8.22.4  Collection Due Process Appeals Program

Manual Transmittal

November 05, 2013

Purpose

(1) This transmits revised IRM 8.22.4, Collection Due Process, Collection Due Process Appeals Program.

Material Changes

(1) See the table below for material changes in this IRM:

Current IRM Description of Change Prior IRM
IRM 8.22.4.2,CDP Process Overview This subsection has been revised and expanded. See the following three items in the Manual Transmittal for the specific changes.  
IRM 8.22.4.2.1, Appeals Policy
  • Incorporated Appeals Interim Guidance AP-08-0613-02, Implementation of the Appeals Judicial Approach and Culture (AJAC) Project

  • Deleted the third bullet suggesting Appeals can make a determination based on available information without first attempting to get the necessary information from Compliance or the taxpayer.

AP-08-0613-02
IRM 8.22.4.2.2, Summary of CDP Process Added:
  • How Appeals responds to an inquiry from Compliance regarding proposed levy action in a CDP case.

  • Exceptions to the general prohibition on levy if there is jeopardy

8.22.4.2.1
IRM 8.22.4.2.3 Statute Responsibility in CDP Added:
  • Appeals has no responsibility to protect a tolling CSED or ASED in CDP.

  • Appeals does not complete Form 3999 for an expired ASED or CSED in CDP.

New
IRM 8.22.4.4, Ex Parte Communication No change. 8.22.4.8
IRM 8.22.4.5.3, Appeals Account Resolution Specialists, (AARS) Clarified the process of requesting a withdrawal when the CDP liability is full paid and the taxpayer isn't raising Innocent Spouse or Interest Abatement  
IRM 8.22.4.7 CDP Tracking System (CDPTS) Added "AI-Advocate Involvement" to the Resolution Reason Code table.  
Exhibit 8.22.4-2, CDP/EH Forms, Letters, and Other Documents
  • Updated reference to Letter 3855, which became Letter 4836

  • Updated reference to Letter 3999, which became Letter 4837

  • For Letter 3210, added "Send ...to POA if applicable."

  • Added new Letter 5145 for agreed EH cases

 
Throughout
  • Editorial changes including grammar, spelling, and minor clarification.

  • Plain language revisions.

 

Effect on Other Documents

IRM 8.22.4, dated September 21, 2012 is superseded.

Audience

Settlement officers, appeals officers, appeals account resolution specialists and Appeals team managers

Effective Date

(11-05-2013)

Susan L. Latham
Director, Policy, Quality and Case Support

8.22.4.1  (03-29-2012)
Collection Due Process (CDP)Technical IRM Overview

  1. IRM instruction for Appeals employees working CDP cases is divided into 6 sections:

    IRM Title and Brief Description
    8.22.4 Collection Due Process Appeals Program
    • General CDP background and overview

    • Instructions for CDP Fast Track Mediation

    8.22.5 Receipt, Control and Pre-Conference Considerations
    • Initial case review, controls and verifications

    • Pre-conference considerations

    • Uniform Acknowledgement and Substantive Contact Letter requirements

    • Separate Timeliness Determination procedures

    8.22.6 Cases Requiring Special Handling
    • Instructions on several types of cases that bring unique issues to CDP

    8.22.7 Alternatives to Collection Action
    • Appeals Referral Investigation procedures

    • Instructions for collection alternatives such as installment payment agreements (IA) and offers in compromise (OIC)

    8.22.8 Liability Issues and Relief from Liability
    • Instructions on working CDP cases involving issues of liability, including innocent spouse, penalty abatement, math errors, etc.

    8.22.9 Closing and Post Closing Actions
    • Instructions on closing CDP cases

    • Instructions on issues that arise after the Notice of Determination is issued

  2. Appeals employees working CDP cases must have a thorough knowledge of conference and settlement procedures applicable to all of Appeals found in other sections of IRM Part 8 including:

    IRM Title and Brief Description
    8.1 Appeals Function
    • General operating guidance for working cases in Appeals

    • Disclosure, security and outside contact requirements

    • Ex parte communication

    8.2.1 Agreed Pre-90 Day Income Tax Cases
    • Many of the procedures in this section are used on every case regardless of the type tax involved; however, certain cases also require special procedures. These special procedures are covered in separate IRM sections containing information solely applicable to that type case

    • Uniform Acknowledgement Letter procedures

    • Overview of conducting an Appeals conference

    8.6.1 Conference and Issue Resolution
    • Communication with taxpayers

    • Conference techniques

    • Circuit riding and case transfer procedures

8.22.4.2  (11-05-2013)
CDP Process Overview

  1. This section provides an overview of the CDP process and Appeals' role and responsibilities within the process.

8.22.4.2.1  (11-05-2013)
Appeals Policy

  1. Appeals’ mission is to resolve tax controversies on a basis which is fair and impartial to the Government and the taxpayer. To accomplish this mission in CDP cases, the Appeals hearing officer is responsible for making a determination based on the facts and the law known to Appeals during the time of the hearing.

  2. The Tax Court's standard of review for non-liability CDP determinations is to consider:

    • Whether Appeals' factual and legal conclusions reached at a CDP hearing are reasonable, not whether they are correct

    • The reasonableness of Appeals ultimate decision

    In Dalton v. Commissioner, 682 F.3d 149, the First Circuit reversed the Tax Court and held that a deferential standard of review is appropriate, noting the record usually available to the Tax Court in CDP cases.

  3. CDP files sent to Appeals should contain sufficient documentation for Appeals to make a determination. If a CDP file lacks documentation, it cannot be returned to Collection as a premature referral due to statutory requirements. Instead, the hearing officer must decide whether to:

    • Request relevant information from the taxpayer, or

    • Issue an Appeals Referral Investigation (ARI) for Collection to secure or verify information

  4. Part 5 Collection Process IRM contains administrative policies and procedures for considering alternatives to collection and case resolutions such as:

    • Offer in Compromise- IRM 5.8

    • NFTL withdrawals, discharges and subordinations-IRM 5.12

    • Installment Agreements- IRM 5.14

    • Financial Analysis - IRM 5.15

    • Currently not Collectible - IRM 5.16

    • Liability Collection, Balance Due, IRM 5.19.1 for ACS cases.

  5. Appeals researches Part 5 to:

    • Verify whether administrative procedures were followed in issuing a Notice of Intent to Levy and/or filing a Notice of Federal Tax Lien (NFTL)

    • Review Collection case actions and decisions, taking into account any special circumstances

    • Evaluate alternatives to collection action or challenges to appropriateness of collection

  6. References in IRM Part 5 to take or propose any enforcement or investigative activity do not apply to Appeals hearing officers.

8.22.4.2.2  (11-05-2013)
Summary of CDP Process

  1. Taxpayers may request a CDP hearing upon receipt of a:

    • Letter 3172 Notice of Federal Tax Lien Filing and Your Rights to a Hearing Under IRC 6320

    • Letter 11, Final Notice - Notice of Levy and Notice of Your Right To A Hearing

    • Letter 1058 Final Notice Reply Within 30 Days

    • CP 90 Final Notice of Intent to Levy

    • CP 92 and CP 242, Notice of Levy upon Your State Tax Refund

    • Notice of Jeopardy Levy and Right of Appeal

  2. IRC 6320 requires IRS to notify the taxpayer of the filing of a Notice of Federal Tax Lien (NFTL) and the right to request a CDP lien hearing within 5 business days after the first NFTL for a tax period is filed.

  3. IRC 6330 requires IRS to notify the taxpayer of the right to request a CDP hearing not less than 30 days before issuing the first levy to collect a tax period.

    Note:

    Generally, the IRS waits 10 days after issuing the notice of assessment of tax and demand for payment before issuing the Notice of Intent to Levy. However, Treas. Reg. 301.6331-2(a)(1) permits concurrent issuance of the notice of assessment and the Notice of Intent to Levy.

  4. IRC 6330(f) contains exceptions to a right to a hearing before levy. When a levy is served in the following instances, the taxpayer is offered an opportunity to request a post-levy hearing:

    1. Collection of the tax was in jeopardy

    2. State Income Tax Levy Program (SITLP)

    3. "Disqualified" employment taxes (DETL)

    4. Federal contractor levies under the Federal Payment Levy Program (FPLP)

  5. IRC 6320 and IRC 6330 provide for one hearing per type of tax and tax period for the tax debt listed on the NFTL or Notice of Intent to Levy. The right to request a CDP hearing applies to the first NFTL filed or the first levy notice issued for a particular tax debt.

    Example:

    IRS filed an NFTL in Washington County on 01/11/12 listing a Form 1040 tax debt for tax year 2008. An NFTL was also filed in Lincoln County on 03/17/12 listing the same 2008 Form 1040 tax debt. The NFTL filed 01/11/12 in Washington County is the NFTL to which the right to a hearing under IRC 6320 applies.

    Note:

    Collection is unable to systemically isolate an additional assessment of tax when issuing the CDP levy notice. The CDP levy notice for the additional tax includes the balance for the whole period. If the taxpayer requests a CDP hearing, the CDP hearing only covers the additional tax assessment if the taxpayer already had an opportunity for a hearing on the original tax assessment.

  6. An exception to one hearing per type of tax and tax period can occur with penalties. The taxpayer is entitled to a second CDP notice/second opportunity for a hearing for Failure to Pay (FTP) penalty if the prior CDP notice listed no accrued or assessed FTP. See Treas. Reg. 301.6330-1(d)(2) Q&A D-1.

  7. The following items are provided to the taxpayer when the CDP notice is issued:

    1. Publication 594, The IRS Collection Process;

    2. Publication 1660, Collection Appeal Rights; and

    3. Form 12153, Request for a Collection Due Process or Equivalent Hearing.

  8. IRC 6320 refers to IRC 6330 for the legal requirements regarding:

    • Matters considered by Appeals at the hearing- IRC 6330(c)

    • Judicial review of the determination made by Appeals-IRC 6330(d)

    • Suspension of collection activity and the statutory period of limitations-IRC 6330(e)

  9. A CDP lien hearing is held in conjunction with a CDP levy hearing whenever an NFTL is filed and Notice of Intent to Levy are concurrently issued, and the taxpayer requests a hearing under both Code sections.

  10. In making a CDP determination, IRC 6330(c)(3) requires Appeals to:

    1. Verify applicable law or administrative procedure were met;

    2. Consider relevant issues relating to the unpaid tax, the filing of the NFTL or the proposed levy; and

    3. Consider whether the action taken or proposed balances the government's need for the efficient collection of taxes with the taxpayer's legitimate concern that any collection action be no more intrusive than necessary.

  11. The taxpayer may raise any non-frivolous issue relating to the NFTL or the proposed levy.

  12. An issue may not be raised at the CDP lien or levy hearing if the taxpayer participated meaningfully in any previous administrative or judicial proceeding where the same issue was already raised and considered.

  13. The taxpayer may seek judicial review of the Notice of Determination by filing a petition in the United States Tax Court.

  14. IRC 6330(e) suspends the collection statute expiration date (CSED) for the period of time during which the CDP hearing and Tax Court appeal is pending. The IRC further states that no CSED shall expire before the 90th day after which the determination is made final. The suspension period begins the date IRS receives the taxpayer's written request for a CDP hearing.

  15. IRS is generally precluded from levying to collect tax periods that are the subject of a pending CDP levy hearing and/or judicial appeal. The exceptions to this include:

    1. Disqualified employment tax levy (DETL)

    2. When IRS determines collection of the tax is in jeopardy

    3. Systemic levy of a state income tax refund under SITLP

    4. Systemic levy of federal contractors under FPLP

    5. During an appeal to the Tax Court or appellate court, where the underlying tax is not at issue, levy action may continue if the court determines that the Service has shown good cause not to suspend the levy. Counsel contacts Collection if they are considering a motion to permit levy.

    6. To collect the jointly owed tax from the non-requesting spouse where only one spouse has requested a CDP hearing.

  16. Levy action is not suspended by law but is generally suspended by policy in the following instances:

    1. During a timely CDP lien hearing

    2. During an Equivalent Hearing (EH)

  17. Per IRM 5.1.9.3.5, Levy Action during the Period of the CDP or Equivalent Hearing, (field) and IRM 5.19.8.4.6, Collections Action During the CDP Appeal Period, (ACS), Collection may deem levy action appropriate in a CDP lien or EH case if:

    1. Collection is at risk - the taxpayer is dissipating assets or pyramiding additional liabilities

    2. The taxpayer raises only frivolous issues

    3. The taxpayer is solely seeking to delay the collection process

  18. The Collection group manager contacts the hearing officer's ATM by secure email to advise levy action is planned and asks whether Appeals has information that may affect the decision to levy. The ATM responds within 5 days with yes or no response:

    • Yes, Appeals has information that levy would create an economic hardship for an individual taxpayer, or

    • Yes, Appeals has information that would prohibit levy absent a determination that collection of the tax is in jeopardy, or

    • No, Appeals has no information that would prohibit levy action

  19. The Treas. Regs. allow for exceptions to the general prohibition on levy if there is jeopardy:

    Type Exception
    Installment Agreement Treas. Regs. 301.6159-1 (f)(2): Paragraph (f)(1) of this section shall not prohibit levy if the taxpayer files a written notice with the IRS that waives the restriction on levy imposed by this section, the IRS determines that the proposed installment agreement was submitted solely to delay collection, or the IRS determines that collection of the tax to which the installment agreement or proposed installment agreement relates is in jeopardy.
    Offer in Compromise Treas. Regs 301.7122-1 (g)(3): The IRS may levy to collect the liability that is the subject of an offer to compromise during the period the IRS is evaluating whether that offer will be accepted if it determines that collection of the liability is in jeopardy.

8.22.4.2.3  (11-05-2013)
Statute Responsibility in CDP

  1. Appeals has no tools to protect a tolling CSED or ASED in CDP and no responsibility to do so. Since Appeals cannot protect a CSED or ASED in CDP, Appeals is not a responsible area as defined in IRM 25.6.1.13.2.5, Identifying the Responsible Area.

  2. Appeals does not prepare a Form 3999, Statute Expiration Report, for expired CSEDs or ASEDs in CDP.

8.22.4.3  (03-29-2012)
Equivalent Hearing (EH)

  1. A taxpayer who fails to make a timely request for a CDP hearing is not entitled to a CDP hearing, but may request an administrative Appeals hearing, which is referred to as an EH. In an EH you generally follow the same procedures and consider the same issues as a CDP hearing.

  2. A taxpayer must submit a written request for an EH within the one-year period beginning the day after the date of the CDP levy notice. For a CDP lien EH, a taxpayer must submit a written request for the EH within the one-year period beginning the day after the end of the five-business-day period following the filing of the NFTL. If a taxpayer does not request an EH within the prescribed time, the taxpayer forgoes the right to an EH.

  3. Appeals confirms a request for an EH was not timely in the CDP separate timeliness determination (CDPTD). See IRM 8.22.5.9 , Separate Timeliness Determinations (CDPTD).

  4. The statutory periods under IRC 6330(e) are not suspended and Collection is not required to suspend its efforts to collect the unpaid tax while the EH case is pending in Appeals.

  5. Appeals issues a Decision Letter instead of a Notice of Determination. The taxpayer is not entitled to seek judicial review of Appeals' decision in an EH case unless one or more of the following issues are raised:

    1. Spousal relief under IRC 6015

    2. Abatement of interest under IRC 6404(h)

    3. Timeliness of the request for a CDP hearing

  6. There is no retained jurisdiction in an EH case.

  7. See Treas. Reg. 301.6330-1(i) for more information on EH hearings.

8.22.4.4  (03-29-2012)
Ex Parte Communication

  1. For guidance on ex parte communications between Appeals employees and employees of other IRS functions, see IRM 8.1.10, Appeals Function - Ex Parte Communications.

8.22.4.5  (03-29-2012)
Appeals Employees in CDP

  1. The issues for which the taxpayer requests Appeals consideration generally guide who in Appeals will consider such issues. Those responsible for conducting CDP hearings and considering issues include:

    • Settlement officers (SO)

    • Appeals officers (AO)

    • Appeals account resolution specialists (AARS)

    • Appeals team managers (ATM)

  2. See IRM 8.22.1, Front-End and Interim Processing of Collection Due Process and Equivalent Hearing Cases, and IRM 8.22.3, Back-End Processing for Collection Due Process and Equivalent Hearing Cases, for information and instructions on processing CDP and EH cases.

8.22.4.5.1  (03-29-2012)
Settlement Officers (SO)

  1. SOs conduct hearings by considering issues and collection alternatives in CDP cases. SOs generally have extensive experience and/or training in resolving collection issues. SO decisions may have a lasting influence upon the economic circumstances of taxpayers and may impact the taxpayer’s interests in subsequent years. Most of IRM 8.22 guidance is for SOs.

8.22.4.5.2  (03-29-2012)
Appeals Officers (AO)

  1. CDP cases may be assigned to AOs as well as SOs. AOs generally have extensive experience and/or training in resolving disputes over the correct amount of tax and may be assigned liability issues in CDP cases.

8.22.4.5.3  (11-05-2013)
Appeals Account Resolution Specialists (AARS)

  1. The AARS position was added to Delegation Order Appeals 193–1, Authority To Conduct Hearings and Make and Approve Certain Determinations Under IRC 6320 and IRC 6330. AARS duties include, but are not limited to:

    • Screening and developing cases for SOs

    • Monitoring cases in suspense

    • Following up on ACDS update requests

    • Conducting research and securing information from internal databases

    • Working Separate Timeliness Determination cases

    • Scheduling appointments

    • Working certain less complex CDP/EH cases

  2. AARS documents the receipt of a case for screening and corrective actions taken. Verification actions during the screening process include:

    Verification Action Corrective Action
    Request for hearing (Form 12153, Request for a Collection Due Process or Equivalent Hearing, other written request) was properly signed by the taxpayer or the taxpayer’s authorized representative Contact the taxpayer or representative to 'perfect' the hearing request following procedures in IRM 8.22.5.2.3, Imperfect Hearing Request
    Ensure information on Case Summary Card and CDP Tracking System (CDPTS) is accurate
    • Type of hearing

    • Type of tax and tax periods match CDP Notice

    • Statute suspension (Integrated Data Retrieval System (IDRS) Transaction Code (TC) 520) and closing code (76/77) on a timely request was correctly input on CDP periods

    • Statute suspension (TC 520) and closing code (76/77) was not placed on Equivalent Hearing periods

    • The work unit (WUNO) contains the correct Appeals Database Control System (ACDS) feature codes - see IRM 8.22.5.2.2.3, Feature Codes

    • The case information on the CDPTS print matches what is on ACDS

    Work with Account and Processing Support (APS) to correct Case Summary Card errors

  3. AARS may request a withdrawal of the CDP hearing using Letter 4388, Withdrawal Solicitation. See IRM 8.22.5.2.5,CDP Withdrawals.

  4. The AARS team in Fresno Campus provides Customer Service on closed cases to internal and external Appeals customers. The following are examples of problems that AARS can resolve:

    • IA, OIC and CNC

    • Account freezes

    • Form 3870, Request for Adjustment, processing

    • Misapplied/Missing payment research

    • Innocent spouse allocations including the mirroring process

    • Application of Tax Court decisions

    • Erroneous refunds

    • Unpostable transaction codes

    • Excess collections issues

  5. AARS does not have the authority to change prior case determinations or decisions.

8.22.4.5.4  (03-29-2012)
Appeals Team Managers (ATM)

  1. ATMs have supervisory responsibilities for the AO and SO teams. ATMs are responsible for reviewing cases for completeness, accuracy and decision quality. ATMs are also responsible for monitoring compliance with ex parte communication requirements during their day-to-day interaction with employees, as well as during workload and closed case reviews.

  2. ATMs provide review and approval authority in CDP cases. See Exhibit 8.22.4-1, Delegation Order Appeals-193-1.

8.22.4.6  (03-29-2012)
Automated Collection System (ACS)/Field General CDP Procedures

  1. Collection should only issue one CDP levy notice and one CDP lien notice per tax period, unless an additional amount of tax (other than interest and penalty accruals) is assessed.

    Exception:

    Collection must issue separate CDP notices to husband and wife when the liabilities are joint, even if they reside at the same address.

    Exception:

    Collection may issue separate CDP notices to individual partners as well as the partnership entity in partnerships.

  2. Integrated Data Retrieval System (IDRS) Transaction Code (TC) 971 with an appropriate Action Code (AC) is input as follows after IRS mails a CDP notice:

    • TC 971 AC 069 - Notice of Intent to Levy and Notice of Your Right to a Hearing

    • TC 971 AC 252 - Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320

  3. Taxpayers are encouraged to continue to work with the IRS office collecting the tax. Once a Form 12153 is received from a taxpayer, Collection may continue to work with the taxpayer for up to 90 days, if the taxpayer is willing. See IRM 5.1.9.3.3, Collection Appeals Rights, Processing CDP and Equivalent Hearing (EH) Requests, (field Revenue Officer (RO) procedures) and IRM 5.19.8.4.7.5, Liability Collection, Collection Appeal Rights, Processing CDP and Equivalent Hearing Requests, (ACS procedures). Collection promptly forwards a case to Appeals in the following instances:

    1. Frivolous issues are raised

    2. The taxpayer only wants to work with Appeals

    3. The taxpayer is not seeking to resolve the issue but using the CDP process as a method for delay, i.e., pyramiding in-business trust fund taxpayer

    4. Bankruptcy was filed after the CDP levy or lien notice was sent

    5. The trust fund assessment (MFT) 55 or 17 is being challenged (ACS only)

    6. The only issue is a request for an IA and the assessed balance is $100,000 or more (ACS only)

    7. Cases with a TC 914, 916 or 918 Criminal Investigation (CI) where the TP raises concern over the CI issue

  4. Collection prepares a CDP transmittal document for every CDP and EH case sent to Appeals. Field ROs use Form 12153-A, Referral Request for CDP Hearing and Request for CDPTS Input, and ACS uses a Form 12153-B, Referral Request for CDP Hearing from ACS Support.

  5. In addition to the Form 12153-A/B transmittal, Collection should also provide the following documentation:

    • Form 12153 or other written request for a hearing along with the envelope, if received by mail

    • Copy of the CDP notice, such as the Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, or Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320

    • Copy of Form 2848, Power of Attorney and Declaration of Representative, or IDRS command code CFINK print

    • Account Management System (AMS) print if case received from ACS

    • Collection Information Statement or other financial information

    • Copies of correspondence to and from the taxpayer or Power of Attorney

    • Copy of original or amended return, if available

  6. The RO or ACS employee enters the date of receipt of the CDP/EH hearing request on the Form 12153-A/B. Based on the data entered on the Form 12153-A/B, a TC 520 with one of the following closing codes (cc) is input onto each tax period starting the suspension of the CSED:

    1. cc 76 for CDP lien case (DPLN)

    2. cc 76 for combination CDP lien and levy case (DPL2)

    3. cc 77 for CDP levy case (DPLV)

      Note:

      A TC 971 Action Code (AC) 275 is also entered onto each CDP tax period to indicate a timely request for a CDP hearing (DPLN, DPLV or DPL2) and to exclude the tax period from selection by Automated Levy Programs (ALPs).

  7. Responsibility for input of the TC 520 cc 76/77 is:

    1. ACS-sourced cases: ACS inputs when they receive a valid, processable hearing request

    2. Collection field-sourced cases: APS inputs using CDP Tracking System (CDPTS) Stage 1 date when updating the case to Stage 4. The Stage 1 date is the date of receipt of the request as shown on Form 12153-A.

  8. Appropriate IMF CSED indicators are also input with the TC 520. The indicators are:

    • P = primary TIN spouse

    • S = secondary TIN spouse

    • B = both primary and secondary TINs

  9. The CSED is systemically calculated and updated via the TC 520 and TC 521 entries. An exception to this systemic CSED update is an IMF account involving a joint income tax liability where only one spouse has requested the hearing.

  10. The CSED is not suspended during an EH case, so a TC 971 AC 278 is entered onto each EH tax period. This does not exclude the tax period from selection by ALPs.

  11. IRS uses ALPs through which select federal tax debts are matched with state taxing authorities and federal agencies disbursing funds, such as salary, pension, and vendor payments. See IRM 5.19.9, Automated Levy Programs (ACS), and IRM 5.11.7, Automated Levy Programs (Collection field) for more information about ALPs and the procedures used to administer the programs, which are divided into three categories:

    • FPLP – attaches federal payments to individuals or businesses

    • SITLP – attaches state income tax refund

    • Alaska Permanent Fund Dividend Levy Program (AKPFD) – attaches to the Permanent Fund Dividend distributed by Alaska

  12. The following TC 971 action codes identify ALPs and may appear in either CDP or EH cases:

    TC 971 Action Code Explanation
    060 Input each time the account goes to FPLP
    600 Input annually when in SITLP program
    601 Input annually when in AKPFD program

  13. Collection of the tax by levy and the CSED are suspended on tax periods that are the subject of a timely CDP levy hearing "for the period during which such hearing, and appeals therein, are pending." See IRC 6330(e) and Treas. Reg. 301.6330-1(g) for more information including exceptions.

  14. Collection of the tax by levy is not suspended on tax periods that are the subject of:

    • An EH

    • Timely-filed request for a CDP lien hearing if all pre-levy requirements are met

    • During a retained jurisdiction proceeding

    See IRM 8.22.4.2 above for information on Collection's policy with regard to levy while a CDP lien or EH case is pending in Appeals.

  15. Collection may levy on tax periods not the subject of the CDP hearing, provided all pre-levy procedures are met. For this reason, it is important Appeals input applicable IDRS transaction codes on both CDP and non-CDP periods promptly upon receipt of an OIC (TC 480) or an IA proposal (TC 971 - AC 43). Collection takes the following steps when levy action is planned against a taxpayer with some but not all tax periods under Appeals' jurisdiction (see IRM 5.1.9.3.5, Levy Action during the Period of the CDP or Equivalent Hearing):

    1. Review IDRS to determine whether there is a pending OIC or an IA

    2. Contact the ATM of the assigned Appeals employee via secure email to advise of the planned levy and to see if Appeals has any information that would prohibit levy or affect the decision to levy, such as a determination by Appeals of economic hardship under IRC 6343.

  16. Collection may file an NFTL while a CDP lien or levy hearing is pending. Before doing so, they generally contact the ATM to advise of the planned action and to see if Appeals has any information that would affect the NFTL filing decision. See IRM 5.12.1.2.19, Lien Filing During Levy Appeal.

8.22.4.7  (11-05-2013)
CDP Tracking System (CDPTS)

  1. CDPTS is a cross-functional inventory system used to track CDP cases from time of receipt through resolution. It allows both Appeals and Collection to:

    1. Research CDP cases utilizing an IDRS command code "CDPTR" (format = CDPTRTXXX-XX-XXXX)

    2. Input and update CDP cases via the Intranet

  2. Collection adds a case to the CDPTS upon receipt of a processable CDP or EH request. As the case proceeds, the CDPTS is updated to new stages to reflect the current status of the case.

  3. When the tax period is added to the CDPTS, IDRS Transaction Code (TC) 971 is systemically generated with an AC. These ACs:

    1. Identify when a hearing request is received and closed, and

    2. Exclude tax period(s) from selection by the Automated Levy Programs (ALPs) when appropriate

      Note:

      A TC 971 AC 275 excludes the tax period from the ALP, but AC 278 does not.

  4. For partnership entities, the hearing request is established on CDPTS under the partnership's Employer Identification Number (EIN).

    1. The individual partner's Social Security Number (SSN) is listed as the secondary TIN

    2. The TP TYPE = "T" (Partnership Only)

    3. A different Stage 1 date (hearing request received) must be used when multiple partners for the same EIN request the same hearing TYPE (i.e. DPLN, DPLV) on the same day. The EIN cannot be added multiple times separately to CDPTS with the TP TYPE = "T" with the same Stage 1 date.

    4. The "notes" feature on CDPTS can be used to explain the reason for the different Stage 1 dates.

    Note:

    A TC 520 cc 76/77 is not placed on the partnership tax period for the individual partner's hearing request.

  5. The following list contains the TC 971 ACs relevant to the CDPTS:

    Action Code Description
    275 ONLY Timely received CDP lien hearing request
    275 AND 630 Timely received CDP levy hearing request
    276 CDP issue resolved and CDP request withdrawn in Collection (lien, levy or both)
    277 CDP hearing resolved by Appeals (lien, levy or both)
    • Notice of Determination issued

    • Taxpayer waived judicial review via Form 12257, Waiver of Appeals Notice of Determination in a Collection Due Process Hearing

    278 EH (lien or levy) request received
    279 EH issue resolved and EH request withdrawn in Collection (lien, levy or both)
    280 EH resolved by Appeals (lien, levy or both)
    • Decision Letter issued

    630 Timely CDP levy or timely combination CDP lien and levy hearing request received (must post with an AC 275 - see above)

  6. The following CDPTS stages reflect the process that a CDP or EH case can follow. Not all stages are applicable in all situations.

    Stage Title Comments
    1 Receipt of Hearing Request Collection receives a processable CDP or EH hearing request.
    2 Reserved  
    3 Transferred to Appeals Collection identifies the type of case being transferred with one of the following:
    • A - Doubt as to Liability issues

    • B - Collection Alternative OIC is primary issue

    • C - Collection Alternative installment agreement is primary issue

    • D - In-business Trust Fund Taxpayer- Not Current with Federal Tax Deposits (FTDs)

    • H - Frivolous/delay argument

    • I - Issue resolved but taxpayer did not withdraw hearing

    • J - Collection alternative-other-is the primary issue (e.g., hardship)

    • K - Contact made with taxpayer but unable to resolve issue

    4 Received By Appeals
    • The hearing officer must review the screen and ensure the information is consistent with the case summary cards. Promptly submit corrections or update requests to local APS and confirm the updates are made

    7 Appeals Decision Reached Input when the Decision/Determination/Closing letter is issued. Uses the following Form 5402, Appeals Transmittal and Case Memo, Reason Codes:
    • CS - Collection Sustained

    • CA - Collection Alternative Reached

    • WD - Withdrawal

    • PR - Premature Referral

    Also uses the Resolution Reason Code listed in the table shown in paragraph (7) below.
    8 Tax Court Petition Date  
    9 Tax Court Decision Date  
    12 Resolved Prior to Appeals Consideration Used by Collection Only
    13 Appeals Case Closing Actions Completed If a Notice of Determination is issued, Stage 13 is input after completion of the suspense period and, if applicable, any court reviews.
    14 Closed Case Received by Collection  
    24 Concluding Actions such as input of payment agreement, are complete The module automatically updates from Stage 13 to Stage 24 when APS takes the final action on the case and enters "Return to Appeals" in Stage 13.

  7. APS is responsible for inputting all CDPTS updates while case is in Appeals' jurisdiction.

    Note:

    APS can add (input Stage 1) for missing periods. Once added as Stage 1, APS can update the periods to Stage 4 from Stage 1. Appeals does not need to contact Collection to add missing periods or to place case in Stage 3 (if in Stage 1). Do not return a CDP referral to Collection as a premature referral simply because all the periods are not present on CDPTS. Submit a request to APS to establish the missing period(s) on CDPTS as well as ACDS. For timely periods, add a TC 520 on the period(s).

  8. The Stage 7 Resolution Reason Code identifies the major issue discussed or addressed in the hearing and indicates the basis for Appeals' decision. The selections are:

    Resolution Reason Codes
    AB - Abatement/Adjustment (non-tax) granted IV - Invalid request/premature request
    AC - Abatement/Adjustment (non-tax) denied LD - NFTL discharge or subordination denied
    AD - Abatement/Adjustment (tax) granted LN - NFTL release or withdrawal granted
    AT - Abatement/Adjustment (tax) denied LR - NFTL release or withdrawal denied
    CE - CSED expired LS - NFTL discharge or subordination granted
    CF - Collection facilitated RC - Reasonable cause not established
    CO - Lack of compliance with filing and/or paying NC - CNC granted or denied
    FP - Full Pay NR - No Response, no communication from the taxpayer
    FV - Frivolous/Constitutional argument presented OC - OIC accepted
    IS - Innocent Spouse relief granted (full or partial) OD - OIC denied
    IR - Innocent Spouse relief denied (full or partial) OT - Other, CDP withdrawn or no other code fits
    IA - IA Accepted PF - Premature filing
    ID - IA Denied TD - Taxpayer Delay, does not provide requested information by deadline
    AI-Advocate Involvement UL - Unable to Raise Liability

8.22.4.8  (03-29-2012)
Fast Track Mediation (FTM)

  1. FTM is a service to expedite case resolution while the case is still under Collection's jurisdiction. FTM is non-binding and optional to both IRS and the taxpayer. FTM is available to taxpayers that qualify for either a CDP or EH, but is not presently available for ACS cases.

  2. The mediation session facilitates communication between the taxpayer and Collection to resolve unagreed issue(s) without a formal appeal. It involves an AO or SO trained in mediation, the taxpayer and Collection. The Appeals mediator does not have settlement authority.

  3. FTM is administered by SBSE and Appeals with the goal of helping taxpayers resolve disputes before a decision is final. If a settlement can be negotiated while the case is still with Collection, it may eliminate the need for an appeal. FTM does not eliminate a taxpayer’s right to request a CDP or EH hearing.

  4. A taxpayer is eligible to request FTM after a CDP Notice (e.g., Letter 1058, Letter 3172, etc.) is issued. FTM is considered only after the RO has fully developed the case, addressed all issues, and made a reasonable attempt to negotiate an agreed resolution. IRM 5.1.9.3.8, CDP and Equivalent Hearing Fast Track Mediation (FTM), contains SBSE's FTM procedures for CDP and EH cases. See also Pub 3605, Fast Track Mediation - A Process for Prompt Resolution of Tax Issues.

  5. A request for FTM does not extend the time for filing a request for a CDP or EH hearing. After requesting a CDP or EH hearing, the taxpayer may request FTM before the case is transferred to Appeals for the CDP/EH hearing.

  6. The taxpayer must meet the following requirements to qualify for FTM:

    1. Current with all filing requirements, estimated tax payments and federal employment tax deposits, and

    2. Present complete information regarding the proposed resolution, such as complete financial information

  7. A taxpayer interested in FTM must first have a conference with the Collection group manager. If resolution is not reached, the taxpayer may submit a request for FTM. Collection does not have to agree to mediation. However, denial of a mediation request requires approval of the Collection group manager and concurrence by the second level SBSE manager. The basis for the denial is communicated to the taxpayer and documented in the case history. The opportunity to mediate should only be granted after the first line manager has reviewed the case and determined that the issue(s) in dispute may be resolved in mediation.

  8. If the FTM request is approved, the RO completes Form 13369, Agreement to Mediate, and provides a summary in memorandum format outlining the issue(s). The taxpayer may also submit a summary of the issue(s), but a formal protest is not required.

  9. Within 3 business days of securing the necessary signatures on Form 13369, the RO provides a copy to the taxpayer and follows locally established guidelines for submitting the mediation request to Appeals.

  10. The FTM program is structured to promote issue resolution within an average of 30 to 40 days from the initial joint discussion between the FTM appeals official and the parties to the dispute. The case remains in SBSE’s jurisdiction throughout the process.

  11. See Rev. Proc. 2003-41 and IRM 8.26.3, Small Business Self Employed (SB/SE) Fast Track Mediation, for additional information.

8.22.4.8.1  (03-29-2012)
Fast Track Mediation Procedures for Appeals

  1. Applications to FTM require ATM approval. See the table below for ATM actions based on the approval decision:

    Application Accepted into FTM Application NOT Accepted into FTM
    Step 1 Date the upper right corner of the Form 13369, Agreement to Mediate, and provide a copy to APS Step 1 Notify the taxpayer within 2 business days of receipt of the Form 13369, Agreement to Mediate
    Step 2 Notify the taxpayer and the Small Business/Self-Employed) SBSE group manager Step 2 Notify the SBSE group manager
    Step 3 Select an AO/SO to serve as the FTM appeals official (mediator) and assign the case within 2 business days of receipt of the Form 13369. Step 3 Return all paperwork to SBSE

  2. The decision to not accept an application for the FTM program is final and not subject to administrative appeal or judicial review.

  3. The AO/SO selected to serve as the FTM appeals official must be trained in mediation. A full list of trained mediators is available on the Appeals web site. The taxpayer does not have the option of using a non-IRS mediator or co-mediator.

  4. A CDP work unit (WUNO) must be established on the Appeals Centralized Database System (ACDS). A FTM CDP case is controlled on ACDS following normal procedures except for the following:

    • Feature Code = FT

    • REQAPPL = Latter of date FTM Agreement signed by taxpayer or SB/SE

    • RECDATE = Date placed in upper right corner of Form 13369 by ATM

    • KeyPeriod = 777777

    • No return information should be entered

  5. The FTM appeals official does not have settlement authority and cannot render a decision regarding a disputed issue. The FTM appeals official may recommend a resolution to the parties.

  6. The prohibition of ex parte communications between Appeals and other Service employees does not apply to the FTM program because Appeals personnel, in facilitating an agreement between the taxpayer and SB/SE, are not acting in their traditional Appeals settlement role.

  7. Either party may withdraw from the mediation process at any time by notifying the other party and the FTM appeals official in writing. If it is determined that meaningful progress toward resolution of the issues has ended, the FTM appeals official also may terminate the mediation process by notifying the taxpayer and SBSE in writing. If any issues remain unresolved at the conclusion of FTM, the taxpayer retains all applicable appeal rights.

  8. In preparation for the FTM session, review Rev. Proc. 2003–41 and IRM 8.26.3, Alternative Dispute Resolution (ADR) Program, Fast Track Mediation.

  9. At the conclusion of a successful mediation, the Appeals mediator prepares Form 13370, Fast Track Mediator’s Report. The Form 13370 must be signed by

    • FTM appeals official

    • Taxpayer or authorized representative

    • RO

    • SBSE group manager

  10. A copy of the signed Form 13370 is given to both parties. Collection follows general closing procedures to process the settlement, including securing an opinion from Counsel if required by IRC 7122(b).

  11. The FTM appeals official submits the original Form 13370 and a copy of the CAR to the ATM. The ATM initials and dates the report, and submits it to APS for closing.

  12. If the parties fail to resolve the disputed issue(s), the Appeals mediator prepares Form 13370 and submits a copy to each party. SBSE closes the case in accordance with standard procedures. If the offer is ultimately rejected, the taxpayer retains the option of appealing the rejection. Submit the original Form 13370 and a copy of the CAR to the ATM. The ATM initials and dates the report, and submits it to APS for closing.

Exhibit 8.22.4-1 
Delegation Order Appeals-193-1

Authority Delegated to
To conduct hearings and make determinations under sections 6320 and 6330 of the Internal Revenue Code (relating to notice and opportunity for hearing upon filing of notice of lien and before levy).
  • AOs

  • SOs

  • AARS

To review and approve determinations made under sections 6320 and 6330 of the Internal Revenue Code (relating to notice and opportunity for hearing upon filing of notice of lien and before levy), except in the case of any Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Suspension of Levy Action that the Director, Tax Policy and Valuation (Appeals) determines in writing does not require review and approval. ATMs
To determine which Appeals employees may accept from the taxpayer, and execute on behalf of the IRS Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Suspension of Levy Action. Director, Policy, Quality and Case Support
Redelegation and Sources of Authority
Redelegation Sources of Authority
The above authorities may not be redelegated.
  • IRC 6320

  • IRC 6330

  • Servicewide Delegation Order No. 193 (Rev. 6)

To the extent that the authority previously exercised consistent with this order may require ratification, it is hereby affirmed and ratified. This order supersedes Delegation Order App 8-a (Rev. 1).
Signed: Diane Ryan, Chief, Appeals Division

Exhibit 8.22.4-2 
CDP/EH Forms, Letters, and Other Documents

Form/Letter Number and Name Purpose
Uniform Acknowledgement/Substantive Contact/Pre-Conference Letters
Letter 3846: Substantive Contact Letter for Frivolous or Delaying Hearing Request
  • Schedules telephone conference

  • Offers taxpayer the opportunity to withdraw the frivolous positions

Letter 4836: Substantive Contact Letter
  • Schedules telephone conference

  • Advises of opportunity to request a face-to-face conference

  • Details supplemental information needed

Letter 4837: Combination Substantive Contact Letter and Uniform Acknowledgement Letter
  • Schedules a telephone conference

  • Advises of opportunity to request a face-to-face conference

  • Details supplemental information needed

Letter 4000: Last Chance Letter Used if taxpayer fails to respond to Substantive Contact Letter to offer the taxpayer the mandatory second opportunity to provide information for consideration.
Letter 4380: Frivolous Acknowledgment Letter
  • Acknowledges a frivolous CDP submission

  • Solicits a withdrawal of the frivolous position

Withdrawal and Waiver Forms and Letters
Form 12256: Withdrawal of Request for Collection Due Process or Equivalent Hearing Taxpayer withdraws either CDP or EH request
Form 12257: Summary Notice of Determination and Waiver of Right to Judicial Review Taxpayer agrees with resolution reached with Appeals and waives right to file judicial review
Form 14041: Waiver Form for Right to Request A New Settlement/Appeals Officer Under Section 6320 and/or 6330 (previously numbered Form 12218) Taxpayer waives prior involvement of Appeals employee, which allows them to conduct current hearing
Letter 4382: Cover Letter For Form 12257 Transmits waiver Form 12257 to taxpayer
Letter 4388: Solicits CDP or EH withdrawal Solicits withdrawal where Collection resolved the taxpayers issue
CDP Notice of Determination Letters and Attachment
Letter 3193: Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330
  • Issued in timely CDP cases

  • Gives taxpayer right to petition Tax Court for review of Appeals' determination

  • Sent separately to each joint filer with copy to Power of Attorney (POA) if applicable.

Letter 3978: Supplemental Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330 Issued by Appeals to issue a supplemental CDP determination after the Tax Court remanded the case back to Appeals
Letter 4299: Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, Case Resolved in Bankruptcy Court Used for timely CDP cases in which the issues raised were resolved in Bankruptcy Court
Letter 4389: Notice of Determination - Abatement of Interest
  • Notice of Determination in timely CDP hearing

  • Provides time frame for filing for a judicial review of the interest abatement issue

Letter 4390: Notice of Determination - Request for Relief from Joint and Several Liability
  • Notice of Determination in timely CDP hearing

  • Provides time frame for filing for a judicial review of the innocent spouse issue

CDP/EH Attachment Attachment template for NOD and Decision Letter
Equivalent Hearing Decision Letters and Attachment
Letter 3210: Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330
  • Decision in EH

  • No right to petition Tax Court for review of Appeals' determination

  • Sent separately to each joint filer with copy to POA if applicable.

Letter 4300: Decision Letter Concerning Equivalent Hearing under Section 6320 and/or 6330, Case Resolved in Bankruptcy Court Used for equivalent hearing cases in which the issues raised were resolved in Bankruptcy Court
Letter 4439: Decision Letter - Request for Relief from Joint and Several Liability
  • Decision on EH

  • Provides time frame for filing for a judicial review of the innocent spouse issue

Letter 4440: Decision Letter - Abatement of Interest
  • Decision on EH

  • Provides time frame for filing for a judicial review of the interest abatement issue

Letter 5145, Agreed Equivalent Hearing Closing Letter Agreed decision in EH cases
CDP/EH Attachment Attachment template for NOD and Decision Letter
Other Closing Letters
Letter 4381: Disregard CDP/EH Request Disregards a frivolous/delaying hearing request
Letter 4383: CDP/EH Withdrawal Acknowledgement Letter Acknowledges taxpayer's withdrawal of CDP/EH request
Bankruptcy Case Forms
Form 13929: Bankruptcy Resolution Transmittal Memorandum - CDP Cases Used to instruct APS on how to issue the NOD BNK letter
Bankruptcy Resolution Checklist for CDP/EH file (formerly Form 12523)  
Compliance Function Referral Forms
Form 13933: COIC-investigated OIC Cover Sheet
  • Used by Appeals to transmit CDP OICs meeting COIC criteria to COIC

  • COIC uses same form to acknowledge receipt of the OIC

Collection Due Process (CDP) Hearing - TP Disputes TFRP Civil Penalty Request for copy of 1153 letter and proof of delivery
ASFR/SFR Cover Sheet Cover sheet for sending returns to ASFR/SFR unit for processing

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