The document outlines the IRS collection appeal procedures established by the Restructuring and Reform Act of 1998, highlighting the right to a Collection Due Process (CDP) hearing that must be requested within 30 days of receiving a final notice. It details the requirements for CDP notices, the filing and hearing procedures, and the implications of requesting a CDP hearing, including the suspension of levy actions and collection statutes. Additionally, it covers the tax court review process and provides insight into other related appeal programs and requirements.

1. IRS Collection
Appeal Procedures
&
Defense Strategy
Presented by
Sidney Goldin, CPA

2. Internal Revenue Service
Restructuring and Reform
Act of 1998

3. A. Single Most Important Change
1. Opportunity and right to Collection Due
Process (CDP) Hearing - effective January
19, 1999 before any collection or levy action
can occur
2. Request must be made within 30 days of
date on final notice (Form 1058 or CP90)

4. B. “Game Changer” for IRS Collection &
Enforcement Activities
1. Cannot take levy action, e.g. bank or wage
levies while CDP Hearing is pending in IRS
Appeals division
2. Tax Court Proceedings – No IRS enforcement
allowed subsequent to a filing of tax court
petition until decision is final

5. C. CDP Notice Requirements
1. Federal Tax Lien – can issue lien notice after
lien is filed
2. Levy notice must issue prior to levy action
3. Exception for jeopardy levies, refund offsets
(federal or state)

6. C. CDP Notice Requirements – continued
4. Disqualified employment tax levies
a. No requirement of pre-levy notice
b. Purpose – No pyramiding of employment taxes
c. Two year rule
1) Must not have requested CDP hearing for unpaid
employment taxes arising in two year period prior to
beginning of taxable period for which levy is served
2) Example – unpaid payroll taxes in current period –
6/30/13

7. Disqualified Employment
Tax Levy
Unpaid payroll taxes for period ending June 30, 2013 - $50,000
Two year period prior to beginning of taxable period for
which levy is served 4/1/2011 – 4/1/2013
Levy can be served any time during period of 4/1/2013 – 6/30/2013
without issuing final CDP notice, if CDP hearing request was made
during above two year period for any quarters in that period.

8. C. CDP Notice Requirements - continued
5. Must be hand delivered, left at taxpayer’s
business or residence or mailed certified to
taxpayer’s last known address
6. Nominees and other third parties
a. Only available to delinquent taxpayer –
liable person
b. Nominee or other person holding property
of taxpayer not entitled to CDP hearing

9. C. CDP Notice Requirements - continued
7. Partners and Partnerships
a. State law – general partners automatically liable
when partnership assessed
b. Partner and partnership entitled to CDP (Final)
Notice, if general partner’s or partnership property
to be levied
8. Owners – Single Member LLCs (disregarded
entities)
a. Prior to 8/16/2007 – Owner liable
b. Post 1/1/2009 – Owner NOT liable

10. D. Filing of CDP Request
1. Must file written request (no phone calls) within 30
days of final notice date. (postmark date is good)
2. Request must state reason(s) why taxpayer doesn’t
agree with proposed levy (or lien) action.

11. D. Filing of CDP Request - continued
3. Frivolous arguments will be grounds for termination
of CDP proceeding and/or imposition of penalties
4. When to contest a lien:
a. If prematurely filed
b. Otherwise erroneous, wrong periods, period(s)
tax paid off, etc.

12. E. CDP Hearings
1. One hearing opportunity per tax and period
2. Exception – additional assessment of tax in audit or
new penalty assessment
3. New CDP Notice must be given
F. Procedures for Requesting Hearing
1. Form 12153
2. Must contain required information – See Form
(handout)

15. G. Effect of Requesting CDP Hearing
1. 10 year collection statute is suspended
2. Levy action suspended unless
a. Taxpayer raises frivolous arguments
b. Service files motion with tax court showing good
cause to proceed with levy
H. Hearing Requirements
1. Hearings are informal

16. H. Hearing Requirements - continued
2. Taxpayer can request recording of face-to-face
conference, but face-to-face not required to be given
if:
a. Financial statements (Form 433-A or B) not
prepared
b. Taxpayer not in filing compliance

17. H. Hearing Requirements - continued
3. Appeals officer must be impartial - No prior
involvement
a. Same taxpayer, tax liability and period
participated in by same appeals officer
b. Example – Trust fund tax hearing and
subsequent assessment. CDP hearing for
same periods for employment taxes
c. Examination appeals included as “prior
involvement”

18. H. Hearing Requirements - continued
4. No ex-parte communications
a. Appeals and collection or examination
b. Appeals and IRS counsel
1) Generally ok
2) Legal issues only – no advice on
settlement ranges – appeals officers
responsibility to assess strengths and
weaknesses of case (hazards of litigation)

19. I. Matters Considered at Hearing
1. Computer transcripts – errors
2. Invalid assessments
3. Spousal defenses (innocent spouse issues)
4. Liability – only if no prior opportunity existed
a. Statutory notice of deficiency
b. 1153 – Trust Fund letter

20. I. Matters Considered at Hearing - continued
5. Collection Alternatives
a. Installment agreement (general requirements – compliance)
b. Offer-in-Compromise (general requirements – compliance)
c. Request for non-collectible status – financial
statements required
6. Non-CDP Years Can Be Considered
a. NOLs from non-CDP years that affect liability of CDP
year(s)
b. All non-CDP years in which there is a liability must be
included in an installment agreement or an offer in
compromise

21. J. Appeals Resolution
1. Determination notice must be issued
2. Taxpayer has 30 days (after determination notice
date) to file tax court petition if no agreement
reached
K. Tax Court Review of CDP Cases
1. Abuse of discretion standard
2. No new issues can be raised not covered in
administrative hearing

22. K. Tax Court Review of CDP Cases - continued
3. Can request remand if abuse exists
a. Proper procedure not followed
1) No 14 day “last chance” letter issued
2) Internal Revenue manual not adhered to or
followed

23. L. Equivalent Hearings (for CDPs filed late)
1. Similar procedures
a. Must be filed within one year of date on levy
notice
b. Must be filed within one year plus five business
days of date on lien notice
2. Exceptions
a. No right to judicial review – tax court
b. No suspension of 10 year collection statute

24. M. Collection Appeal Program – C.A.P.
(“Emergency Appeal”)
1. Installment Agreement to be terminated by ACS or
Revenue Officer
2. Installment agreement not granted (rejected) by ACS
or Revenue Officer
3. IRS modifies or proposes to modify installment
agreement (e.g. to increase payments)
4. Levy or lien action is eminent as result of above
action

25. M. Collection Appeal Program – C.A.P.
(“Emergency Appeal”) - continued
5. Filed on Form 9423
6. Requires managerial review, conference, and
routing to appeals if manager rejects
7. Entitled to appeals conference
8. Decision binding – not appealable to any court
9. Enforcement generally withheld during appeal
process

26. Key to successful IRS defense is knowing
what to do and when to do it

27. For Additional Information Contact
Sidney Goldin, CPA
Goldin Peiser & Peiser, LLP
Sgoldin@GPPcpa.com
214-635-2509
www.GPPcpa.com
Note: This content is accurate as of the date published above and is subject to
change. Please seek professional advice before acting on any matter contained
in this presentation.