8.22.9. Closing and Post Closing Actions

(1) The IRS Restructuring and Reform Act of 1998 (RRA 98) created Collection Due Process (CDP) appeal rights and with them, the ability for taxpayers to contest their liability under certain circumstances.

(1) Internal Revenue Code (IRC) sections 6320 and 6330 are the primary sources of authority, in addition to applicable Internal Revenue Manual (IRM) sections. Further, the Taxpayer Bill of Rights, IRC 7803(a)(3), applies to Appeals employees’ interactions with taxpayers.

(1) The Policy analyst shown as the originator on the Product Catalog page is the assigned author of this IRM.

(1) PPQ&A provides trend and data analyses and detailed summary reports for Appeals.

(1) See IRM Exhibit 8.22.4-3, Common Terms and Acronyms used in Collection Due Process, for such common terms and their definitions.

(1) CDP and interest abatement WUNOs must have separate administrative files due to different closing actions required for each. These files must be closed together unless one is withdrawn.

(2) At the conclusion of the CDP hearing, issue one of the combination letters below. A combination letter must be used as it provides the taxpayer with an extended period to petition Tax Court on the interest abatement issue.

(1) CDP and Innocent Spouse (IS) WUNOs must have separate administrative files due to different closing actions required for each. These files must be closed together unless one is withdrawn.

(2) When a joint CDP request includes IS as an issue, each spouse receives a different closing letter because:

• The requesting spouse (RS) has 90 days to petition Tax Court regarding the IS determination

• The RS and non-requesting spouse (NRS) each have 30 days to petition Tax Court regarding the CDP determination

(3) The table below describes the closing letters in a CDP case where the NRS was a participant in the CDP hearing. Letter 3289, Final Appeals Notice, is not issued when the NRS is advised of the result of the IS decision in the CDP closing letter.

(4) When the NRS was not a participant in the CDP hearing, issue the NRS Letter 3289 at closing.

(5) Input the final action codes to both WUNOs. Your ATM inputs the ACAP to both WUNOs.

(1) CDP and the OIC WUNOs must have separate administrative files due to different closing actions required for each. The CDP and OIC files must be closed together unless one was withdrawn, the OIC is not processable or there is an imminent TIPRA statute.

(2) If you are recommending acceptance of an OIC that requires Counsel review, hold the CDP open until approval is secured so the two files can be closed together.

(1) Any notice required to be sent by statute is sent separately to each individual filing a joint return. When one joint hearing is requested for both individuals on a joint return, the following closing letters are addressed jointly but mailed separately to each individual requesting the joint hearing:

• Notices of Determination (NOD)

• Decision Letter

• Letter 3978 Supplemental NOD

(2) Closing letters not required by statute are sent separately to each spouse if one is living at a different address. Examples include:

• Letter 4381

• Letter 4382

• Letter 4383

• Letter 5145

(3) Print an ENMOD or INOLES at closing to ensure the closing letter is mailed to the taxpayer's most current address.

(4) NODs or Decision Letters should not be sent to a taxpayer representative if their Form 2848, Power of Attorney and Declaration of Representative, does not include all periods included in the NOD or Decision Letter.

(1) Appeals may disregard any portion or all of the CDP or EH hearing request when a portion or all the request states a position which the Service has publicly identified as frivolous or reflects a desire to delay or impede the administration of the federal tax laws. The entire CDP request may be disregarded and the taxpayer denied a CDP hearing only if the taxpayer fails to raise a single non-frivolous argument. See IRM 8.22.5.5.3 , Frivolous Issues.

(2) If a taxpayer fails to respond within 30 days or responds with frivolous or desire-to-delay statements after receiving Letter 4380, Frivolous Acknowledgement, then use Letter 4381, Disregard Frivolous, to advise the taxpayer the hearing request has been disregarded.

(3) An attachment is not prepared for Letter 4381 since Appeals did not conduct a legal and administrative analysis.

(1) When you reach an agreed resolution and the taxpayer signs Form 12257, Summary Notice of Determination, prepare Letter 4382 as a cover letter. This letter acknowledges receipt of Form 12257 and the agreed resolution of the CDP.

(2) Document the agreement reached on either Form 12257or Letter 4382 including the terms of the agreed resolution:

• IA: payment amount and date

• OIC: terms of the accepted offer

• CNC: accrual of interest and penalty

• Innocent Spouse: the final determination

• Penalty and/or Interest abatement: the final determination

  Note: This list is not all inclusive.

(3) If you considered an OIC prior to reaching agreement on an IA or CNC, you must state whether the offer was rejected, returned or withdrawn in order to end the TIPRA statute.

(4) Letter 4382 is signed by the ATM with the following exceptions noted below. Delegation Order App-193-1 allows Appeals Officers, Settlement Officers or Account Resolution Specialists to sign Form 12257 and Letter 4382 when either:

• IS is the sole issue and relief is granted in full leaving no remaining issue for Appeals consideration

• Collection is the sole issue, which is resolved by an IBTF-Express, Streamlined or Guaranteed IA

• Penalty appeal is the sole issue and relief is granted in full with prior ATM approval, leaving no remaining issue for Appeals consideration

• Collection accepts a taxpayer’s Offer in Compromise, leaving no issues for Appeals consideration

• The taxpayer is granted a short term payment plan following IRM 8.22.7.6, Short Term Payment Plan within 120 Days, and there are no other issues for Appeals consideration

(5) The hearing officer signing the Form 12257 and Letter 4382:

1. e-Mails the case resolution to the ATM so the ATM can enter the ACAP date on ACDS

2. Enters "N/A- D.O. App-193-1" in the Form 5402 signature block

3. Sends the closed case to APS for processing

(1) Prepare Letter 4383 when a taxpayer withdraws a CDP request. Letter 4383:

• Provides the taxpayer the date Appeals received the withdrawal

• Provides APS the date Appeals received the withdrawal and this date is used for input of the TC 521 cc 76/77

• Can be signed by the hearing officer

(2) Use Letter 4383 even if the withdrawal was received before Appeals issued a SCL. Before issuing the letter, ensure the AO had no prior involvement with the taxpayer, type of tax and tax periods, since Letter 4383 contains a no prior involvement clause.

(3) In a withdrawal, there is no need to:

• Prepare an ACM

• Secure an ATM signature on Form 5402

(4) Use the following codes on the Form 5402:

• Closing Code = 16

• CDP Tracking Code = WD

• Resolution Reason Code = OT

(5) If a taxpayer withdraws from a CDP hearing but then rescinds that withdrawal prior to formal issuance of the closing letter by Appeals, proceed with the hearing. The rescission by the taxpayer may be made verbally or in writing. Document the CAR.

(1) At the conclusion of an EH hearing, prepare one of the following decision letters in APGolf 2.0:

• Letter 3210, Decision on Equivalent Hearing Under IRC 6320 and/or 6330 Closing, or

• Combination Letter 4439 where IS was raised

• Combination Letter 4440 where Abatement of Interest was raised

• Letter 5145, Agreed Equivalent Hearing Closing Letter, for agreed EH cases

(2) Decision Letters contain a Summary Statement at the bottom of the letter which:

1. Briefly states whether the disputed collection action is sustained or not

   Example: "The issuance of the Notice of Intent to Levy was proper. The levy action proposed by the Revenue Officer is sustained"

2. Describes any conditions that might result in future enforced collection action

Example: "Your request for an installment agreement is granted. Failure to meet the terms of the agreement may result in collection action."

(3) If a CDP liability is paid and the taxpayer doesn't withdraw the request, you still must issue a Decision Letter.

(4) Appeals Officers, Settlement Officers and Account Resolution Specialists may sign Letter 5145, Agreed Equivalent Hearing Closing Letter, and Form 5402 when:

• IS is the sole issue and relief is granted in full leaving no remaining issue for Appeals consideration

• Collection is the sole issue, which is resolved by a IBTF-Express, Streamlined or Guaranteed IA

• Collection accepts a taxpayer’s Offer in Compromise, leaving no issues for Appeals consideration

• The taxpayer is granted a short term payment plan following IRM 8.22.7.6 , Short Term Payment Plan Within 120 Days, and there are no other issues for Appeals consideration.

(5) The hearing officer signing Letter 5145:

1. e-Mails the case resolution to the ATM so the ATM can enter the ACAP date on ACDS

2. Enters “N/A-D.O. App-193-1” in the Form 5402 signature block

3. Sends the closed case to APS for processing

(6) When closing an EH case where the timeliness determination of the appeal remained in dispute with the taxpayer, use the remarks section on Form 5402 to alert APS to suspend the case following procedures in IRM 8.20.6.20.2, CDP Notices of Determination (NOD), in the event the taxpayer files a tax court petition.

(1) At the conclusion of a CDP hearing, prepare one of the following determination letters in APGolf 2.0:

• Letter 3193 in most instances, or

• Combination Letter 4389 when Abatement of Interest was raised

• Combination Letter 4390 when IS was raised

• Letter 4382 when the taxpayer signed Form 12257

(2) Determination Letters contain a Summary Statement at the bottom of the letter which:

1. Briefly states whether the disputed collection action is sustained or not

   Example: "The filing of the Notice of Federal Tax Lien was appropriate. The lien will remain in place until the liability is satisfied or the collection statute of limitation expires"

2. Describes any conditions that might result in future enforced collection action

Example: "Your request for an installment agreement is granted. Failure to meet the terms of the attached agreement may result in collection action."

(3) If a CDP liability is paid and the taxpayer doesn't withdraw their request, you still must issue a determination letter.

(1) At the start of the attachment, list the type of tax, period(s), date of the CDP notice(s), and date of taxpayer's CDP request. List all periods that appeared in the CDP notice(s). If an OIC was considered in CDP, separately indicate in the attachment all periods that were included in the OIC.

(2) State whether you conducted a levy or lien hearing, or a combination of both.

(3) If the request was based on both lien and levy notices, specify tax and periods listed in each notice.

(4) If the tax includes civil penalty module(s), specify the code section under which the penalty was imposed.

(5) Tax periods from related WUNOs may be combined into a single NOD or Decision Letter if they are for the same taxpayer or taxpayer entity.

(1) This section briefly summarizes what the reader will find in the rest of the document. Clearly state what your determination is regarding the hearing.

(1) The brief background section of the attachment discusses:

• Requests for documentation, how much time the taxpayer had to produce the documents and whether they were provided

• Whether a conference was held and, if so, the type of conference, such as in-person, telephone, etc. See IRM 8.22.5.6.1 , Types of Appeals Conferences, for information on the different types of Appeals conferences

• Any issues regarding timeliness of the CDP request. If timeliness was disputed by the taxpayer, discuss this further in "Issues" section

(1) You are required by law to consider three areas in a CDP determination, referred to as the "Big Three." Your attachment must contain a "Big Three" review that includes:

1. Verification the requirements of any applicable law or administrative procedure were met

2. Issues raised

3. Balancing

(1) This section is for discussing the legal and administrative review.

(2) Valid and Accurate Assessment: Was a valid and accurate assessment made for each tax and period on the CDP notice? Invalid or inaccurate assessments must be abated and collection cannot proceed. If the liability arose from a Statutory Notice of Deficiency (SNOD) or Letter 1153, Proposed Trust Fund Recovery Penalty Notification, discuss whether the notice was properly issued as per IRM 8.22.5.4.2, Legal and Administrative (L&A) Procedure Review. Discussion should include whether:

• The assessment is valid because the SNOD or 1153 was timely issued by certified mail to the taxpayer’s last known address

• The assessment is valid because the taxpayer signed a waiver, making the SNOD or 1153 unnecessary.

• The assessment is invalid because the SNOD or 1153 was not sent to the last known address and not received in sufficient time to petition Tax Court

• The assessment is invalid because the assessment was incorrectly assessed under math error procedures with no SNOD

• For 6020(b) nonfiler assessments, that the failure to file, failure to pay and estimated tax penalties are listed on the SNOD. If not, the penalty assessments would be invalid.

(3) Receipt of the SNOD or 1153 is not required to verify an assessment is valid. Receipt is relevant to establishing whether liability was properly at issue in the hearing. If the taxpayer admitted receipt of the notice, document it here. If the taxpayer denied or could not recall receipt of the notice, see the table below for additional documentation:

(4) Notice and Demand: Was notice and demand issued to the taxpayer’s last known address within 60 days of assessment as per IRC 6303? Failure to give notice and demand within 60 days doesn’t invalidate the notice and demand or the assessment. See Treas. Reg. 301.6303-1(a). If the IRC 6303 notice was not issued or issued late, most other collection notices can constitute notice and demand for purposes of the statute.

(5) Balance Due: Was there a balance due at the time the CDP notice was issued?

(6) CDP Notice Properly Issued: CDP notice verification requires you to confirm the CDP lien or levy notice was properly issued to the taxpayer. Properly issued means the CDP notice was:

1. Delivered personally to the taxpayer, or

2. Left at the taxpayer's dwelling or usual place of business, or

3. Sent by certified or registered mail, return receipt requested, to the taxpayer's last known address

   Note: Return receipt requested is not required for CDP lien notices

(7) No prior involvement: Did you previously handle a non-CDP case (including EH cases) on this taxpayer for the same tax and tax period? If so, document that you obtained a Form 14041 waiver. IRC 6320(b)(3) and 6330(b)(3) require the hearing to be conducted by an employee with no prior involvement with respect to the unpaid tax. Prior involvement includes participation in a matter (other than a prior CDP hearing) that the taxpayer may have had with respect to the taxes shown on the CDP notice.

(8) For other required verifications, in general, see IRM 8.22.5, Collection Due Process, Receipt, Control and Pre-Conference Considerations.

(1) This section is for discussing all non-frivolous issues raised on Form 12153 and in the hearing. The table below highlights the issues a taxpayer might raise and what to discuss:

(2) If the taxpayer's arguments and/or collection alternatives were rejected, why were they rejected? Explain in detail why your determination was correct.

(3) If the taxpayer or representative listed issues in the request for Appeal that were not pursued while the case was in Appeals, note that in your ACM with a general statement such as :

No other issues were pursued by the taxpayer / representative while in Appeals.

Example: In the request for the appeal, the taxpayer seeks alternatives such as: OIC, CNC, IA, and interest and penalty abatement. However, at conference, only an OIC is discussed and the case is ultimately resolved with an OIC. There is no need to address any other of the original proposed alternatives other than as stated above.

(4) When an ASFR/SFR liability was raised by the taxpayer, document the following under Issues Raised or on the Form 12257:

You filed income tax return(s) for calendar year ending [ ] with Appeals after the IRS completed substitute return(s) for you as authorized by Internal Revenue Code 6020(b). Appeals forwarded your income tax return(s) for reconsideration. The IRS processed your return(s) and made the adjustments you requested. Since there is no dispute as to the amount of the tax liability, it is not necessary for Appeals to make a determination on this issue.

(5) When an ASFR/SFR liability was raised by the taxpayer but precluded, document the following under Issues Raised or on the Form 12257:

I determined you were precluded from challenging the liability for the [ ] tax year(s) in CDP because you received a prior opportunity to do so. Though precluded, your liability was reconsidered outside of CDP. You filed an income tax return for the [ ] tax year(s) which were forwarded for reconsideration. The IRS made the adjustments you requested.

(6) If the taxpayer raised frivolous issues, do not discuss them. Instead, note that Appeals does not consider frivolous issues.

(1) In the balancing section, explain whether the proposed collection action balances the need for efficient collection of taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. Balancing is tied to the taxpayer's:

1. Actions or inaction

2. Compliance history

3. Financial circumstance

(2) Discuss balancing even when the only issue raised is liability.

(3) When the taxpayer is unresponsive or proposes no collection alternatives, the levy proposed or Notice of Federal Tax Lien is generally sustained.

(4) When the Notice of Intent to Levy was properly issued but you subsequently agree to a collection alternative, state so.

(5) When the Notice of Federal Tax Lien is sustained.

(1) A Tax Court case is commenced by filing a petition. The table below lists the deadline for filing a petition with the Tax Court:

(2) If the taxpayer wants Tax Court review of a denial of relief under IRC 6015 or 6404, as well as other issues raised in the CDP hearing, the taxpayer must petition within 30 calendar days of the issuance of the Notice of Determination.

(3) 11 USC 362(a)(8) prohibits the filing of a petition with the Tax Court if a taxpayer is in bankruptcy. If a taxpayer petitions Tax Court after filing a bankruptcy petition, the Tax Court petition will be dismissed. In innocent spouse and CDP cases where the taxpayer has filed a bankruptcy petition, the deadline for filing a petition with the Tax Court is suspended for the period during which the taxpayer is prohibited by the bankruptcy from filing such petition, plus 60 days (applicable to Tax Court petitions filed after December 18, 2015).

(4) IRC 6330(d)(1) does not provide additional time to petition to persons residing outside of the US.

(1) The table below describes the standard and scope of Tax Court review in a CDP determination:

(2) "Abuse of discretion" is defined as “arbitrary, capricious, clearly unlawful, or without sound basis in fact or law.”

(1) Assignment of a remand should generally be to an AO other than who issued the NOD.

(2) If an AC/FR was previously input on the Case Activity Record (CAR), the ATM must input **RR to reflect the case returning to the assigned hearing officer. This changes the prior AC/FR to MS. If the case is reassigned to a different hearing officer, the ATM will reassign and input **RR on the CAR.

(3) Send a secure e-mail to APS requesting input of:

1. Closing code 42, Case Remanded. CC 42 changes the case from PART 3 to PART 2.

2. REMAND in LOC 3 field.

(4) Remands must be expeditiously worked to meet court-ordered deadlines for conducting the supplemental hearing and responding to the court. These deadlines are found in the Area Counsel memorandum accompanying the remand.

(5) In a docketed case, the taxpayer’s counsel of record should solely receive all correspondence as stated in 26 CFR 601.509.

(6) Contact the taxpayer or counsel of record, as needed, to schedule the supplemental hearing. Ask if a copy of Counsel’s memorandum to Appeals regarding the remand was provided, and give them a copy if it was not.

(7) Notwithstanding the expedited nature of a remand assignment, be certain that enough attention and consideration are given to the issues discussed in the remand order and that they are adequately presented to the taxpayer, particularly when the taxpayer is pro se.

(8) Complete the requirements in Counsel's remand memo including contacting Counsel by the specified due dates. Do not address issues that are outside of the scope of the remand. If anything is unclear, be sure to address any clarifications to the memo with Counsel.

(9) Depending on the requirements stated in the remand, new information may be necessary to be obtained from the taxpayer. Discuss with Counsel the appropriateness of issuing an ARI to Collection to obtain, review and/or investigate and comment on new information.

(10) Avoid the hasty issuance of a supplemental notice of determination. Be liberal with granting reasonable extensions of time for the taxpayer to complete the requirements of the remand. If extensions will go beyond a deadline stated in the remand order or Counsel memo, consult with IRS Counsel regarding the extension.

(1) When the Tax Court remands a CDP for consideration of an OIC not submitted in the initial hearing, follow IRM 8.22.7.10, Offers in Compromise (OICs), for carding in and processing the OIC.

(2) If Collection accepts the OIC, Collection prepares and processes the acceptance documents with courtesy copies sent to Appeals. The Hearing Officer must forward copies of the acceptance documents to the Counsel attorney.

(3) If Appeals accepts the OIC, it cannot be processed until the Status 72 is reversed. Send Counsel the entire accepted offer file along with the supplemental NOD, making sure Counsel understands it has the original offer and that Counsel must direct APS to process the accepted offer.

(1) When the Tax Court remands a CDP for reconsideration of an OIC, Appeals reconsiders the original offer. The taxpayer is not asked to submit a new OIC, pay a new application fee or make a new TIPRA payment. However, if the offer amount is increased, the taxpayer must make an additional payment of 20% of the increase if the taxpayer is making a lump sum offer.

(2) The original rejection of the offer in the CDP hearing tolls the TIPRA statute under IRC 7122(f) even if the court holds the rejection was erroneous.

(3) Request APS reopen the CDP OIC WUNO:

• STATDATE field remains blank

• Enter SUSP in the STATCODE field

(1) Once the supplemental hearing is concluded:

1. Prepare Letter 3978, Supplemental Notice of Determination, and share with assigned attorney prior to submitting the case to the ATM. The attorney reviews the NOD before it is issued to ensure compliance with the Tax Court's order.

2. Input AC/FR on the CAR.

(2) Submit to your ATM at closing:

1. Letter 3978

2. Case Summary Card

3. CAR

4. The administrative file including copies of all letters and documentation issued to or received from the taxpayer regarding the remand

5. Form 2828, Transmittal Memorandum, to return the case to Counsel

6. If the decision in the case changed during the remand hearing, prepare a new form 5402. If the decision remains the same, a new form 5402 is not needed.

(3) The ATM inputs a revised ACAPDATE and submit to APS for closing

(4) The remand file is returned to APS after the ATM review. APS issues the supplemental NOD and puts the case back into PART 3. Then APS sends the file back to Counsel.

(5) After the Supplemental NOD is issued, the jurisdiction of the case remains with the Tax Court. The Supplemental NOD is not a new determination and does not provide the taxpayer with additional judicial appeal rights.

(6) The taxpayer is not required to re-petition the Tax Court if they disagree with the Supplemental NOD.