8.22.6. Cases Requiring Special Handling

(1) Purpose: This section provides guidance to Appeals Technical Employees (ATEs) for certain specialty issues arising in Collection Due Process (CDP) cases.

(2) Not every specialty issue is discussed in this section. Instructions for some cases and issues fit better in other sections as listed in the table below.

(3) Audience: The primary users of this IRM section are ATEs and Appeals Team Managers (ATMs) handling Collection Due Process (CDP) and Equivalent Hearing (EH) cases.

(4) Policy Owner: Director, Case and Operations Support.

(5) Program Owner: Director, Policy, Planning, Quality and Analysis (PPQ&A).

(6) Contact Information: Appeals Employees should follow established procedures on How to Contact an Analyst. Other employees should contact the Product Content Owner shown on the Product Catalog Information page for this IRM section.

(1) RRAP delivers priority CDP hearings for cases meeting ALL of the following criteria:

1. In-business taxpayer owing employment taxes

2. Taxpayer is not making Federal Tax Deposits (FTD) in the current quarter

3. Unpaid tax due including accruals is $10,000 or more

4. Receipt of a timely request for an IRC 6330 hearing or a combination IRC 6330 and IRC 6320 hearing

5. No existing tax periods for which levy action may be taken, such as those subject to an equivalent hearing, those for which an IRC 6330 hearing has already been held, or the one year period to request an equivalent hearing has expired. If levy action can be taken for another tax period, the IRC 6330 hearing does not qualify for RRAP

(2) Cases excluded from RRAP include:

1. Equivalent hearings (EH)

2. Request solely for an IRC 6320 hearing

3. Disqualified Employment Tax Levy (DETL)

4. Not forwarded to Appeals within 45 calendar days of Collection's receipt of the taxpayer's request for a CDP hearing

5. Case not submitted via encrypted e-mail

(3) To be considered under RRAP, a case must be identified as such by Collection prior to being forwarded to Appeals using the RRAP procedures below.

(4) After approval by the revenue officer's group manager, the digitized case documents listed below must be forwarded to the appropriate Appeals RRAP Technical Coordinator via encrypted e-mail with a courtesy copy to the appropriate RRAP Account and Processing Support (APS) Coordinator within 45 days of the date Collection received the taxpayer's written request for a CDP.

(5) Collection sends RRAP cases via encrypted e-mail to the Appeals RRAP Technical Coordinators and the RRAP APS Coordinators as follows:

(6) The e-mail subject line should contain "CDP IBTF RRAP Case - XXXX" where XXXX reflects the case name control.

(7) The file must include the following digitized documents:

• Form 12153, Request for a Collection Due Process or Equivalent Hearing, or substitute written request

• Form 14461, Transmittal of CDP/Equivalent Hearing Request with a note indicating if financial information is available

• Copy of the CDP Notice, Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, and if the request is for a hearing under both IRC 6320 and IRC 6330, a copy of Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320

• Copy of the envelope

• Form 433-B or other financial documentation if available

• Additional documentation/correspondence sent with the Form 12153

• Any additional documentation/information in the case file pertinent to the issue(s) raised by the taxpayer

(1) IRC 6330(f) provides 4 exceptions to the pre-levy notice requirements in IRC 6330:

• Jeopardy levy

• State Income Tax Levy Program (SITLP)

• Disqualified Employment Tax Levy (DETL)

• Levy on a Federal Contractor (FEDCON)

(2) When the IRS levies prior to issuing a CDP notice in these circumstances, the taxpayer is given the opportunity for a CDP hearing via a post-levy CDP notice issued within a reasonable period of time after the levy. The subsections below discuss each of the exceptions.

(1) International tax issues arise from overseas and cross-border activities of U.S. businesses and individuals as well as U.S. activities of foreign businesses and individuals. The definition of International issues, including coordinated, non-coordinated, and emerging issues can be found on the Appeals International website located at http://appeals.web.irs.gov/intl/default.htm.

(2) Input Feature Code "IC" (International Case) to ACDS when a CDP has an international tax issue.

(3) Examination International tax issues generally require a referral to the Appeals Team Managers of the International Technical Specialist groups found on the Appeals International web page. See IRM 8.22.8.6.1, Referring a Liability Issue, for instructions on referring the international tax issue to an Exam AO for consideration.

(4) Form 13381, Appeals Technical Guidance/International Referral is:

• Used when the international tax issue requires only a telephonic or secure e-mail consultation with International Operations

• Not used when a liability WUNO is established under IRM 8.22.8.6.1, Referring a Liability Issue, and referred to an International Exam AO Team for consideration

(5) Form 13381 resources are found on the International website http://appeals.web.irs.gov/intl/default.htm including:

• ACDS Form 13381 desk guide under the RESOURCES tab

• A link out to Form 13381 under the REFERRALS tab

• Where to send the referral under the REFERRALS tab

(6) International cases with collection related issues should be assigned to the Collection Appeals group with responsibility for working such cases. Proposed case transfers should be coordinated through that team’s ATM. Locate the ATM’s contact information via the link that is located on the Appeals intranet page following Collection > Resources > Appeals International Collection Issues Group.

(1) Under state law, general partners in partnerships are liable for taxes assessed against the partnership. In United States v. Galletti, 541 U.S. 114 (2004), the Supreme Court held the Service’s assessment against a partnership serves to make the general partner liable for the tax. While the Supreme Court did not address administrative collection, Galletti is consistent with the Service’s long-standing legal position that it can enforce a tax lien and take administrative levy action against a general partner based on the assessment and notice and demand directed to the partnership. See Chief Counsel Notice 2005-003 at http://www.irs.gov/pub/irs-ccdm/cc-2005-003.pdf

(2) A partner's individual CDP hearing request:

• Affects Collection's ability to collect from that partner's individual assets

• Does not affect Collection's ability to collect from the partnership or other individual partners' assets

(1) Collection must identify the liable taxpayer prior to issuing a CDP notice so that the correct entity is notified of their right to a CDP hearing. IRM 5.1.21,Collecting From Limited Liability Companies (LLCs), contains guidance for Collection employees including IRM 5.1.21.14, Identification of Liable Taxpayer, and IRM 5.1.21.6.1, Collection Due Process Notice.

(2) The liable taxpayer is either the:

• LLC: When the LLC is the taxpayer, the assessment is made against the LLC and the notice and demand and the CDP notice are issued in the name of the LLC and the LLC has the right to a CDP hearing; or

• SMO: When the Single Member Owner (SMO) is the taxpayer, the assessment is made against the SMO and the notice and demand and the CDP notice are issued in the name of the SMO and the SMO has the right to a CDP hearing

(3) Appeals must verify whether Collection properly assessed the correct person or entity and properly issued the notice and demand and the CDP notice to the liable taxpayer as part of the Legal and Administrative analysis. This is done by reviewing:

• ICS history to see how the revenue officer documented the basis of their liable taxpayer determination

• IDRS transcripts for command code BMFOLE to confirm the liable taxpayer:

(4) The liable taxpayer is sometimes identified in TXMOD with Transaction Code (TC) 971 and an Action Code (AC) shown below:

(5) The table below reflects Part 5 IRM sections containing LLC instructions Collection must follow when deciding how to list the taxpayer's name on the notice of lien or levy and whom to notify of CDP rights:

(6) A disregarded SMO LLC is carded-in on ACDS as the case appears on IDRS. The information on ACDS must match IDRS.

(7) If you determine the LLC entity is a disregarded single owner, prepare the ACDS update form and request that APS:

1. Add the single-owner name to the name line of the ACDS entity section BEHIND the LLC name

   Example: xxxxx LLC, xxx xxxxx, owner

2. Add the single-owner TIN (SSN or EIN) to the TIN2 field

(8) A request for a CDP hearing that lists the SMO's name and the LLC's EIN but not the single owner's TIN is not valid. The taxpayer is required to include an identifying number in the written CDP hearing request. Thus, if a single owner of a disregarded LLC fails to include his/her TIN and lists only the LLC's EIN, then the CDP hearing request is not perfected. If a CDP is referred to Appeals without required TIN information, attempt to obtain it from internal sources - IRM 8.22.5.2.3, Imperfect Hearing Requests. If you cannot locate the TIN from internal sources, return the request as a premature referral.

(9) If the CDP notice was not properly issued to the liable taxpayer, return the request to Collection as a premature referral. Not properly issued includes:

• The CDP notice was not issued to the liable taxpayer

• The name of the liable taxpayer was not included on the original CDP notice

• The CDP notice was not sent to the liable taxpayer's last known address

(10) A review of IDRS is generally all that is required to verify a CDP notice was properly issued to the liable taxpayer. However, it is possible for an LLC to change without notice to the IRS. If the L & A verification confirms the CDP notice was properly issued but the taxpayer claims collection action is directed at a person or entity who is not liable, (e.g. the assessment was made against the wrong person or entity, the notices (including notice and demand) were issued to the wrong person or entity) the taxpayer should be asked to document that claim. This issue can be complex as both State law and Treas. Regs. can factor in. Refer to IRM 5.1.21,, Collecting From Limited Liability Companies (LLCs), and if in doubt, consult with Area Counsel.

(1) Add ACDS feature code "DR" to cases that qualify for disaster relief.

(2) Special tax law provisions may grant additional time to file returns and pay taxes as a means to help taxpayers recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

(3) Appeals follows the Disaster Relief Memorandums issued by the Director, Communications, Liaison and Disclosure (CLD), when dealing with taxpayers in a disaster-covered area. Disaster Relief Memorandums are available at: http://www.icce.irs.gov/fema/

(4) Disaster Relief IRM guidance for Appeals is found at:

• IRM 8.7.1.10, Disaster Relief Cases, and

• IRM 25.16, Disaster Assistance and Emergency Relief

(1) If a taxpayer files bankruptcy after filing for a CDP or EH hearing:

• Suspend the CDP case by inputting SU/PI and E/BNK to the Case Activity Record (CAR).

• Do not issue a Notice of Determination or Decision Letter

• Do not request a Form 12256, Withdrawal or Form 12257, Summary Notice of Determination

(2) If there is an open OIC case related to the CDP, close the OIC WUNO as a return using cc 20. Send a standalone Letter 5010 to convey the OIC disposition to the taxpayer.

(3) There are certain actions that should be taken on CDP/EH cases with a bankruptcy proceeding which do not violate the automatic stay. See IRM 8.7.6.2, Appeals Bankruptcy Cases, Collection Due Process Cases, for a discussion of the following:

1. Verification of the bankruptcy filing

2. Suspending the CDP proceeding

3. Monitoring and reactivating a suspended case

4. Determining if the automatic stay has lifted

5. Resuming the CDP process

(4) If a Notice of Determination or Decision Letter was issued on an open bankruptcy case, alert Area Counsel as the notice may be void.

(5) 11 U.S.C. 362(a)(8) prohibits the commencement or continuation of a Tax Court proceeding concerning:

• A corporate debtor's tax liability for a taxable period the bankruptcy court may determine (generally, a taxable period that ends before the plan confirmation date), and

• An individual debtor's tax liability for a taxable period ending before the bankruptcy petition date (i.e., pre-petition tax liabilities).

(6) A prior bankruptcy may constitute a prior opportunity for a hearing on the liability if the same tax periods are later involved in CDP. Consult with Area Counsel to examine the facts of the bankruptcy case and determine whether the taxpayer had an actual opportunity to contest the liability in the bankruptcy. For example:

• If a request for 11 U.S.C. 505(a)(1) determination of liability was granted or an objection to the Service’s proof of claim was filed in an individual Chapter 11 or 13 case, or a non-individual Chapter 11 case in which the taxpayer was debtor-in-possession, then liability for the tax is generally precluded from consideration in a later proceeding. However, if there was no bankruptcy court consideration of the liability, Appeals cannot conclude that the taxpayer could have disputed the liability during the court proceeding without considering the facts of the case

• A taxpayer cannot invoke a bankruptcy court’s jurisdiction to determine a tax liability in a Chapter 7 bankruptcy in which all assets of the estate were exempt

• A bankruptcy court may abstain from considering a tax dispute that can be considered in another forum, such as Tax Court

(7) Consult with local Counsel for issues involving a Receivership, Assignment for the Benefit of Creditors, or other insolvencies. Similar to bankruptcy, in these cases, a determination should be made whether or not to suspend the CDP under these circumstances. See also IRM 5.9.20, Non-Bankruptcy Insolvencies.

(1) DOJ has the sole authority to settle or otherwise compromise liabilities in the following situations:

(2) When you discover tax periods with DOJ controls, determine the status and issues in the suit, and contact Area Counsel for guidance. If Counsel believes continuing the CDP hearing could adversely affect the ongoing litigation, Counsel will ask you to suspend the CDP hearing. Input ’SU/PI’ in the CAR to place the case in ’E/OTH’ status

(3) The table below provides instructions for DOJ controlled cases:

(4) If a taxpayer has not raised any issues over which Appeals has jurisdiction:

(1) IDRS may confirm an IRS Criminal Investigation Division (CI) investigation. See the table below for CI indicators in IDRS:

(2) Request the name and contact information for the CI Special Agent assigned to your case through the CI contact whose name is listed on the CDP intranet page following Appeals > Collection > Collection Due Process > Resources > CI Case Assignments.

(3) A 120 day follow-up is appropriate on CI cases unless the special agent states a different time frame for follow-up.

(1) A CDP hearing involves a decedent when:

• A taxpayer's estate requests a hearing, or

• A taxpayer dies after requesting a CDP hearing

(2) If a taxpayer dies after requesting a CDP hearing, the request is still valid. However, any Form 2848, Power of Attorney, terminates by operation of law. Obtain a copy of the executor's or administrator's appointment to act on behalf of the estate and ask if they wish to continue the CDP hearing. Then consult the table below:

(3) Refer to IRM 21.3.3, Taxpayer Contacts - Incoming and Outgoing Correspondence/Letters, for how to address correspondence and forms for decedent cases.

(4) The IRS may not levy on probate assets without permission of the probate court. If Appeals is unable to reach an alternative to collection in such a case, the determination/decision may state that levy is sustained but not against assets in the custody of the court, absent permission from the court.

(5) If there is no requirement for probate, the personal representative or any successor in interest (e.g., spouse, trustee, surviving joint tenant, etc.) MAY be authorized to sign on behalf of the estate. Confirm there is no requirement for probate and that either the successor in interest is appointed personal representative under the decedent's will or the successor in interest otherwise qualifies. If the successor in interest is not willing to sign the withdrawal or continue the CDP hearing, issue the Notice of Determination/Decision Letter based on the available information.

(6) When calculating an estate’s Reasonable Collection Potential (RCP) in an offer in compromise, Collection may need to value an asset that was previously listed on the estate tax return. If the taxpayer disputes Collection’s valuation, you will need to determine the value of the asset. A starting point for your analysis should be the value listed on the estate tax return, the value determined by Collection, or the value determined by the Tax Court in an estate tax deficiency case following the IRS’s examination of the return. For estate tax purposes, assets are valued as of the date of death. In calculating the RCP, Collection should have determined whether the value of the asset has increased, remained the same, or decreased since the valuation for estate tax purposes. If the taxpayer has provided additional or new information in Appeals, consider whether issuing an Appeals Referral Investigation (ARI) is necessary to determine an asset value. Refer to IRM 8.22.7.4 and its subsections for guidance on ARIs. Explain your determination of the asset’s value in the Notice of Determination.

(7) Contact local Area Counsel with any questions concerning local law on probate.

(1) Combat Zone (CZ) accounts are identified by a -C freeze, which indicates a taxpayer is or was serving in a designated combat zone area.

(2) When working an account with a –C freeze, additional research is required to determine the taxpayer's CZ status. Research CC IMFOLE for the Combat indicator on Line 11. See the table below:

(1) Members of the United States armed forces and their spouses may be eligible for certain deferments under:

• The Service members Civil Relief Act

• The Military Spouses Residency Relief Act

(2) Review the following IRM sections for information and eligibility:

1. IRM 5.1.7.12, Collecting Process, Field Collection Procedures, Military Deferments

2. IRM 5.19.1.5.9, Collecting Process, Liability Collection, Military Deferments, (ACS)

3. IRM 20.2.7.12, Interest, Abatement and Suspension of Debit Interest, Military Deferments

4. IRM 21.8.1.5.7, Customer Account Services, International, Military Spouses Residency Relief Act

(1) A taxpayer may have a pending matter in Tax Court, or in the jurisdiction of another court, for one or more tax periods that are not a part of your CDP or EH case. This may happen when the taxpayer is litigating:

1. a prior CDP determination,

2. an Examination deficiency assessment, or

3. PENAP or other appeal.

(2) A taxpayer or representative may request that the current CDP case be suspended pending the outcome of the litigated matter. It is generally not required to suspend work on the current CDP or EH case for this reason, however, it may be prudent to do so in certain circumstances. On a case-by-case basis, the AO should consult with their ATM and, if necessary, IRS Counsel, about how to proceed in such cases.

(1) IRC 6306 authorizes the IRS to enter into certain qualified tax collection contracts with a PCA for certain "inactive tax receivables".

(2) The IRS establishes the criteria by which these specific debts are to be assigned to a PCA.

(3) There are certain statutory exclusions in place that will prevent assignment of a debt by the IRS to a PCA. These exclusions include when a taxpayer is:

• deceased

• under the age of 18

• in a designated combat zone

• a victim of a tax-related identity theft

• currently under examination, litigation, criminal investigation or levy

• subject to a pending or active offer in compromise or installment agreement

• subject to a statutory right of appeal

• classified as an innocent spouse case, or

• requesting relief from collection while in a presidentially declared disaster area

(4) Cases assigned to a PCA and which subsequently meet any of the above criteria will be returned to the IRS.

(5) IRC 6320 and 6330 are statutory appeal rights giving Appeals broad authority to resolve any relevant issue raised by the taxpayer, including resolutions that include all CDP and non-CDP liabilities such as installment agreements and offers in compromise.

(6) When you are assigned a CDP or EH case with related liabilities that are outside of CDP and assigned to a PCA, but the liabilities need to be included in the overall resolution of the case, the taxpayer should contact their assigned PCA, in writing, informing them that they no longer wish to work with the PCA and that the debts should be recalled to IRS. The PCA will honor the request under the Fair Debt Collection Practices Act.

(7) See also IRM 5.19.1.5.21, Private Debt Collection, and its related subsections.

(1) When Appeals closes a case that is appropriate for expedited passport decertification, take the following actions:

1. The AO should prepare Part 1 of the Form 14794, Expedited Passport Decertification

2. After securing managerial approval on Part 1, both parts 1 and 2 of the Form 14794 should be forwarded to *SBSE Passport Group, via secured e-mail, for the expedited decertification.

3. The e-mail should also contain an explanation of the specific terms of the agreement (IA, etc.) that has caused the decertification. Also include the taxpayer’s targeted dates of travel.

4. The SB/SE Passport Group will notify the U.S. State Department.

(2) For cases where there is no need to expedite the passport decertification process, no action is needed by Appeals, but appropriate closing transactions should be input promptly by APS.

(3) Passport certification accounts are flagged with TC 971 AC 641, and decertification generally begins once certain qualifying transactions appear on IDRS.

(4) A TC 972 is systemically input (outside of Appeals) to reverse the TC 971.

(5) See IRM 5.19.1.5.19, Passport Certification in Case of Certain Tax Debts, and its related subsections.

(1) In certain unique circumstances, the taxpayer may request a Letter of Credit (LOC) or posting of a Bond to be used as collateral for their tax debt. Inquire of the taxpayer why they would be able to secure a LOC or Bond yet be unable to obtain credit sufficient to pay the tax liability. If you determine the taxpayer’s answers are satisfactory, take the below actions, as applicable.

(2) For a LOC, prepare and submit an ARI to Advisory. Advisory will consult with Counsel. Submit the ARI via the following website: http://mysbse.web.irs.gov/collection/ceaso/contacts/19172.aspx.

(3) Advisory will review the LOC and, if it meets the necessary requirements, refer it to Counsel.

(4) If approved by Counsel, the taxpayer will be notified of the approval and Advisory holds the approval letter.

(5) If not approved, the CDP matter will be resolved in Appeals.

(6) For Bond requests, refer the taxpayer to Treasury Circular 570 for a list of acceptable bonding agencies. The taxpayer should review and investigate this option fully as the requirements and costs of such an option are generally prohibitive. Treasury Circular 570 is located at the following link: https://www.fiscal.treasury.gov/surety-bonds/circular-570.html.