Appeals Process: Collection Issues (Part 2)

In part 1 of this series we discussed what happens during the appeals process. 

If you feel that an appeal is the best course of action for handling your tax issue, then you will need to select the appropriate appeal procedure given your circumstance.  

Here is a closer look at the 4 procedures for appealing collection actions:

Collection Appeals Program (CAP)

The Collection Appeals Program (CAP) is most appropriate for those dealing with a proposed levy, filing of a Notice of Federal Tax Lien, or seizure of property. The CAP process can also be used when there is a rejection, termination, or modification of an installment agreement.

Cases that come to appeals under CAP are usually resolved very quickly. A potential downside: You cannot go to court if you disagree with the Office of Appeals determination.

CAP Procedures

If your only contact with the IRS has been a notice or telephone call, you need to call the IRS with the number shown on the notice. Explain why you disagree and want to appeal. Then offer a solution to the issue.

If you are dealing with a levy, lien, or seizure, you will have to discuss your case with a Collections Manager before starting the appeals process. 

Have you already been in contact with a Revenue Officer? Call the Revenue Officer and present the same information mentioned above. 

Next, you will need to complete a Form 9423, Collection Appeals Request. Submit that form to the revenue officer within 3 days of your conference with the Collections Manager.

Collection Due Process (CDP)

During a Collection Due Process (CDP) hearing, the Office of Appeals must consider if the IRS followed all required procedures when looking at your case. Also, the CDP will determine if the proposed collection action is appropriate or if there are better alternatives.

Unlike a CAP, if you disagree with a CDP determination, you could ask a court to review the appeals process and the Appeals Officer’s discretion of your case. 

You are entitled to a CDP if the IRS sends you a notice saying you have a right to request a CDP hearing. The communication from the IRS can include:

  • Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320
  • Final Notice–Notices of Intent to Levy and Notice of Your Right to a Hearing
  • Notice of Levy on Your State Tax Refund–Notice of Your Right to a Hearing
  • Notice of Jeopardy Levy and Right to Appeal
  • Post Levy Collection Due Process (CDP) Notice

CDP Procedures

Once you receive one of the above mentioned notices, you have 30 days to request a CDP hearing. Complete Form 12153,Request for a Collection Due Process or Equivalent Hearing. Send the form to the SAME address shown on your CDP notice.

If you sent the appeals request within 30 days of receiving your notice:

  • The IRS levy action is usually suspended against you for the tax periods you appealed.
  • You are entitled to an Office of Appeals hearing AND judicial review with the Tax Court.

If you sent the appeals request after 30 days of receiving your notice:

  • You are entitled to request a CDP Equivalent Hearing with the Office of Appeals within the 1 year period described in the form you sent.
  • You will NOT have a right to a judicial review by the Tax Court.

Offer in Compromise (OIC)

An Offer in Compromise (OIC) is an agreement between you and the government that settles your tax liability payment for less than is owed. OICs are generally for individuals who cannot pay back their full tax liability without significant financial hardship.

OIC Appeal Procedures

If you received a letter that your OIC was rejected, you have 30 days from the date on the letter to request an appeal. 

You can request an appeal by preparing a Form 13711, Request for Appeal of Offer in Compromise. Mail the letter to the office that sent you the rejection letter. 

The determination of this appeal is not reviewable by the courts.

Trust Fund Recovery Penalty (TFRP)

A Trust Fund Recovery Penalty (TFRP) applies to individuals responsible for collecting, withholding, accounting, or paying specified taxes but failing to do so. These taxes can include non-resident alien (NRA) withholdings as well as employment and excise taxes.  

Individuals that could be held personally liable for a TFRP (the full amount of the tax not paid plus interest) include:

  • Sole proprietors
  • Owner or officers of a corporation
  • Partner of a business
  • Employees of any form of business 

In a TFRP case, you and the Appeals Officer will discuss the facts of your case and review relevant court cases. Then, the Appeals Officer will determine what the outcome might be if your case went to court. This approach is used to reach a mutually acceptable settlement.

TFRP Appeal Procedures

Here are the steps to take when preparing your formal written protest or small case request:

  • Enclose a copy of the notice you received–Letter 1153, Proposed Trust Fund Recovery Penalty Notification. 
  • Explain why you don’t think you are responsible for the unpaid taxes or why you disagree with the amount. 
  • Clearly describe your duties and responsibilities regarding this issue.
  • Cite the law or authority, if applicable, to support your position.
  • Send the letter to the IRS officer listed on the Letter 1153 you received.

For more information on preparing a protest, visit the IRS’s Publication 5, Your Appeal Rights and How to Prepare a Protest If you Don’t Agree.

Don’t Have the Time and Patience to File Your Own Appeal?

To be clear, you can appeal your IRS tax issue on your own. 

If you feel you can present your case clearly, confidently negotiate a compromise, and/or complete and send in all the necessary paperwork on time, you have every right to handle your own appeal.

Doesn’t sound like you? Don’t worry, most people would rather get some help with the appeals process.

After all, you don’t need to add “dealing with the IRS” on your already busy to-do list.

Get peace of mind working with a team that deals with the IRS on a daily basis. 

Schedule a consultation with the Confidential Tax Relief team today and stop worrying about handling your own tax issues.