should contact the CDP unit and they will forward the request to the RO for processing to Appeals, otherwise the CDP unit will process the request. The same procedure applies if ACS issues a CDP levy notice or CDP NFTL notice and the case is assigned to a RO by the time the CDP request has been received.

(13) If there are indicators of fraud, a revenue officer may hold a hearing request for 90 days while the fraud referral is being developed. After 90 days, if additional time is needed to develop the fraud referral, secure Fraud Technical Advisor (FTA) concurrence, documented in the ICS history, to hold the hearing request for an additional 90 days, after which, the request must be sent to Appeals.

(14) If the taxpayer full pays the liability after the hearing request has been filed, see if the taxpayer wants to withdraw the request since the NFTL will be released and levy action is no longer applicable. If the taxpayer does not withdraw the request, process the request to Appeals.

(15) If the taxpayer files bankruptcy after the hearing request has been filed, the hearing request is still valid and needs to be processed to Appeals. Appeals will suspend the hearing until after the bankruptcy. Refer to IRM 8.22.6.8, Bankruptcy.

(1) The ICS CDP application allows the field to use ICS to track valid hearing requests from receipt through resolution in Appeals or withdrawal of the request by the taxpayer.

(2) After adding a hearing request to ICS CDP/EH, ICS generates a follow-up for 45 days from the hearing receipt date. Refer to IRM 5.1.9.3.3, Processing CDP and EH Requests.

(3) If the taxpayer withdraws the request, update the ICS CDP/EH application to reflect the withdrawal. If the withdrawal occurs after the group manager approved the transfer but prior to actual transfer, input the withdrawal date. If you sent the request to Appeals, forward the withdrawal to Appeals. Refer to IRM 5.1.9.3.3.1, Processing Withdrawal of Request for CDP Hearing.

(4) After transferring the request to Appeals, ICS systemically updates the received in Appeals date and the closed date based on data Appeals sends weekly to ICS. This systemic update should occur within two weeks after Appeals assigns/closes the case. If the systemic updates of the received/closed in Appeals date did not occur, manually input the date after verifying receipt/closure.

(5) When the group manager (GM) approves the transfer of the CDP to Appeals on ICS, a CDP OI is systemically opened. The CDP/EH OI serves as a control while the case is pending in Appeals and it ensures that the case stays on ICS. Even if there are multiple requests pending in Appeals, there is only one CDP/EH OI. The CDP OI is automatically assigned to the RO that has the Bal Due case assignment. Once receipt of the CDP in Appeals is confirmed and there is no open Bal Due or Del Ret and no further collection actions are warranted, the CDP OI should be assigned to the CDP Appeals Hold File, AOTO XX91 for monitoring at the group level. Before requesting transfer of the CDP OI to the CDP Appeals Hold File (AOTO XX91), the RO will update the CDP OI Closure Due Date for 270 days from the date Appeals received the CDP.

• Review AOTO XX91 ICS Notifications periodically for Appeals closures and/or reassignment to an RO.

• If a new assignment, i.e., Bal Due or Del Ret, is received, the GM will transfer the CDP OI back to the RO.

• If the new Bal Dues / Del Rets are resolved and Appeals still has an open CDP case, the RO will request transfer of the CDP OI back to the CDP OI hold file, AOTO XX91.

• If the Bal Due or Del Ret is transferred to another group, the CDP OI also transfers.

• ICS will systemically close the CDP/EH OI when all requests pending in Appeals have a closed date entered on the ICS CDP/EH application.

(6) The CDP case is sent to Appeals electronically. Appeals acknowledgment is received on ICS with action dates updated on the ICS CDP Application. If you do not receive an acknowledgment within 45 days, Field Collection Group Managers can access the Appeals Centralized Database (ACDS) to determine receipt of the case in Appeals. If Appeals did not receive the request, re-send the request to Appeals.

(7) ICS will generate systemic histories and update the ICS CDP application based on information received from Appeals. Appeals will send data to ICS weekly when:

• The case is assigned in Appeals for the first time,

• The case is updated in Appeals, such as a change in hearing type or tax periods added or removed, or

• The case is closed in Appeals.

(8) The history generates if the case originated in the field and if the case is open on ICS allowing the history to post.

(1) The RO can continue to work with the taxpayer after the request is sent to Appeals, especially if there are other assigned modules that are not part of the hearing request. If a resolution is reached, such as a full pay, CNC determination or an IA and it involves modules in Appeals, the RO should solicit a withdrawal of the hearing request.

• If a withdrawal is secured, notify Appeals and forward the withdrawal, Form 12256, to Appeals so Appeals can input the TC 521 and close the case. The appeals officer will close the CDP case within 10 business days of receipt of a copy of Form 12256.

• If a withdrawal is secured and the taxpayer has an appeal pending in Tax Court, notify the Counsel attorney assigned the CDP case regarding the proposed collection alternative or if full payment is received.

• If a resolution is reached but the taxpayer does not withdraw, notify Appeals of the resolution reached.

(2) If the RO secures additional information from the taxpayer while the case is pending in Appeals, such as a financial statement or delinquent tax returns, notify Appeals. The notification is a permitted ex parte communication as long as there is no discussion of the merits of the case. This way Appeals will not have to request information already secured. The RO should advise the taxpayer that the information will be provided to Appeals.

(3) If an in-business trust fund taxpayer is assessed additional tax periods while other tax periods are pending in Appeals, the RO assigned the case should determine whether levy action, such as a disqualified employment tax levy, is appropriate.

(4) The Collection Statute Expiration Date (CSED) is not suspended during an equivalent hearing, so collection action can continue as appropriate.

(5) The authority to file a NFTL is not suspended during the hearing. If the determination is to file a NFTL and the taxpayer disagrees, the taxpayer can request a CAP appeal.

(6) While a CDP NFTL hearing is pending, if the RO determines that an additional NFTL needs to be filed on the same type of tax and tax periods that are the subject of the hearing, the collection group manager or designee needs to contact the Appeals Team Manager (ATM) of the assigned hearing officer, preferably via email, to advise them that filing of the NFTL is planned. Determine whether Appeals has new information that may affect the decision. For example, the taxpayer may have provided Appeals with information raising doubt as to the validity of the liability.

(7) Monitor the case to ensure that the NFTL is refiled during the refiling period. Refer to IRM 5.12.8, Notice of Lien Refiling.

(1) The statute of limitations is suspended from the date the IRS receives a timely request for a CDP hearing to the date the taxpayer withdraws their request for a CDP hearing or the date the determination from Appeals becomes final, including any litigation. The Collection Statute Expiration Date (CSED) is suspended even if the account is full paid as long as the taxpayer does not agree with the offset/payment that full paid the account.

1. The date the determination from Appeals becomes final is the date the 30-day period within which the taxpayer could appeal to the Tax Court expires, if the taxpayer does not exercise their right to seek judicial review (or 90 days, if the CDP petition includes innocent spouse relief, or 180 days, if CDP petition includes interest abatement).

2. If the taxpayer timely petitions the Tax Court, the statute of limitations is suspended and the determination is not final until the court determination becomes final including any appellate court decision.

3. If 90 days is not remaining on the statute of limitations when the determination becomes final, the statute of limitations is extended to equal 90 days.

(2) Upon receipt of a hearing request, determine if the collection statute needs to be suspended. The collection statute is suspended only when a taxpayer files a timely request for a CDP hearing. The collection statute is not suspended on EH cases unless the request includes another basis for suspending the collection statute, such as an innocent spouse request under IRC 6015.

(3) When the CDP collection statute suspension occurs at the same time but differs with other applicable collection statute suspensions, e.g., those under the innocent spouse provisions of IRC 6015 or bankruptcy, the latest suspension period controls.

(1) When a corporation, partnership, or LLC owing trust fund taxes requests a CDP hearing or EH, the TFRP needs to be addressed. There is no prohibition against asserting the TFRP against responsible persons while the CDP/EH is pending. Since the statutory period of limitations for assessing the TFRP is not suspended while the CDP/EH hearing is pending, the TFRP investigation should continue unless the RO has a reasonable expectation of the account being fully satisfied.

(2) The RO should note in the case history whether or not the TFRP investigation is continuing. The investigation can proceed as far as the assertion of the penalty against each responsible person. This includes providing each responsible person with their TFRP appeal rights.

(1) Appeals makes the final determination about timeliness of a CDP or EH request.

1. If the CDP hearing request is timely, the taxpayer will receive a CDP hearing.

2. If the CDP hearing request is untimely, the taxpayer will receive an EH if the taxpayer timely requests one.

(2) In both instances, the hearing is held in Appeals. It is conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax. However, the taxpayer may waive this requirement.

(3) To the extent practicable, a hearing under IRC 6320 (NFTL) and a hearing under IRC 6330 (levy) will be held simultaneously.

(4) The appeals officer is required to verify that the requirements of the Internal Revenue Code or administrative procedure with respect to the proposed collection action have been met. Appeals will verify:

1. That the taxpayer has a valid tax liability for the period and its amount and

2. That procedures for filing the NFTL or issuing the L-1058 have been met.

(5) Clearly and completely document preliminary actions as Appeals will rely on the information in the case file or will seek clarification of items that appear to be incomplete within the case file.

(6) Appeals may request and Collection will secure information pertaining to the taxpayer's appeal, such as verification of financial information and courthouse checks. Appeals will request this information via an Appeals Referral Investigation (ARI). Refer to IRM 5.1.9.3.8.2, Appeals Referral Investigation (ARI).

(7) During the appeal process, the taxpayer or their representative may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including:

• Appropriate spousal defenses,

• Challenges to the appropriateness of collection actions,

• Offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an IA, or an offer-in-compromise,

• Issues related to an economic hardship determination, and

• Challenges to the existence or amount of the underlying tax liability including a liability reported on a self-filed return for any tax period specified on the CDP notice if they did not receive a statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

(8) A non-liability issue may not be raised at the hearing if:

1. The issue was raised and considered at a previous hearing under IRC 6320 or in any other previous administrative hearing before appeals or judicial proceeding; and

2. The person seeking to raise the issue participated meaningfully in such hearing or proceeding.

3. This prohibition does not apply to consideration of collection alternatives when there has been a significant change in the taxpayer's financial condition. In that situation, a taxpayer may continue to make new proposals for an OIC or IA, or other collection alternative, even if one was raised and rejected at a previous hearing or administrative proceeding.

(1) The Appeals determination will take into consideration the following:

1. The verification that the requirements of the Internal Revenue Code and administrative procedure have been met;

2. The issues being raised; and,

3. Whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.

(2) For a timely filed due process hearing, the taxpayer will receive a Notice of Determination letter that explains the taxpayer’s right to petition Tax Court within 30 days of the date of the letter. Appeals Processing (APS) will suspend the case for 60 days after issuing the Notice of Determination to the taxpayer. The suspension period will be longer if the CDP hearing included a spousal defense determination under IRC 6015 or an interest abatement determination under IRC 6404. If no further appeals are filed, the Notice of Determination is final. If the taxpayer contacts you during the Notice of Determination suspension period, you can assist the taxpayer in carrying out the determination of Appeals, (i.e., Installment Agreement) or otherwise assist in resolving the liability.

(3) For an EH, the taxpayer will receive a decision letter. In an EH, the decision by Appeals is final, and there is no appeal to court, except as it relates to certain spousal defenses under IRC 6015 (if a petition is filed within 90 days after denial is issued), denial of a request for interest abatement (if a petition is filed within 180 days after denial), or if the taxpayer disagrees with Appeals' decision that the taxpayer's CDP hearing request was not timely.

(4) In both the Notice of Determination letter and decision letter, Appeals will provide clear information regarding any agreement reached with the taxpayer, any relief given, and any necessary actions required by Collection. If the tax liability is upheld or the enforcement action is appropriate, the letter will so state, even if the appeals officer decides to provide the taxpayer a different collection alternative. The letter will also set forth specific ramifications should the taxpayer not comply with the terms of the agreement.

(5) Appeals will generally follow the IRS guidelines for collection set forth in the Internal Revenue Manual (IRM). Appeals, however, also considers the impact of the hazards of litigation, which may be applicable especially if tax liability is the issue. In addition, Appeals is required to balance tax collection needs with the legitimate concerns of the taxpayer that any collection action be no more intrusive than necessary and renders its determination accordingly.

(1) After Appeals makes its determination in a CDP hearing, the taxpayer may, within 30 days of the date of the determination letter, petition the Tax Court.

(2) To allow time to be notified of any court petitions, Appeals will hold cases subject to Tax Court review for an additional 30 days (60 days after issuance of the Notice of Determination). If the taxpayer reaches an agreement with Appeals and does not wish to go to court, Appeals employees may use Form 12257, which serves as a summary Notice of Determination, and waives the right to go to court and the suspension of levy action. If the taxpayer waives the right to judicial review, the determination is final and the case can be returned to collection.

(3) Once Appeals issues the notice of determination, the taxpayer may raise collection alternatives with Collection. If the taxpayer has an appeal pending in Tax Court, notify the Counsel attorney assigned the CDP case regarding the proposed collection alternative or if full payment is received.

(4) In an EH, the decision is final when Appeals issues its decision letter, except as it relates to certain spousal defenses under IRC 6015 and denials of interest abatement under IRC 6404.

(1) Once the hearing determination is final, the clerical unit of Appeals, Appeals Processing Service (APS), completes back end processing. APS will

• Input the TC 521, when applicable,

• Input IAs (only exception are manually monitored IAs which Appeals cannot input to IDRS. If Appeals has accepted an IBTF IA, see (4) below),

• Input CNC determinations,

• Input adjustments,

• Input TC 971 AC 277 (CDP request) or AC 280 (EH). These AC's identify when Appeals closes the hearing request.

(2) APS will return the case file to the referring Collection group via encrypted E-mail with copies of all correspondence generated during the hearing along with the applicable Appeals closing letter:

1. Notice of Determination (CDP),

2. Decision letter (EH),

3. Form 12257, Summary Notice of Determination, and cover letter, or

4. Form 12256 Withdrawal and acknowledgment letter.

(3) Review the determination and document a plan of action with respect to the determination.

• If the request was closed as a premature referral because it was not processable, follow procedures in IRM 5.1.9.3.2.3, Perfection of Hearing Requests.

• If the request was closed as a premature referral because the taxpayer is not entitled to a hearing, for example, no CDP notice issued, notify the taxpayer and explain what appeal options are available.

• If the request was closed as a disregarded hearing request, refer to IRM 5.1.9.3.15, Hearing Requests with Frivolous, Delaying or Impeding Issues.

• If Appeals determines a request or periods included on a request were processed to Appeals as timely but are not timely, Appeals will conduct a separate CDP timeliness determination (CDPTD). Refer to IRM 5.1.9.3.2.5, Separate Timeliness Determination.

• If Appeals has accepted an IBTF IA, Collection is responsible to address the TFRP prior to forwarding the IBTF IA to CCP. If needed, secure Form 2750 waivers from all responsible parties, recommend assertion of the TFRP or when applicable, create a Trust Fund Recovery Investigation Other Investigation (OI) on ICS to control completion of the TFRP assessment. Refer to IRM 5.14.7.4.1, Trust Fund Recovery Penalties and Installment Agreements.

• If Appeals determines trust fund liabilities are CNC, Collection is responsible to address the TFRP. When applicable, create a Trust Fund Recovery Investigation OI on ICS to control completion of the TFRP assessment.

• If not previously done, make a Notice of Federal Tax Lien (NFTL) filing determination. Refer to IRM 5.12.2.3, Notice of Federal Tax Lien Filing Determination (Pre-filing Considerations). If the determination is to file a NFTL and the taxpayer disagrees, explain the CAP procedures to the taxpayer.

(4) When all the hearing requests in Appeals are closed on the ICS CDP applications, the CDP OI should systemically close. If the CDP OI does not systemically close, the RO should alert the group manager to take needed action to close the CDP OI.

(5) Upon receipt of a closed case, if the TC 521 to reverse the Status 72 has not been input, contact the Appeals Account Resolution Specialist (AARS) via email at *AP Account Resolution for corrective action.

(1) The Office of Appeals retains jurisdiction with respect to any Notice of Determination issued under IRC 6320 or IRC 6330, including subsequent appeals requested by the taxpayer who requested the original Collection Due Process hearing on issues regarding:

1. Whether the taxpayer believes Collection did not carry out Appeals' determination as it was stated.

2. Whether there is a change in the taxpayer's circumstances which affects Appeals' determination.

(2) Taxpayers, who request subsequent review of their case by Appeals under the changed circumstance provision under retained jurisdiction, must first exhaust all administrative remedies, such as having a conference with the Collection manager. Use the Appeals Electronic Case Receipts (ECR) page and select case type of CDP (Collection Due Process) from Field Revenue Officers to send the case to Appeals. Transmit the retained jurisdiction request with Form 3210, Document Transmittal, or a cover sheet summarizing the issue(s).

(3) If there has been a change in circumstances with respect to the taxpayer affecting the IRC 6320 or IRC 6330 determination, Appeals, under the retained jurisdiction provision, may consider only those issues that were raised and considered at the previous hearing.

(4) The statutory period for collection is not suspended during the retained jurisdiction proceeding.

(5) NFTL filing and levy actions are not required by statute to be suspended during the retained jurisdiction proceeding. However, even when not required by statute, levy action is generally suspended unless collection is at risk. When it is identified that collection is at risk, Collection personnel should initiate the appropriate actions to protect the government's interest. Evidence that the taxpayer is dissipating assets is an example where collection is at risk. Also, pyramiding of additional tax liabilities, including unpaid employment tax deposits and unfiled tax returns while in Appeals, are indicators that collection may be at risk. Refer to IRM 5.7.8, In-Business Repeater or Pyramiding Taxpayers, for additional information regarding in-business trust fund taxpayers. The group manager must concur with the planned levy action during the appeal. Appeals must be advised immediately of any decision to take levy action.

(6) Actions under automated levy programs, such as the SITLP and the FPLP, are not suspended during a retained jurisdiction hearing. Appeals can address the lien or levy action during the retained jurisdiction hearing.

(7) Similar to a Collection Appeal Program (CAP) appeal (Refer to IRM 5.1.9.4, Collection Appeals Program (CAP)), the taxpayer will receive a letter upon completion of the review under the retained jurisdiction provision. The decision by Appeals is final with no judicial review.

(1) There are exceptions to the pre-levy notice requirements of IRC 6330. They are:

1. When the collection of tax is in jeopardy under IRC 6331(a), or

2. A levy is served on a State to collect a Federal tax liability from a State tax refund, referred to as the SITLP, or

3. A disqualified employment tax levy is served, or

4. A Federal contractor levy is served.

(2) A post-levy CDP notice is issued when the taxpayer did not have a prior opportunity for a CDP hearing under IRC 6330. Post levy CDP notices include:

• Letter 2439, Notice of Jeopardy Levy and Right of Appeal

• CP 92 or CP 242, Notice of Levy on Your State Tax Refund, Notice of Your Right to a Hearing

• Letter 1058-D, Post Levy Collection Due Process (CDP) Notice

• Letter 1058-F, Post Levy Federal Contractor Collection Due Process

(3) For more information on post-levy CDP’s, refer to IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, IRM 5.19.9, Automated Levy Programs, IRM 5.11.3.5, Forms and Letters for a Jeopardy Levy without a Jeopardy Assessment, IRM 5.19.9.3.4, SITLP Notices, IRM 5.11.1.5.4, Issuing Notice of Levy/Notice of a Right to a Hearing in Field Collection, and IRM 5.11.1.6.3, Issuing Notice of Intent to Levy and Notice of Your Right to a Hearing in Field Collection FEDCON Case.

(1) A disqualified employment tax levy (DETL) is comprised of these three components:

1. A levy served to collect an employment tax liability;

2. The levy is for taxes owed by a taxpayer who previously requested a CDP levy hearing;

3. The prior CDP hearing involved unpaid employment taxes that arose in the two-year period before the period for which the levy is served.

(2) Even if a taxpayer's employment tax liabilities meet the criteria for a DETL, this action is discretionary and determined on a case by case basis. The IRS has the option to issue a pre-levy CDP notice for DETL periods, if the situation warrants. For example, if there has been no contact with the taxpayer within the last 180 days, the issuance of a pre-levy CDP notice might be advisable to resolve the issue. Also, if no IRC 6331(d) notice (CP 504 notice or “Status 58” notice) has been issued, then issuing the L-1058 meets both the requirements of IRC 6331(d) and IRC 6330.

(3) The prior request refers to a timely, processable CDP hearing request. Refer to IRM 5.1.9.3.2.1, Timeliness of the CDP Hearing Request, for information regarding the timeliness and processability of CDP hearing requests. Even if the request is subsequently withdrawn, it qualifies as a prior hearing request.

(4) The following can be helpful in determining if the taxpayer requested a prior CDP levy hearing involving unpaid employment taxes.

1. First hand knowledge of a prior CDP levy hearing. In most instances involving pyramiding trust fund taxpayers, the RO assigned the case will be aware of previously requested hearings.

2. Case history.

3. A TC 971 AC 630 on prior modules indicates a prior timely levy hearing request.

4. By contacting Appeals at 559-233-1267 to see if they have record of a prior hearing request received in Appeals.

(5) If the taxpayer requested a prior CDP levy hearing involving employment taxes, determine if the CDP levy tax periods occurred in the two-year “look back” period. The two-year look back period is measured from the beginning of the period for which the DETL is served. If the CDP levy hearing periods fall within this two-year period, the new period meets the criteria for a DETL. See examples below.

(6) If a DETL is served, the post-levy CDP notice is sent with the taxpayer’s copy of the levy. This should be done as soon as possible but no more than 10 days after the levy. Letter 1058-D, Notice of Levy and Notice of Your Right to a Hearing is used to provide post levy CDP rights. If using the mail to deliver the post-levy CDP notice, it should be sent to the taxpayer's last known address by certified or registered mail. Include a copy of the levy, Form 12153, Request for a Collection Due Process or Equivalent Hearing, Pub 594, The IRS Collection Process, and Pub 1660, Collection Appeal Rights, with the letter.

(7) Process the post-levy DETL hearing request in the same way as other hearing requests. If a timely filed post-levy CDP hearing request is filed, the CSED is suspended.

(8) A DETL levy may be served during a timely requested pre- or post-levy CDP hearing or judicial review of such hearing to collect employment tax liabilities (DETL tax periods) subject to the hearing. For example, a DETL levy may be served during a hearing or judicial review if collection is at risk (e.g., taxpayer’s business is deteriorating or taxpayer is pyramiding).

• If the DETL levy is to take place during the hearing, check IDRS for actions that may prohibit levy action, i.e., TC 480 or TC 971 AC 043. If there are no apparent TC codes, then contact the Appeals Team Manager of the assigned hearing officer, preferably via email, to inform Appeals that levy action will be taken. Determine whether Appeals has information that prohibits levy or may affect the decision to levy.

• If the DETL levy is to be issued during the judicial review, contact the Counsel attorney assigned the case to advise them of the planned levy action and to determine if there is any new information that may affect the decision to levy.

(1) If the taxpayer provides a frivolous basis for requesting a hearing, then that portion of the hearing request is to be treated as if the hearing request was not submitted. In addition, IRC 6702 (b) provides for a penalty of $5,000 if any portion of a request for a hearing is based on a specified frivolous position, or reflects a desire to delay or impede the administration of federal tax laws.

(2) If a taxpayer files a hearing request that includes a reason that appears to be frivolous or reflects a desire to delay or impede the administration of federal tax laws, forward the request to Appeals. Note "Frivolous Issue Raised" on the Form 3210, Document Transmittal. Appeals will make the determination regarding whether the hearing request or any part of the hearing request is based on a specified frivolous position, or reflects a desire to delay or impede the administration of federal tax laws.

1. A request is deemed frivolous if the sole reason for the request is based on a specified frivolous position identified by the IRS in Notice 2010-33 or its successor notice and any revenue rulings issued since the publication of the notice that identifies frivolous argument. See Exhibit 25.25.10-1, Frivolous Arguments, of IRM 25.25.10.

2. A request is deemed to reflect a desire to delay or impede the administration of federal tax laws if it only lists a reason that, while not one of the published specified frivolous positions, is a position which on its face has no basis for validity in existing law, or which has been deemed frivolous in a published opinion of the United States Tax Court or other court of competent jurisdiction.

(3) In cases in which the IRC 6702(b) penalty might apply, if a frivolous or desire to delay reason is the only issue raised, Appeals will issue a letter to the taxpayer that will give them 30 days from the date of the letter to amend the request, directing the taxpayer to either:

1. Withdraw the reason and provide a valid reason based on existing law; or

2. Withdraw the entire hearing request.

(4) The taxpayer must amend or withdraw the request in writing to avoid the $5,000 IRC 6702(b) penalty. If the taxpayer does not take corrective action, Appeals will disregard the hearing request and return the case to the originating Collection office.

(5) If, in addition to a frivolous or desire to delay reason, the taxpayer provides a non-frivolous issue, such as hardship or innocent spouse claims, Appeals will disregard the frivolous/desire to delay portion of the hearing request and conduct the hearing only on the legitimate issue. In cases in which the IRC 6702(b) penalty might apply, Appeals will issue a letter giving the taxpayer 30 days from the date of the letter to withdraw the frivolous or desire to delay position to avoid the $5,000 IRC 6702(b) penalty as well as to schedule a conference for the legitimate issue. After the hearing, Appeals will issue a Notice of Determination or Decision Letter addressing the legitimate issues and will include a statement that the taxpayer also raised a frivolous or desire to delay position if such position or desire to delay reason is not withdrawn.

(6) Appeals will not make a determination regarding the assessment of the IRC 6702(b) penalty. However, it will identify when the request meets the criteria for penalty assessment. The hearing request containing a frivolous or desire to delay position will be returned to Collection when an entire hearing is disregarded or when the hearing is concluded if a legitimate issue is raised in addition to a frivolous or desire to delay position. Appeals will return the case with the following:

1. Form 5402, Appeals Transmittal and Case Memo - It will include a statement that Appeals has determined that the issues raised in the CDP/EH request were either a specified frivolous position identified by the IRS in Notice 2010-33 or intended to delay or impede the hearing process,

2. A copy of the taxpayer's frivolous CDP/EH hearing request (Form 12153),

3. A copy of the letter or letters Appeals issued soliciting a withdrawal of taxpayer's specified frivolous position or desire to delay position,

4. A copy of Appeals case history notes documenting any discussion it had with the taxpayer regarding the withdrawal request,

5. A copy of any written communication received from the taxpayer in response to the withdrawal solicitation, and

6. A copy of the notice of determination or decision letter (for cases where the taxpayer raises a legitimate issue and an un-withdrawn frivolous or desire-to-delay issue).

(7) Upon receipt of the information from Appeals that the request meets the criteria for assessment of the $5,000 IRC 6702(b) penalty, the collection employee should independently:

1. Determine the taxpayer was given an opportunity to withdraw the position and failed to do so.

2. Verify that the criteria for penalty assessment has been met, and

3. Take the necessary steps to have the penalty assessed.

(8) To recommend assessment of the penalty, forward the IRC 6702(b) Referral Package to the Frivolous Return Program (FRP) in accordance with the procedures in IRM 25.25.10.3, Referrals to Frivolous Return Program.

(9) IRC 6702(d) authorizes the reduction of the frivolous tax submission penalties assessed under IRC 6702 if it is determined that a reduction would promote compliance with and administration of the federal tax laws. Rev. Proc. 2012-43 provides eligibility requirements for reduction. For additional information, refer to IRM 20.1.10.12.3, IRC 6702(d) Reduction of Frivolous Submission IRC 6702 Penalties, and IRM 25.25.10.13, Reduction of the Frivolous Return Penalty IRC 6702(d).

(1) Several collection issues have separate appeal procedures in place. When a taxpayer requests an appeal under CAP in error, advise the taxpayer of the correct appeal procedures. Examples of such requests are:

• Pre or post assessment of Trust Fund Recovery Penalties.

• Rejection of Offer in Compromise.

• Penalty appeals.

• Jeopardy levies: unless the time to appeal under IRC 7429 has expired or the jeopardy levy is not subject to IRC 7429 review and the taxpayer will not be given a CDP hearing (i.e., no hearing request was submitted within 30 days of the notice granting CDP rights or a prior CDP hearing was held for the liability at issue) For example, CAP may be available for a jeopardy levy issued during an IA, OIC, or on the date of a summons. Refer to IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment.

• Audit reconsideration.

• Claims for refund or abatement.

• Original requests for return of levied property.

• Actions under the control of a court of competent jurisdiction.

(2) CAP cannot be used to determine a taxpayer’s liability including reopening examinations or claims for refund. Examination reconsiderations and claims are appealable under their own appeals procedures. Refer to IRM 5.1.15.4.6.4, Appeal Rights on Reconsiderations.

(3) Actions under control of the Department of Justice are excluded from CAP. Refer to IRM 5.17.4.2.1, General Procedures, (4) and (5).

(4) Cases on taxpayers under the control of Criminal Investigation (CI) where CI concurs with collection activity may be reviewed under a CAP. Follow CAP procedures. Appeals will generally delay a CAP hearing during the pendency of criminal investigation and proceedings, unless the determination is made consistent with Policy Statement P-4-26 that the CAP hearing will not imperil prosecution.

(5) CAP cannot be used to address issues not within the scope of Internal Revenue laws, i.e., moral, religious, solely frivolous requests, or requests that reflect a desire to delay or impede the administration of federal tax laws.

(6) CAP cannot be used to address Collection’s decision not to release a lien. Refer to 26 CFR 301.6326-1 (f) and IRM 5.12.3.9, Erroneously Filed Notice of Federal Tax Lien.

(7) Refer taxpayers to the Taxpayer Advocate Service (TAS) (Refer to IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (Refer to IRM 13.1.7, TAS Case Criteria) and you can't resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve within 24 hours as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer "same day" cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.6, Same-Day Resolution by Operations. When you refer cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS. While TAS is attempting to work with the taxpayer to resolve the tax problem, action to collect the tax, such as filing of NFTL or levy, while not prohibited, will generally be suspended. If the RO believes such action is necessary, e.g., the taxpayer is dissipating assets; TAS should be contacted and advised of Collection’s plans in advance.

(1) If the taxpayer or third-party requests a CAP appeal, verbally or in writing, the taxpayer or third-party must first discuss the case with the group manager. The group manager or designee must reply to the request for a CAP appeal conference in a timely manner not to exceed two workdays. The discussion with the group manager on proposed termination, proposed modification, modified, terminated or rejected IAs is not mandatory due to the statutory right to appeal these actions. These appeal requests can be forwarded directly to Appeals without prior group manager conference. However, holding a group manager conference for these types of cases is encouraged.

(2) A taxpayer may submit Form 9423 prior to the group manager conference. Treat this as a request for a CAP appeal conference and contact the taxpayer within two workdays. The instructions on the Form 9423 state that if the taxpayer previously requested a conference and was not contacted, the taxpayer can contact Collection again or submit Form 9423. If the taxpayer chooses to submit Form 9423, the date of the taxpayer's request for a conference and information reflecting they were not contacted by the group manager should be noted in Block 15. The instructions further state, “The Form 9423 should be received or postmarked within four (4) business days of your request for a conference as collection action may resume.”

(3) Once a seizure action is taken, the taxpayer has 10 business days to appeal under CAP from the date the Notice of Seizure is provided to the taxpayer, or left at their usual abode or place of business. Publication 1660, Collection Appeal Rights, must be included with the Notice of Seizure. The 10 business day limitation does not apply to other actions appealable under CAP.

(4) Other than appeals relating to seizures which must be made in 10 business days as discussed above and installment agreement appeals discussed in paragraph (7) below, there is no deadline for requesting a CAP appeal. However, a delay in requesting an appeal may in certain circumstances result in the taxpayer not being able to appeal the issue.

(5) If agreement is not reached at the manager conference, advise the taxpayer or third-party that they can have the issue addressed by Appeals by filing a request in writing. Advise the taxpayer to use Form 9423, Collection Appeal Request. If the taxpayer intends to submit a Form 9423, the taxpayer needs to let the manager or RO know within two business days of the conference with the manager or collection action may resume (except for appeals related to IAs). If the taxpayer mails the Form 9423, it must be postmarked within three business days after the date of the conference with the group manager to avoid collection action. Due to the short time frame, taxpayers may want to submit the Form 9423 at the conference, via fax or electronically and should be advised accordingly. If the taxpayer submitted the Form 9423 prior to the conference, the taxpayer can request that the same Form 9423 be used to submit the case to Appeals. If the issue is not resolved and the taxpayer submits a request to go to Appeals, forward the request to Appeals within 2 business days.

(6) While the stay of collection is no longer required if the taxpayer does not submit a Form 9423 postmarked within three business days after the conference, taxpayers are still entitled to a CAP appeal if their Form 9423 (or other written request) is received in a reasonable time after the manager conference, e.g., ten business days. Requests that come in after the time frame may be the result of continuing collection action and may qualify as a new CAP request if new issues are raised.

(7) For IA appeals, the taxpayer has 30 days to appeal. During that time and during a timely requested appeal, levy action is prohibited by statute.

1. For rejected IAs — The taxpayer has 30 days from the date of the letter rejecting the proposed IA to appeal.

2. For modified/proposed modification of an installment agreement - The taxpayer has 30 days from the date of the proposed modification of the installment agreement to submit an appeal. The taxpayer may also appeal prior to the expiration of the 30 day period commencing the day after the modification is to take effect.

3. For defaulted/proposed termination of an IA — The taxpayer has 30 days to request an appeal after termination of an IA is proposed. Unless the taxpayer appeals within the 30 day period or cures the default, the IA will terminate.

4. For terminated IAs — The taxpayer has 30 days to request an appeal after an IA is terminated. If a taxpayer appeals prior to termination under (c) above, the taxpayer may not appeal the decision again once the termination takes effect.

(1) Generally, a copy of the entire case file is not necessary and is burdensome. At a minimum, the Appeals file should include:

1. Form 9423, Collection Appeal Request, and any taxpayer correspondence which accompanied the CAP request.

2. Copies of the relevant levy, lien, and/or seizure documents.

3. Form 433A or Form 433B.

4. Any other relevant documents, such as copies of deeds, mortgages, counsel opinions, copies of appropriate financial documentation, and/or taxpayer correspondence.

5. Form 15044, Transmittal of CAP Hearing Request. The form includes taxpayer identifying information, POA identifying information (if applicable) the reason for the CAP appeal, list of documents transmitted, date of manager’s conference, when required, your name and contact information, and lists the tax periods included in the CAP appeal.

   Note: When using the ICS CAP application to document receipt and transfer of the CAP request, the system will generate Form 15044 when the manager approves the transfer of the CAP request to Appeals.

6. In addition, any narrative statement included must be limited to a neutral list of documents and neutral statements regarding actions taken and documented in the case history without any further discussion regarding the strengths and weaknesses of the taxpayer's appeal. The manager must ensure this requirement is met and that no prohibited ex parte communications are included before approving the transmittal of the case to Appeals. Refer to IRM 5.1.9.5, Communications with Appeals.

(2) The CAP appeal and associated documents should be scanned and named using the following naming convention: (FC = Field Collection; NF = Non-Field) (Four Character Name Control) (Last Four Digits of TIN) Hearing Type:

(3) Each new CAP receipt is uploaded and sent to Appeals through the Electronic Case Receipts (ECR) page intake site. A Form 15044, Transmittal of Collection Appeals Program (CAP) Hearing Request needs to be completed and included with the CAP appeal.

(4) All Appeals offices have access to the Integrated Data Retrieval System (IDRS) and Integrated Collection System (ICS). The Appeals technical employee can access the ICS case file that includes case history, information on account transactions and the manager’s comments regarding the conference. Collection no longer needs to provide paper copies of the following:

1. ICS history

2. TXMODs

3. Power of attorney information (IDRS cc CFINK)

   Note: If the current information is not on IDRS, provide a copy of the Form 2848.

4. Installment agreement details (IDRS cc IADIS) unless the current IA information is not on IDRS

(5) Appeals may contact the revenue officer or group manager to seek clarification of an illegible or unclear statement in the file, to question them about procedural matters, or to obtain additional information available to the collection employee which is needed by Appeals to adequately consider the issues raised by the taxpayer.

(6) Send to Appeals only those cases that meet CAP criteria. Appeals will return CAP cases as a premature referral, if:

1. Taxpayer appealed before entitlement to a CAP hearing

2. Taxpayer or representative did not have the mandatory meeting with the manager

   Exception: installment agreement CAP requests.

3. Request is for an excluded issue

   Note: Refer to IRM 5.1.9.4.1, Exclusions from CAP.

4. CAP appeal is not timely

(1) The Appeals organization tries to resolve CAP cases within five business days of the receipt of the case by the appeals officer unless there are case complexities that require more time for quality case consideration. The more complex cases should normally be resolved within 15 business days. Appeals will attempt to hold a conference with the taxpayer within two days of receipt of the case. However, if the taxpayer requests a conference delay, and it is warranted, then a reasonable delay will be allowed. Usually, such a delay will not exceed five business days. If the taxpayer does not elect a conference within the time limits given, Appeals will return the case to Collection as a premature referral.

(2) The short time frames have been set to give taxpayers an almost immediate decision on lien issues, levies, seizures, and rejection or termination of IAs. It also helps to ensure that taxpayers do not appeal solely to delay collection.

(3) If a taxpayer presents new information to Appeals that the revenue officer has not considered, Appeals may ask the revenue officer to review and comment on the information, in accordance with the ex parte requirements. To the extent the revenue officer is expected to orally comment on the accuracy of the new information or the relative importance of the information to Appeals’ decision, the taxpayer/representative must be given an opportunity to participate in any discussions with the revenue officer. If comments on the information are in writing, the comments should be sent simultaneously to Appeals and the taxpayer.

(4) When levy action is being appealed, further levy action is generally suspended. However, levy action can be taken if it is determined to be appropriate in the situation. Levy action may be appropriate if:

• Collection is at risk, e.g., dissipating assets, pyramiding additional liabilities;

• Taxpayer raises only frivolous issues;

• Taxpayer is seeking solely to delay the collection process.

(5) The group manager must concur with the planned action during the appeal. Prior to initiating levy action, check with Appeals to determine whether they have new information that may prohibit levy or may affect the decision.

(6) Levy action during a CAP appeal will be suspended when required by law, for example, when the 30-day time period for rejection or termination of an IA is running or during the appeal.

(7) When the filing of the NFTL is the subject of the appeal, further NFTL action is generally withheld unless appropriate to protect the government's interests. The group manager must concur with the planned action during the appeal. Prior to taking further NFTL action, check with Appeals to determine if they have any new information from the taxpayer that may affect the decision.

(8) Appeals will review the case based on law, regulations, policy, and procedures (National and local), considering all the facts and circumstances. Local procedures will only be considered if they are written and in accordance with the IRM.

(9) Judgment is likely to be an issue on these types of cases, although they can also involve legal or procedural issues. Appeals may reverse Collection’s action if evaluation of the taxpayer’s history and current facts and circumstances indicate that the proposed or taken action is inappropriate.

(10) Appeals will inform both Collection and the taxpayer of their decision as soon as possible within the five business day time frame. Appeals will contact Collection immediately upon making a decision. A copy of the closing letter together with the Form 5402, Appeals Case Memo (if prepared) will be sent via encrypted email or EEFAX to the revenue officer.

(11) If Appeals has sustained the collection action, enforcement action may resume upon receipt of the decision, unless otherwise prohibited. For example, if the 30–day time period after rejection of an IA is still running, levy action is prohibited during that time. Otherwise, the decision made by Appeals will be implemented. Appeals will give the closing letter to the taxpayer with a copy to Collection. The closing letter should clearly outline any agreement reached with the taxpayer. In cases where a Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), has been filed by the taxpayer, Appeals will give a copy of the closing letter to the controlling Taxpayer Advocate Office.

(12) Decisions by Appeals are binding on the taxpayer and Collection. Collection will take the actions directed by the Appeals decision. However, if the taxpayer defaults on the decision directed by Appeals, Collection is released from the terms of the agreement. The taxpayer may not appeal the same issue under CAP once Appeals has decided the issue on the same factual basis, e.g., a subsequent levy on the same asset.

(13) Should taxpayers withhold pertinent information or frame a false representation, any agreement made on behalf of the IRS by Appeals will be voidable. Before Collection declares an agreement void under this provision, the Collection group manager will confer with Appeals. Only if Appeals concurs with Collection’s determination, may enforcement action resume immediately.

(14) If there is concern or disagreement with respect to a decision reached by Appeals, refer to IRM 5.1.9.5.4, Disagreement with Appeals Decisions.

(1) Not all ex parte communications are prohibited. Appeals or the originating function may ask questions or provide information that involve ministerial, administrative, or procedural matters and do not address the substance of the issues.

(2) Communications regarding ministerial, administrative, or procedural matters include, but are not limited to, the following:

• Communications about whether certain information was requested and whether it was received.

• Providing information received from the taxpayer.

  Example: The taxpayer files a refund return with the RO. The RO provides a copy of the return to the AO working the CDP case.

• Communications to clarify the content of illegible documents or writings.

• Communications about case controls and transactions on the IRS management information systems.

• Communications regarding receipt of a case or the status of the case that Appeals is reviewing, such as whether the case or an issue in the case has been resolved or when a case is expected to be closed.

  Note: This does not include any discussion of the terms of the resolution prior to the case being closed. Permitted communications concerning the status of the case should be limited to a direct, narrow exchange of information without any surrounding discussion.

  Note: Field Collection Group Managers can access the Appeals Centralized Database System (ACDS) to determine the status of cases in Appeals.

• Providing information regarding planned collection actions.

  Example: An RO contacts the appeals officer and advises them the next planned collection action on this case is levy action of tax years that were previously heard and sustained in Appeals and inquires if the taxpayer has a pending IA or OIC with respect to the current years under Appeals jurisdiction. In this situation, Collection is providing information regarding planned collection actions and seeking to verify compliance with legal and administrative requirements. Communications seeking to verify compliance with legal and administrative requirements in this situation would be considered ministerial, administrative or procedural inquiries. The appeals officer’s response to the RO is not a prohibited ex parte communication.

• Communications in connection with a CDP hearing to verify compliance with legal or administrative requirements and communications with respect to verification of assets/liabilities involving a collection alternative during a CDP hearing.

(3) See section 2.03(2)(a) of Revenue Procedure 2012-18 for examples of permissible communications that are considered ministerial, administrative, or procedural.

(1) A general discussion of the strengths and weaknesses of issues and positions should not be held, unless the taxpayer/representative is provided with an opportunity to participate in the discussion.

(2) Prohibited ex parte communications include:

• Discussions about the accuracy of the facts presented by the taxpayer/representative and the relative importance of the facts to the determination.

• Discussions of the originating function's perception of the demeanor or credibility of the taxpayer/representative.

• Discussions of the originating function’s views concerning the level of cooperation (or lack thereof) of the taxpayer/representative during the originating function’s consideration of the case.

• Discussions regarding the originating function’s views concerning the strengths and weaknesses of the case or the parties’ positions in the case.

• Communications from the originating function to advocate for a particular result or to object to a potential resolution of the case or an issue in the case.

(3) If a questionable communication is encountered, notify your immediate manager. The manager will review the issue and, if appropriate, will contact the Appeals manager regarding the potential ex parte violation. When contacting the Appeals manager, only the specific details of the questionable communication will be addressed. Both Appeals and Collection are responsible to ensure they do not initiate a prohibited ex parte communication. Appeals is responsible for taking the necessary steps to cure a prohibited ex parte communication. Refer to Revenue Procedure 2012-18, Section 2.10, Remedies Available to Taxpayers, and IRM 8.1.10.6, Curing Ex Parte Communication Breaches.

(1) The administrative file transmitted to Appeals is not an ex parte communication since it sets forth the boundaries of the dispute between the taxpayer and the IRS and forms the basis for Appeals to assume jurisdiction.

(2) Any transmittal memorandum or any similar document used to transmit the administrative file (transmittal) should not include statements or comments intended to influence Appeals' decision-making process.

• Summary statements included on a transmittal must be limited to a neutral list of documents and neutral statements regarding actions taken and documented in the case history without any further discussion regarding the strengths and weaknesses of the taxpayer's appeal.

• The manager needs to ensure this requirement is met and that no prohibited ex parte communications are included before approving the transmittal of the case to Appeals. This eliminates the need to send a copy of the transmittal to the taxpayer.

• A transmittal that includes prohibited ex parte communications needs to be shared with the taxpayer at the time the case is sent to Appeals.

(3) If a rebuttal to the taxpayer’s protest is prepared by the originating function, it must be shared with the taxpayer/representative by the originating function at the time that it is sent to Appeals.

(4) Employees are required to maintain and document the administrative file according to established procedures. Statements or documents that are pertinent to the consideration of the issues and included in the administrative file according to procedure are permitted even if the substance of those comments, statements, or documents would be prohibited if they were communicated to Appeals separate and apart from the administrative file. Notes, memoranda, or other documents not in accordance with procedures should not be included in the administrative file if the reason for including this material is to attempt to influence Appeals’ decision-making process.

(5) When a taxpayer submits a request for a CDP, EH or CAP appeal, the request for Appeals’ consideration does not mean collection actions need to stop with respect to the tax periods in Appeals, other tax periods not in Appeals, or both. As such, statements or documents contemporaneously added to the administrative file by Collection after the taxpayer requests Appeals’ review do not violate the ex parte communication rules if they are made to resolve the tax debt(s) or further evaluate the taxpayer’s financial condition and are in accordance with established procedures. It is permissible to contemporaneously include statements or documents that are pertinent to Collection’s consideration of the case in the administrative file even if the substance of those comments, statements, or documents would be prohibited if they were communicated to Appeals separate and apart from the administrative file.

(1) If there is concern or disagreement with respect to an Appeals decision in a particular CAP or CDP case, the group manager may contact the ATM to address the concern and resolve the disagreement.

(2) The Appeals decision will be implemented even as the decision is elevated for review. Elevating the issue can help ensure similar concerns do not arise with future decisions.

(3) If resolution cannot be reached informally at the local level, then a formal process is available to elevate concerns and issues to Appeals. Prepare a written dissent within 90 days of receiving the Appeals decision.

(4) A written dissent needs to:

1. Clearly outline the nature of the dissent and the supporting rationale.

2. Include specific facts that should have been considered or given more weight, if Collection believes Appeals did not properly consider the facts.

3. Provide the applicable law, policy, or procedure, e.g., Code Section, Regulation, Revenue Ruling, IRM policy or procedure that should have been considered or accorded different weight.

(5) Field Collection will forward written dissents through the SB/SE territory manager and Collection area director or AI area manager to the director, Collection Appeals via the “*AP Formal Dissents" centralized mailbox. The Appeals area director will provide a written response to the Collection area director or the AI area manager generally within 90 days of receipt of the written dissent.

(6) Once Collection receives the response, they may request a post-Appeals conference by contacting the Appeals Area Director within 15 days.

(7) In certain unique situations a delay in implementing the CAP appeals decision may be warranted to allow Appeals an opportunity to consider whether Appeals will reopen its decision. If implementation of the appeals decision is being delayed, alert the ATM via email within two business days of the date the decision was sent by Appeals via fax and received in Collection. Within five business days of receiving the decision, secure approval of the Area Director and submit a written dissent to Appeals and provide a copy to the taxpayer.

(8) Appeals will reopen a CAP decision ONLY if the decision involved:

1. Fraud,

2. Malfeasance,

3. Concealment,

4. Misrepresentation of material fact,

5. An important mistake in mathematical calculation, or

6. Such other circumstances that indicates that failure to take such action would be a serious administrative omission.

(9) If Collection requests Appeals to reopen the CAP decision, Appeals will notify Collection of its decision within five business days of the receipt of their request in Appeals. If Appeals does not agree to reopen the CAP decision, Collection will immediately implement Appeals decision.

(10) Concerns regarding Appeals decisions not satisfactorily addressed through this process need to be brought to Headquarters attention. They should be forwarded to the Program Manager, Campus Policy. These procedures do not preclude any activities already in place involving Advisory Boards or the exchange of information between Collection analysts and Appeals analysts.