Important Things to Know about IRS Appeals

Roni Deutch
February 27, 2009 — 2,015 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

The IRS provides appeal procedures for a variety of situations. The focus of this article is IRS appeals as they relate to collection procedures and the resolution of an IRS tax debt.

An appeal is simply the reconsideration of a lower authority's decision by a higher authority. For example, Joe Taxpayer has a federal tax debt of $50,000, is recently married, and has a newborn. Joe Taxpayer provides a financial statement and makes a proposal to the IRS repay his taxes through an Installment Agreement at the rate of $300 per month. The IRS rejects Joe Taxpayer's proposal for an Installment Agreement because the IRS views Joe Taxpayer as having the ability to make a higher monthly payment than the payment amount he proposed. Joe Taxpayer disagrees with the IRS's analysis because it appears their analysis is based on a household of one (Joe only) rather than three (Joe, his wife, and child).

In this situation, Joe Taxpayer can and should appeal the IRS's rejection of his Installment Agreement by filing the appropriate forms and identifying the issues with which he disagrees (i.e. the number of people in his household). If the decision to reject the Installment Agreement is properly appealed, an IRS will assign an appeals officer to review the rejection decision.

The scenario above is an example of an issue that may be appealed. There are different appeals procedures that apply in different situations. Below are the primary appeals process that relate to IRS collection and debt resolution issues.

Collection Due Process Hearing

The Collection Due Process (CDP) hearing is triggered by the receipt of specific IRS notices. The notices that will trigger the right to file for a CDP hearing are:

1. Notice of Federal Tax Lien and Your Right to a Hearing Under IRC 6320 2. Final Notice - Notice of Intent to Levy and Your Right to a Hearing 3. Notice of Jeopardy Levy and Right of Appeal 4. Notice of Levy on Your State Tax Refund

A CDP hearing allows the taxpayer to present their objection to the IRS's proposed action. At a CDP, the taxpayer can present financials and propose a resolution to a tax debt such as an Installment Agreement, Offer in Compromise, or Currently Not Collectible Status. Additionally, taxpayers can, in limited circumstances, dispute the tax debt.

A taxpayer has only 30 days from the date of the triggering notice to file an appeal. Once the 30-day window lapses, the right to file for a CDP hearing is lost.

If a taxpayer wants to take their issue to U.S. tax court, they are generally required to follow the CDP procedures. This makes filing a proper and timely request for a CDP hearing very important. Because failure to request a CDP hearing will forclose the taxpayer's ability to take their issue to U.S. Tax Court.

Equivalent Hearing

An Equivalent Hearing is very similar to a CDP hearing, except for these three primary differences are as follows: 1.) A request for an Equivalent Hearing can be submitted more than 30 days after receiving one of the CDP type notices discuss in the preceeding section ; 2. The IRS can continue collection efforts while an Equivalent Hearing is in progress; and 3. A taxpayer cannot move forward to U.S. tax Court if the appeals decision is adverse.

Both the CDP hearing and Equivalent Hearing can be requested by completing Form 12153 Request for a Collection Due Process or Equivalent Hearing.

Collection Appeal Process

The Collection Appeal Process (CAP) is much broader that the CDP process in terms of when the procedure is available. Unlike a CDP hearing, if a taxpayer is not successful, the IRS decision will generally stand and the taxpayer cannot continue the fight in U.S. Tax Court. In addition, a taxpayer cannot under any circumstance dispute the existence or amount of a tax debt. The situations that trigger the right to the CAP are as follows:

1. Notice of Federal Tax Lien 2. Notice of Levy 3. Seizure of Property 4. Denial of Request to Have Seized Property Returned 5. Rejection of Termination of an Installment Agreement

In order to appeal through the CAP, a taxpayer must make an attempt to resolve their tax issue with an IRS manager. If a taxpayer's issue is still not resolved after speaking or corresponding with an IRS manager, the taxpayer may submit a request for an appeal using Form 9423 Collection Appeal Request. Like the CDP, there are time frames within which the CAP must be filed and those timeframes vary depending on the situation.

About the Author

The Tax Lady Roni Deutch and her law firm Roni Lynn Deutch, A Professional Tax Corporation have been helping taxpayers across the nation find IRS tax relief for over seventeen years. The firm has experienced IRS tax attorneys who will fight the IRS on your behalf.

Roni Deutch