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Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
Collection Statute presentation
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Collection Statute presentation

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  • CDP allows taxpayers to have a hearing with Appeals concerning filed liens or proposed levies/seizures
  • There are two statutes providing a taxpayer right to a Collection Due Process Hearing with Appeals. IRC 6320 relates to a lien filing and IRC 6330 relates to notice of intent to levy.
  • Section 6320 requires a notice to be mailed or personally delivered no later than 5 business days after the NFTL was mailed for recordation. The letter informing the taxpayer of the right to request a hearing is Letter 3172. (The letter is automatically issued by ALS (Automated Lien system) within 5 days after the NFTL is requested)
  • Under Section 6330, no levy may be made on any property unless the IRS sends the taxpayer a notice at least 30 days before the levy is made -- which provides the taxpayer with an opportunity for a CDP hearing. The L.1058 or the LT 11 is the letter the taxpayer would receive.
  • Appeals classifies these requests as timely, equivalent and retained jurisdiction. Collection is suspended by law on timely requests. Timely filed requests for CDP hearing in Appeals maybe appealed to the Tax Court on income, estate or gift taxes and to the United States District Court for employment taxes. Untimely requests are entitled to an equivalent hearing in Appeals, but no judicial review.
  • Equivalent Hearing   Although an Equivalent Hearing is not provided for in the code, Treas Regs §§ 301.6320 and 301.6330.provide for such a hearing. The Equivalent Hearing is available where the taxpayer, intentionally or inadvertently, missed the 30-day CDP hearing request deadline. In an Equivalent Hearing, Appeals will consider the same issues as in a CDP hearing.   The Equivalent Hearing differs from the CDP hearing in the following significant areas:          the statutes of limitations under IRC §§ 6502, 6531 and 6532 are NOT suspended          collection action is NOT suspended during the pendency of the appeal. (However, normally collection action is suspended as in the instance of a CAP).          a decision letter , rather than a determination letter, is issued by Appeals. (The Appeals decision is final and not subject to judicial review. There is an exception in the case of innocent spouse issues under IRC §§ 6015(b) or (c), which may be petitioned to the Tax Court within 90 days after Appeals' decision on the innocent spouse issue).
  • In any hearing conducted under IRC 6320 and 6330 there will be: a requirement that Appeals obtain verification from the Secretary that the requirements of law of administrative procedures have been met   allowance of certain issues to be raised by the taxpayer, to include but are not limited to:   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 installment agreement, or an offer-in-compromise   challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability   The taxpayer is precluded from raising an issue in appeals if the taxpayer raised the issue at a previous CDP hearing or in any other previous administrative or judicial proceeding and the taxpayer participated meaningfully at such hearing.  
  • Appeals Officers have, in the past, attempted to resolve all taxpayer arguments in conferences. In CDP cases, the taxpayers offer several arguments that may or may not be resolved by Appeals. In many of the CDP requests that we receive, the taxpayers contest the underlying liability. Most of these taxpayers have had a previous opportunity to contest the liability. In these instances, the taxpayers did not appeal/protest the decision made by Compliance.   There are areas where the taxpayer can raise the underlying liability issue at a CDP hearing. They are: Spousal Defense Issues Frivolous Return & Questionable Withholding Statement Penalties Voluntarily Filed Returns Without Deficiency Assessments and Returns With Math Errors
  • Appeals will generally not consider the liability issue if the taxpayer has received a deficiency notice or Letter 1153 (in a TFRP case), or has otherwise had an opportunity to appeal the assessment of the liability Challenges barred by § 6330(c)(4): issue raised and considered at a previous hearing under § 6320 to any other previous administrative or judicial proceeding and person seeking to raise the issue already participated meaningfully in such a hearing Letters Providing Prior Opportunity: Letter 1153(DO) – trust fund recovery penalty proposed Letter 950 – employment tax assessment proposed Letter 955 – excise tax assessments proposed Letter 1125(DO) – return preparer penalties proposed
  • If a liability cannot be considered as part of a CDP hearing, the taxpayer has rights through an audit reconsideration. Publication 3598 provides the details on audit reconsideration. The taxpayer has appeal rights through an audit reconsideration.
  • For levy to be valid, it must be delivered to the party being levied before the statute expires. As a form of levy, notice of seizure must be given to taxpayer to qualify. Filing of proceeding of court extends the statute until the liability for the tax is satisfied or becomes enforceable. Review Figure 6 TXMOD on Page 2-23 to show CSED (Line 9) and TC 150 (Line 22) connection. Caution: a number of suspensions of the CSED make it impossible to use this feature, such as OIC and CDP. Prior to 11/5/90, the statute was six years. Periods open on 11/5/90 were automatically extended to ten years. Examples: TC 150 date: 12/1/90, CSED to 12/1/00. TC 150 date: 12/1/85, CSED to 12/1/95. TC 150 date: 10/31/84, CSED to 10/31/90. Review Figure 7 on page 2-24 to show how only earliest CSED is reflected in the CSED indicator. MULTIPLE ASSESSMENTS: -Each assessment starts its own CSED. -Easily possible that TC 150 assessment is not enforceable and TC 300 is still valid. -Accruals associated with the assessment can only be collected until that statute goes, despite any of their assessments showing on IDRS. (Especially interest, for example.)
  • A number of conditions, discussed individually below, can suspend or extend the “general” statute of limitations for collection. It is important to understand that “suspension” halts the running of the statute for a period of time, which consequently results in an extension beyond the general CSED. An “extension,” on the other hand, does not suspend or otherwise affect the general 10-year period. It simply adds additional time to the end of the period. Baseball game analogy: Rain delay suspension vs. tie game extension
  • EXTENSION AGREEMENT ENTERED INTO IN CONNECTION WITH AN     INSTALLMENT AGREEMENT. If the Secretary and the taxpayer enter into     an installment agreement for the tax liability prior to the     expiration of the period of limitations on collection, the Secretary     and the taxpayer, at the time the installment agreement is entered     into, may enter into a written agreement to extend the period of     limitations on collection to a date certain. A written extension     agreement entered into under this paragraph shall extend the period     of limitations on collection until the 89th day after the date agreed     upon in the written agreement.
  • You are familiar with the fact that the issuance of a statutory notice of deficiency (SND) extends the assessment statute. The same is true of the CSED. IRC § 6503(a) provides that both the ASED and CSED with regard to income, estate, gift and certain excise taxes are suspended from the date of mailing the SND until the date the Secretary is no longer prohibited from assessing or collecting, and for 60 days thereafter. This suspension applies to the statutes on amounts named in the SND only The CSED would be extended on a deficiency (T/C 300) which is assessed, for whatever reason, before the 90th day (before the decision of the tax court becomes final), but not on any original tax assessment (T/C 150 or 290) balance still due. IRC § 6503(b) provides that the CSED is suspended for a period during which the taxpayer’s assets (all or substantially all) are in control or custody of any court (“custodia legis”) of the United States, any state, or the District of Columbia, and for 6 months thereafter. IRC § 6503(c) provides that the CSED is suspended for the period during which the taxpayer is outside of the United States, if such absence is continuous for at least 6 months. IRC § 6503(f) prescribes that the CSED will be suspended for a period of time equal to the period during which property (including cash) of a third party is wrongfully seized or received, plus 30 days.
  • IRC § 781l(d) provides that the CSED is suspended from the date on which a taxpayer files an Application Taxpayer Assistance Order (ATAO) on Form 911, to the date of the Problem Resolution Officer’s (T/A) decision on the application.   IRC § 7508 provides for suspension of the CSED for the time period which an individual served in an officially designated combat zone or was hospitalized outside the United States as a result of such service, plus the next 180 days thereafter.  
  • Must be timely request. Equivalent hearings don’t qualify. IDRS: TC 520 AC 66/67
  • Transcript

    • 1. Collection Due Process Hearings
    • 2. Restructuring and Reform Act of 1998 <ul><li>Taxpayers are entitled : </li></ul><ul><li>to same protections in dealing with the IRS as other creditors </li></ul><ul><li>adequate notice of collection activity and </li></ul><ul><li>a meaningful hearing before IRS deprives them of their property </li></ul>
    • 3. When? <ul><li>Taxpayer entitled to a hearing before Appeals: </li></ul><ul><li>after Notice of Federal Tax Lien filed (IRC § 6320) </li></ul><ul><li>IRC § 6330: After notice of intent to levy issued </li></ul>
    • 4. IRC § 6320 <ul><li>Taxpayer: </li></ul><ul><li>notified of notice of lien within 5 days of its filing </li></ul><ul><li>Must request hearing within 30 days </li></ul>
    • 5. IRC § 6330 <ul><li>IRS issues notice of intent to levy and right to hearing </li></ul><ul><ul><li>Exceptions: </li></ul></ul><ul><ul><ul><li>Jeopardy levy </li></ul></ul></ul><ul><ul><ul><li>Levy on state income tax refund </li></ul></ul></ul><ul><ul><ul><li>Right to a hearing is after levy </li></ul></ul></ul><ul><li>Taxpayer must request hearing within 30 days </li></ul>
    • 6. Request for a Hearing <ul><ul><li>Must be in writing </li></ul></ul><ul><ul><li>Must include: </li></ul></ul><ul><ul><ul><li>Name, address, daytime telephone number, signature, and date </li></ul></ul></ul><ul><ul><li>Form 12153 or any written request </li></ul></ul><ul><ul><li>Suspends collection statute </li></ul></ul><ul><ul><li>IRS may not levy </li></ul></ul><ul><ul><li>Right to judicial review of Appeals determination if requested timely </li></ul></ul>
    • 7. Equivalent hearing <ul><ul><li>Late request for hearing (more than 30 days) </li></ul></ul><ul><ul><li>Same issues considered </li></ul></ul><ul><ul><li>No collection suspension </li></ul></ul><ul><ul><li>IRS may levy, but generally will not </li></ul></ul><ul><ul><li>No right to judicial review of Appeals decision </li></ul></ul>
    • 8. Nature of Hearing <ul><li>Informal </li></ul><ul><li>By correspondence, telephone, or face-to-face meeting </li></ul><ul><li>With an Appeals or Settlement Officer with no prior involvement in case (unless waived) </li></ul>
    • 9. What Appeals Considers: The “Big” Three <ul><li>Did IRS follow required procedures? </li></ul><ul><li>Issues the taxpayer raises </li></ul><ul><li>Balancing the need for efficient tax collection with the taxpayer’s legitimate concerns re its intrusiveness </li></ul>
    • 10. Issues the Taxpayer May Raise <ul><li>Innocent Spouse </li></ul><ul><li>Challenges to the appropriateness of the proposed collection action </li></ul><ul><li>Offers of Collection Alternatives </li></ul>
    • 11. Challenges to the appropriateness of proposed action <ul><li>Excludes: </li></ul><ul><li>Moral, religious, constitutional, conscientious objection, or similar grounds. </li></ul><ul><li>Challenges to assessment process, unless separate FOIA request </li></ul>
    • 12. Collection Alternatives <ul><li>Installment Agreements </li></ul><ul><li>Offers In Compromise </li></ul><ul><li>Substitution of other assets </li></ul><ul><li>Posting of a Bond </li></ul>
    • 13. Underlying Liabilities??? <ul><li>Must consider: </li></ul><ul><li>Innocent spouse </li></ul><ul><li>Self-assessed returns </li></ul><ul><li>Assessments for which no statutory notices were issued </li></ul>
    • 14. Underlying Liabilities??? <ul><li>Must not consider: </li></ul><ul><ul><li>Liabilities for which taxpayer received statutory notice of deficiency (90-day letter) </li></ul></ul><ul><ul><li>Other opportunity for Appeals consideration </li></ul></ul><ul><ul><ul><li>Example: Letter proposing trust fund recovery penalty </li></ul></ul></ul>
    • 15. Issues Precluded <ul><li>Issues decided by a court, or raised and considered at a previous CDP hearing or Appeals conference regarding this tax liability, and </li></ul><ul><li>The taxpayer participated meaningfully in such a hearing or proceeding. </li></ul>
    • 16. AUDIT RECONSIDERATIONS <ul><li>IRS ACCEPTS AN AUDIT RECONSIDERATION REQUEST IF: </li></ul><ul><ul><li>You have new information that will decrease the tax owed. </li></ul></ul><ul><ul><li>You filed a return after the IRS filed a return for you. </li></ul></ul><ul><ul><li>IRS made a computational or processing error </li></ul></ul>
    • 17. AUDIT RECONSIDERATIONS <ul><li>IRS WON&apos;T ACCEPT AN AUDIT RECONSIDERATION REQUEST IF: </li></ul><ul><ul><li>A Closing agreement was signed. </li></ul></ul><ul><ul><li>An agreement on Form 870-AD with the Appeals Office was signed. </li></ul></ul><ul><ul><li>The amount of tax was due to a final partnership adjustment in a TEFRA proceeding </li></ul></ul><ul><ul><li>The United States Tax Court, or another court, has issued a final determination on your tax liability </li></ul></ul>
    • 18. AUDIT RECONSIDERATIONS <ul><li>If the IRS accepts the information, then they will either eliminate, reduce or in some cases refund money already paid. </li></ul><ul><li>If you do not accept the findings of the IRS you have the right to request an Appeals conference. </li></ul>
    • 19. STATUTE OF LIMITATIONS ASED
    • 20. STATUTE OF LIMITATIONS <ul><li>Form 1040 – 3 years after the return was filed or from the due date, whichever is later (same for Forms 1041) </li></ul><ul><li>Failure to file – no statute IRC 6501 (c)(3) </li></ul><ul><li>False or fraudulent return – no statute IRC 6501(c)(1) </li></ul>
    • 21. STATUTE OF LIMITATIONS <ul><li>Form 1120 – is due 15th of the third month after the close of the entity’s fiscal year. Early and late return provisions apply as with Form 1040; regular statute is three years. </li></ul>
    • 22. STATUTE OF LIMITATIONS <ul><li>Form 941 – filed quarterly, due the last day of the month following the end of the quarter. If filed prior to April 15 of the succeeding year, it is deemed filed, for statute purposes, on April 15 of the succeeding year. Three year statute. If filed after April 15 of succeeding year, statute is three years from filing date. </li></ul>
    • 23. STATUTE OF LIMITATIONS <ul><li>Form 940 – due annually – January 31 of the next calendar year. Three year statute. </li></ul><ul><li>Form 706 – Estate – due 9 months after date of death. Early and late return and three year general rule applies. Statute may not be extended IRC Sec 6501(c)(4) </li></ul>
    • 24. STATUTE OF LIMITATIONS <ul><li>Delinquent return filed after SFR – three year statute begins upon filing of delinquent return. Exception – if the SFR case has already become docketed – statute is suspended as with any docketed case. (Note if the delinquent return has a spouse that was not part of the docketed case. This individual still has an open three year statute. </li></ul>
    • 25. STATUTE OF LIMITATIONS <ul><li>Amended return – if taxpayer submits amended return showing additional tax, within 60 days before the expiration of the statute, the statute does not expire until 60 days from the receipt of the amended return. </li></ul>
    • 26. STATUTE OF LIMITATIONS <ul><li>Net Operating Loss – statute of carryback years, with respect to this issue, is controlled by the statute on the originating year of the NOL. This does not affect the statute for carryforward years. </li></ul>
    • 27. STATUTE OF LIMITATIONS <ul><li>Notice of Deficiency – suspends statute for 90 days (150 days if mailed outside the U.S.) to allow taxpayer to file Tax Court petition. Another 60 days is added to the statute to allow the assessment to be made. This is why the revised statute date for a normal timely filed return, where the taxpayer defaults (does not petition) is always September 12 – April 15 plus 90 days plus 60 days </li></ul>
    • 28. STATUTE OF LIMITATIONS <ul><li>Notice of Deficiency – taxpayer agrees during the 90 day period – the 90 day period ends on the date the agreement form is received. The revised statute date is generally the number of days between the notice issuance and the agreement receipt date, plus 60 days, added to the original statute date. </li></ul>
    • 29. STATUTE OF LIMITATIONS <ul><li>Notice of Deficiency – taxpayer petitions Tax Court – the statute is suspended from the date the notice is issued to the date the Tax Court decision becomes final (90 days after it is entered), then 60 days are added to allow for the assessment. This entire “tack-on” period is added to the regular statute date </li></ul>
    • 30. STATUTE OF LIMITATIONS <ul><li>Omission of 25% of Gross Income – if taxpayer omits from gross income an amount properly includible in income that is in excess of 25% of the gross income reported on the return, the statute becomes six years IRC Sec. 6501(e)(1) </li></ul>
    • 31. Collection Statute Expiration Date - CSED
    • 32. IRC 6502 <ul><li>Tax may be collected by levy or by a proceeding in court, but only if begun: </li></ul><ul><li>--within 10 years of assessment, or </li></ul><ul><li>--prior to expiration of any period agreed on with Secretary and taxpayer before the ten years expires. </li></ul>
    • 33. Suspension &amp; Extension of CSED <ul><li>Suspension: </li></ul><ul><ul><li>halts the running of the statute, which results in extension of general CSED. </li></ul></ul><ul><li>Extension: </li></ul><ul><ul><li>Addition of time at the end of general 10-year period. </li></ul></ul>
    • 34. Waiver - After 12/31/99: <ul><ul><ul><li>Only with I/A </li></ul></ul></ul><ul><ul><ul><li>Limited to 5-year extension by policy </li></ul></ul></ul>
    • 35. 6503 Suspensions : <ul><li>(a): Notice of Deficiency </li></ul><ul><li>(b): Custodia Legis </li></ul><ul><li>(c): TP outside of US </li></ul><ul><li>(f): Wrongful levy </li></ul><ul><li>(h): Bankruptcy </li></ul>
    • 36. Other suspensions : <ul><li>IRC 7811(d): Taxpayer Assistance Order </li></ul><ul><li>IRC 7508: Military Deferments </li></ul><ul><li>Certain collection suits </li></ul><ul><li>IRC 6015(2): Innocent spouse </li></ul><ul><ul><ul><li>Involves only 6015(b) and (c). </li></ul></ul></ul><ul><ul><ul><li>CSED is suspended during period no levy may be made pursuant to 6015(e)(1)(B). </li></ul></ul></ul>
    • 37. IRC 6330(e): Collection Due Process <ul><li>Suspension of CSED for period while hearing is pending, and any appeals. </li></ul><ul><li>CSED won’t expire less than 90 days after final determination. </li></ul>
    • 38. OFFER IN COMPROMISE <ul><li>CSED is suspended during the period that an offer-in-compromise was filed and if the offer is rejected by the IRS, during the 30 days thereafter (and, if an appeal of such rejection is filed within such 30 days, during the period that such appeal is pending). </li></ul>

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