IRM instructions for Appeals technical employees working Collection Due Process (CDP) cases is now divided into six smaller and more targeted sections:

In addition to a thorough knowledge of procedures contained in the above listed IRM sections, Appeals personnel making determinations in CDP cases must also have a thorough knowledge of general conference and settlement procedures applicable to all of Appeals and provided for in other sections of IRM Part 8. The major sections include:

This section provides a basic overview of CDP and Appeals' general role and responsibilities within the process.

The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98) created IRC 6320, Notice and Opportunity for Hearing Upon Filing of Notice of Lien, and IRC 6330, Notice and Opportunity for Hearing Before Levy. Taxpayers may request a CDP hearing before the IRS Office of Appeals upon receipt of one of the following:

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

IRC 6330 requires IRS to formally notify the taxpayer of its intent to levy and the right to request a CDP hearing not less than 30 days before issuing the first levy to collect a particular tax debt.

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:

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 issued for a particular tax debt.

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

The following items are made available to the taxpayer when the CDP notice is issued and inform taxpayers about their CDP appeal rights:

IRC 6320 defers to IRC 6330 for the legal requirements pertaining to:

To the extent practical, a CDP lien hearing will be held in conjunction with a CDP levy hearing whenever a NFTL is filed and Notice of Intent to Levy is concurrently issued.

IRC 6330(c)(3) requires the Appeals hearing officer to take into consideration the following in making a CDP determination.

The taxpayer may raise any non-frivolous issue relating to the NFTL or the proposed levy. See also IRM 8.22.8, Liability Issues and Relief from Liability, for information on issues precluded from Appeals' consideration under IRC 6330(c)(2)(B) and IRC 6330(c)(4).

An issue may not be raised at the CDP lien or CDP levy hearing if the taxpayer participated meaningfully in any previous administrative or judicial proceeding where the same issue was already raised and considered. See also IRM 8.22.9.8.6, Issues Raised, for additional information on limitations on issues Appeals may consider under CDP.

The taxpayer may seek judicial review of the Notice of Determination by filing a petition in the United States Tax Court. IRM 8.22.9.12, Deadline to Petition Tax Court.

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. Treas. Reg. 301.6330-1(g)(2) states the suspension period begins the date IRS receives the taxpayer's written request for a CDP hearing.

IRS is generally precluded from levying to collect tax periods that are the subject of a pending CDP matter. There are a few exceptions to this general rule. IRS is not precluded from levying to collect a tax period that is the subject of a pending CDP hearing and/or judicial appeal in the following instances:

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

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:

Prior to initiating levy action, Collection will contact the Appeals team manager to advise that levy action is planned and check whether Appeals has new information that may prohibit levy or may affect the decision to levy. For example, if Appeals has determined economic hardship exists or secured an installment payment agreement or offer in compromise proposal. The Collection group manager must concur with the planned levy action during the hearing.

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. The EH is held by Appeals and generally will follow Appeals procedures for a CDP hearing.

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 the taxpayer does not request an EH within the prescribed time period, the taxpayer foregoes the right to an EH. If the request for an EH is not timely, the request will be denied. Appeals will confirm that the request for an EH was not timely when Collection refers the taxpayer's request for the CDP separate timeliness determination (CDPTD). See IRM 8.22.5.9, Separate Timeliness Determinations (CDPTD).

In an EH case, Appeals will consider the same issues that it would otherwise have considered at a CDP hearing on the same matter.

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. See IRM 8.22.4.2(17) above for information on Collection's policy with regard to levy while an EH case is pending in Appeals.

Appeals will issue a Decision Letter in place 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:

There is no retained jurisdiction with an EH case (See IRM 8.22.9.20, Retained Jurisdiction Hearings)

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

Part 5 (Collection Process) of the IRM contains the administrative policies and procedures Appeals follows when considering alternatives to collection and other resolutions. The following are examples (this list is not all-inclusive):

Hearing officers will also use IRM Part 5 as a guide to verify whether administrative procedures were followed in issuing the Notice of Intent to Levy and/or filing the NFTL and to identify the IRS's position when working and resolving CDP/EH cases.

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

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 issues involving CDP and EH cases.

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 .

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

Taxpayers are encouraged to continue to work with the IRS office collecting the tax. See Treas. Reg. 301.6330-1(c). 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 (both ACS and field) will promptly forward the case to Appeals in the following instances:

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. These transmittal documents are designed to include the following details:

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

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:

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

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

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. See also IRM 8.22.5.3.2, Documentation Requirements - CDP Statute Controls and Verifications.

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.

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:

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

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.

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

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.

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

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

The Collection Due Process Tracking System (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:

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

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

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

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

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

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

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:

For guidance on ex parte communications between Appeals employees and employees of other Internal Revenue Service functions, seeIRM 8.1.10, Appeals Function - Ex Parte Communications.,

Fast Track Mediation (FTM) is a service offered by the IRS designed 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 cases considered by ACS sites.

The mediation session is designed to help facilitate communication between the taxpayer and Collection and help resolve unagreed issue(s) without the need for a formal appeal. The process involves an appeals officer (AO) or settlement officer (SO) trained in mediation techniques, the taxpayer and Collection. The Appeals mediator does not have settlement authority under FTM.

Rev. Proc. 2003-41, 2003-1 C.B. 1047, formally established the Small Business/Self-Employed (SBSE) FTM program, which is jointly administered by SBSE and Appeals. The goal of FTM is to help taxpayers resolve disputes with a compliance function before a decision is final. If a settlement can be negotiated while the case is still with the Collection function, it eliminates the need for a likely appeal. FTM does not eliminate or replace a taxpayer’s option to request a CDP or EH hearing.

A taxpayer is eligible to request FTM after a CDP Notice (e.g., Letter 1058, Letter 3172, etc.) is issued. FTM will be 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.

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.

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

A Taxpayer expressing an interest 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.

If the FTM request is approved, the RO will complete Form 13369, Agreement to Mediate, and provide 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.

Within three (3) business days of securing the necessary signatures on Form 13369, the RO will provide a copy to the taxpayer and follow locally established guidelines for submitting the mediation request to Appeals.

Stringent time frames have been established in order to provide Taxpayers a more timely resolution of tax disputes. The entire process is estimated to be completed within an average of 30-40 days.

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