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8.1.1.4
(10-23-2007)
Collection Cases under Appeals Jurisdiction
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Collection Due Process - The IRS Restructuring and Reform Act of 1998 (RRA 98) gives taxpayers the right to a Collection Due Process (CDP) hearing
with Appeals when they receive one of the following notices:
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Notice of Federal Tax Lien Filing and Your Right to A Hearing Under IRC 6320,
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Final Notice - Notice of Intent to Levy and Notice of Your Right To A Hearing,
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Notice of Jeopardy Levy and Right of Appeal,
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Notice of Levy on Your State Tax Refund - Notice of Your Right to a Hearing.
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IRC 6320 requires the taxpayer be given notice after the filing of a Notice of Federal Tax Lien (NFTL). IRC 6330 requires
the taxpayer be given notice of a right to a hearing before taking levy action. The purpose of CDP hearings under IRC 6320
and IRC 6330 is to give the taxpayer an opportunity early in the collection process to work with an independent hearing officer
to resolve the collection of the taxpayer's liability. After a CDP hearing and determination by Appeals, taxpayers have the
right to challenge Appeals' determination in court.
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Equivalent Hearing (EH) - If a taxpayer did not timely request a CDP hearing with Appeals, the taxpayer has the right to request an "Equivalent
Hearing"
. However, the taxpayer must specifically state he or she wants an Equivalent Hearing. In an Equivalent Hearing, the taxpayer
may raise and Appeals will consider all issues raised in CDP, however, the taxpayer does not have the right to seek judicial
review of Appeals' decision.
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Offer-in-Compromise - An Offer in Compromise (OIC) is an agreement between a taxpayer and the government to settle a tax liability in exchange
for payment of less than the full amount owed. Appeals has jurisdiction to make decisions on OIC cases in the following circumstances:
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Offers appealed after being rejected by Collection.
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Offers based wholly or in part on doubt as to liability after being rejected by Examination, or if the liability was previously
determined by Appeals.
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Offers submitted directly to Appeals as an alternative to the proposed collection in a CDP or EH case.
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Offers being evaluated by Collection when a Notice of Federal Tax Lien is filed and the taxpayer requests a CDP hearing or
Equivalent hearing.
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Collection Appeal Program - Collection Appeal Program (CAP) is an administrative appeal for certain collection actions. A taxpayer, or a third party
whose property is subject to a collection action, may appeal the following actions under CAP:
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Levy or seizure action that was or will be taken.
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Notice of Federal Tax Lien that was or will be filed.
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Filing of a Notice of Federal Tax Lien against an alter-ego or nominee's property.
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Denials to issue lien certificates; such as subordination, withdrawal, discharge or non-attachment.
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Rejected, proposed for termination or terminated installment agreements.
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Disallowance of taxpayer's request to return levied property under IRC 6343(d).
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Disallowance of property owner's claim to return property under IRC 6343(b).
CAP decisions by Appeals are binding on the taxpayers and the Collection functions.
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Trust Fund Recovery Penalty - Trust Fund Recovery Penalty (TFRP) is a penalty against any person who willfully fails to collect, account for, and pay
over taxes held in trust. The TFRP is imposed for:
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Willful failure to collect tax.
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Willful failure to account for and pay over tax.
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Willful attempt in any manner to evade or defeat tax or the payment thereof.
TFRP under IRC 6672 is equal to the total amount of tax evaded, not collected, or not accounted and paid for. The Collection
function is solely responsible for recommending assertion of the TFRP. Before assessing a TFRP, a 60-day notice of proposed
assessment is sent or given to the taxpayers, along with their right to an Appeal. The taxpayer has 60 calendar days to file
a timely protest (75 calendar days if the letter is addressed outside of the United States). When the taxpayer files a timely
protest, the case is sent to Appeals. Appeals is responsible for determining if the party is willful and responsible for the
TFRP. Only Appeals can make the final administrative determination with respect to the taxpayer's protest.
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Trust Fund Recovery Penalty Claims - The IRS must provide for an appeal of a Form 843, Claim for Refund and Request for Abatement. When the IRS assesses the
TFRP, the taxpayer has a right to pay the appropriate amount of the assessment and file a refund claim with the IRS. If Collection
denies the taxpayer's claim, Collection sends the taxpayer a letter notifying them of the 60-day time period to file a timely
administrative appeal. If a timely administrative appeal is received, the case is heard in Appeals.
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