This section provides guidance to Appeals technical employees for considering liability issues and relief from liability in CDP, EH and retained jurisdiction cases.

If a liability is full paid before or during a CDP hearing, the taxpayer may not raise the underlying liability as an issue. Such a challenge can instead be made through the refund claim process. Solicit a withdrawal of the CDP if there are no other issues. If the taxpayer does not withdraw, issue a determination noting that:

IRC 6320(C) and IRC 6330(c)(2)(B) provide that a taxpayer may challenge the underlying liability in a CDP hearing if the taxpayer did not:

Receive a notice of deficiency means receipt of the Statutory Notice of Deficiency (SNOD) in time to petition Tax Court for a redetermination of the deficiency. The IRS has the burden of proving receipt and the table below provides examples of how receipt can be established:

If the tax returns for the subject tax years are not in the CDP file, request them in IDRS with ESTAB. Request a special search if the file is not received in 21 days.

Consider the evidence and determine whether the taxpayer received the SNOD:

If you determine the SNOD was not properly mailed to the last known address by certified/registered mail and the taxpayer did not receive the SNOD in time to petition Tax Court, the assessment is invalid and must be abated.

Sign a consent to assessment means

Prior opportunity to dispute the tax liability means a prior opportunity for a conference with Appeals either before or after assessment of the liability. The taxpayer must have received a letter offering a hearing with Appeals or have participated in such a hearing to bar the underlying tax liability in the subsequent CDP hearing. The analysis used to determine receipt of the letter offering a hearing with Appeals is analogous to establishing receipt of a SNOD discussed in IRM 8.22.8.3(2) above. The table below provides examples:

IRC 6320(c) and IRC 6330(c)(4) may be the basis for precluding liability and non-liability issues from a CDP hearing. An issue is precluded if it was:

The table below provides examples to illustrate these rules:

A liability issue raised in a CDP hearing is either:

At issue: When liability is at issue in CDP, create a separate WUNO when the issue should be considered by an Appeals Officer. See the table below to determine whether a liability should be considered by an Appeals Officer.

Precluded: Document how you determined the liability issue is precluded as you will need to discuss this in the attachment to the determination or decision letter under "Issues Raised."

Precluded but considered under Appeals general authority: If a taxpayer provides evidence of eligibility for reducing a liability and the liability issue is precluded, you may request ATM approval to consider the issue under Appeals general authority outside of the CDP hearing if it prudent to do so. In such a case, document the taxpayer's eligibility for reducing a liability and submit it for ATM approval as per IRM 8.22.8.5.1, Referring a Liability Issue.

If the precluded liability is an audit assessment or IRC 6020(b) return, it is almost always quicker for the taxpayer to request an audit reconsideration from one of the designated Campus locations. Provide the taxpayer with Pub 3598, which explains the audit reconsideration process and provides the campus addresses. If a liability will remain for the CDP periods even if the taxpayer is successful in audit/AUR reconsideration, proceed with the hearing. You may withhold making a CDP determination until the reconsideration is complete if the potential reduction will affect the collection alternatives the taxpayer could qualify for.

The subsections that follow describe processes for considering various liability issues in CDP.

If a taxpayers disputes the liability on a self-filed return, provide them with a deadline of at least 21 calendar days to file an amended return with you.

If the taxpayer fails to amend the return after disputing the liability, note the opportunity offered to address liability in the attachment to the determination or decision letter.

Appeals can reduce the liability on a self-filed return. There is no statute of limitations for requesting abatement but there is Refund Statute Expiration Date for credits and refunds in IRC 6511.

Taxpayers may dispute an ASFR/SFR liability in the CDP hearing. The table below describes how to determine whether to consider the liability in or outside of CDP under Appeals general authority:

If the taxpayer disputes an ASFR/SFR liability, give the taxpayer 21 calendar days to file an income tax return with you to replace the IRS-prepared return. Attempt to secure all unfiled returns for processing, including non-CDP ASFR/SFR liabilities.

If the taxpayer fails to file, note that you offered an opportunity to address the liability and the taxpayer failed to follow through.

For this process, the taxpayer must provide Appeals with a valid return. A valid returns includes:

On receipt of a valid return from the taxpayer:

The ASFR Reconsideration Team will:

The hearing officer will monitor IDRS for the adjustment. If the adjustment fails to post, follow up with the ASFR unit at 631-654-6624. To avoid ex parte communications, limit the discussion to timeliness and processing issues. See IRM 8.1, Appeals Function, for more information on ex parte communication.

If a liability remains after the taxpayer's return is adjusted, proceed to discuss collection alternatives.

A taxpayer may dispute a math error liability in a CDP hearing. A math error is a mistake on a tax return that is corrected by the IRS during processing. IRM 21.5.4.2, What Is a Math Error, lists when the Service may summarily assess a deficiency resulting from the mathematical or clerical error.

A notice of deficiency is not initially required for math error liabilities. A notice of mathematical error is generally issued notifying the taxpayer that an amount of tax in excess of that shown on the return is due. The notice must identify the alleged error.

The notice of mathematical error is not considered a notice of deficiency and a taxpayer who receives one cannot petition Tax Court.

The taxpayer may request abatement of the math error liability within 60 days of the notice of mathematical error and the IRS must abate the liability.

Reassessment of the tax with respect to the abatement is subject to the deficiency procedure. If a petition is timely filed, the Tax Court has jurisdiction to redetermine the deficiency. See IRC 6213(b)(2)(A).

If a tax liability was incorrectly assessed under math error procedures instead of SNOD, the assessment is invalid and needs to be abated. Your notice of determination should reflect the facts that support this determination. Do not sustain collection.

Innocent Spouse (IS) is not a challenge to the existence or amount of the underlying tax liability and IRC 6330(c)(2)(B) , Prior Opportunity, does not apply in determining whether Appeals can consider the issue in CDP. A taxpayer may always raise IS in a CDP hearing unless the issue was previously:

To make an IS claim, taxpayers must submit Form 8857, Request for Innocent Spouse Relief or a document containing similar information..

There is an additional suspension of the collection statute under IRC 6015(e)(2) that for the most part is concurrent with the suspension under a CDP lien or levy hearing. See IRM 25.15.1.8, Statute of Limitations on Collection. Under IRC 6015(e)(2), CSED is suspended from the date the claim is filed until it is:

CCISO's input of TC 971 AC 065 marks the beginning of the statute suspension under 6015(e)(2). APS input of TC 972 AC 065 marks the end of the statute suspension under 6015(e)(2). The dates of the TC 520 and TC 521 are unaffected.

Covington Centralized Innocent Spouse Operation (CCISO) investigates IS claims raised in CDP, with the exceptions listed below.

Taxpayers may raise EITC liability in their CDP hearing if they did not receive a SNOD or otherwise have an opportunity to contest the tax liability.

When EITC is considered in CDP, the ACDS Feature Code is "EI" .

When a taxpayer is precluded from raising EITC in CDP, the issue may be considered outside of CDP under Appeals general authority. In order to do so:

A three digit code is used to track information regarding the source of EITC cases. The hearing officer will identify this three digit code from the following list and request that APS load the code into the ACDS PROJCD field. The project codes are:

For more information on Project Codes see IRM 4.19.14.3, Program Description.

Taxpayers may raise Trust Fund Recovery Penalty (TFRP) liability in CDP if they did not have a prior opportunity to dispute the liability. Examples of a prior opportunity include the taxpayer:

To determine whether the taxpayer received Letter 1153:

Return the TFRP files promptly to Advisory at the conclusion of the case as they may be needed to consider a taxpayer's Form 843 Claim for Refund.

If liability can be considered, see:

Taxpayers may raise reasonable cause penalty abatement in their CDP hearing if they did not have a prior opportunity to dispute the liability. The table below gives examples of when penalty appeal (PENAP) is an issue in CDP:

To raise PENAP in CDP, the taxpayer must provide a written statement identifying the:

If the taxpayer's CDP request includes a general statement about penalties, e.g. “penalties should be abated,” ask them for specific information in support of the dispute of the liability for the penalties as described above. If the taxpayer fails to provide the requested information, note in the attachment to the determination or decision letter that penalty abatement was not considered because the taxpayer declined to provide requested information.

See IRM 20.1.1.3.2Reasonable Cause, and IRM 8.11.1.5.2.1, Applying Reasonable Cause, for a discussion of reasonable cause criteria.

When PENAP is a CDP issue, a separate PENAP WUNO will not be created. The PENAP will be addressed in the determination or decision letter attachment.

When PENAP is precluded from CDP, it may be considered outside of CDP under Appeals general authority. To do so:

Prepare one of the forms below for APS to input your decision regarding each of the disputed penalties and tax period(s):

Use blocking series 96X (penalty abatement refusal) for the TC 290 (-0-) transaction. This prevents a later abatement of a penalty sustained by Appeals.

Under IRC 6673(a)(1), the Tax Court may impose a penalty of up to $25,000 against a taxpayer for:

If the Tax Court imposes the IRC 6673 penalty, the IRS assesses and collects the penalty in the same manner as a tax. A notice of a right to a hearing must be given to the taxpayer when the IRS intends to collect the penalty.

If a taxpayer disputes an IRC 6673 liability, the hearing officer will confirm:

The penalty cannot be compromised under doubt as to liability as Treas. Reg 301.7122-1(b)(1) states that doubt as to liability does not exist where a liability is established by a court decision or judgment.

Counsel generally recommends against compromise of the IRC 6673 penalty under doubt as to collectibility or effective tax administration grounds. The penalty is an important tool used by the Tax Court to deter frivolous litigation. However, compromise on doubt as to collectibility grounds may be appropriate if the taxpayer abandons frivolous arguments and comes into tax compliance.

IRC 6700 provides a penalty for promoting abusive tax shelters.

IRC 6701 provides a penalty for aiding and abetting understatement of tax liability.

A notice and demand letter is automatically generated upon assessment of these penalties.

Notice and demand CP15 and CP215 provide specific procedures for requesting an abatement and obtaining judicial review under IRC 6703. To contest the penalties, the taxpayer must pay at least 15% of the penalty and file a claim for a refund within 30 days of the date of issuance of notice and demand. Because notice and demand provides specific procedures to obtain judicial review of the penalty, receipt constitutes a prior opportunity to contest the liability under IRC 6330(c)(2)(B). Receipt of a notice and demand containing the IRC 6703 language is analogous to a taxpayer receiving a notice of deficiency. If Appeals confirms receipt of notice and demand, the liability cannot be raised in CDP.

If the taxpayer disputes an IRC 6700 or IRC 6701 liability, confirm the taxpayer received a notice and demand that described the taxpayer's right to pay 15% of the penalty and file a refund claim within 30 days. Since notice and demand is not sent by certified mail, confirmation is made through other means:

If the taxpayer admits receipt or there is information that confirms receipt, the taxpayer had a prior opportunity to dispute the penalty. Advise the taxpayer the liability issue is precluded in CDP but Appeals may consider other CDP issues. Advise the taxpayer of the right to pay the penalty in full and to file a claim for a refund to contest the penalty outside of CDP.

If the taxpayer denies receipt and there is no information that confirms receipt, refer the liability issue to an Appeals Officer per IRM 8.22.8.5.1, Referring a Liability Issue.

If you determine the taxpayer timely took the actions in IRC 6703(c) to obtain judicial review, this subsection provides the Service may not levy to collect the penalty until the final resolution of the proceeding the taxpayer initiated. If the CDP hearing involves a proposed levy and the taxpayer timely followed the procedures in IRC 6703(c), the CDP notice is valid. However, do not sustain the proposed levy unless there has been a final resolution. See IRC 6703(c)(2). If a NFTL was filed after the taxpayer timely followed IRC 6703(c) and there has been no final resolution under IRC 6703(c)(2), consult with Counsel as to whether the filing of the lien was similarly prohibited by IRC 6703(c)(1).

If you determine that the taxpayer paid 15% of the penalty but the taxpayer denies a claim was filed after 15% was paid, check Pacer to verify the taxpayer did not filed a suit . If the taxpayer filed suit, see paragraph (8) above.

Frivolous Return Penalty IRC 6702(a), Specified Frivolous Submission Penalty IRC 6702(b), and IRC 6682 Questionable W-4 penalties do not provide notices that give the taxpayer an opportunity to go to Appeals. Therefore, these penalties may be raised in CDP.

IRC 6682 allows the assessment of a $500 civil penalty for furnishing a false Form W-4 if:

IRC 6682 penalties are assessed using MFT 55 for the calendar year for which the false Form W–4 was signed.

IRC 6702(a) imposes a $5,000 civil penalty against any person who files a return (not limited to income tax returns), if the purported return does not contain information on which the substantial correctness of the self-assessed determination of tax may be judged or contains information that on its face indicates that the self-assessment is substantially incorrect and:

IRC 6702(b) imposes a $5,000 civil penalty against any person who submits a specified frivolous submission. A specified submission contains a position which the IRS has identified as frivolous under IRC 6702(c) or if the specified submission reflects a desire to delay or impede the administration of Federal tax laws. See Notice 2010-33. A specified frivolous submission may be identified by TC 240 with reference code 543.

There is no legal basis for abatement of these penalties due to Reasonable Cause. However, IRC 6702(d) provides that the Service may reduce any penalty imposed under IRC 6702 if it "determines that such reduction would promote compliance with and administration of the Federal tax laws." If a taxpayer requests an IRC 6702 penalty reduction, the central factor to consider is whether the taxpayer is in compliance with Internal Revenue laws. If a taxpayer has come into compliance, the penalty will have served its purpose to promote compliance and a reduction is appropriate.

Compliance for the purposes of this subsection is defined as the taxpayer:

Payment compliance for the purposes of this subsection is defined as the taxpayer:

If it is determined that the taxpayer has come into compliance and thus is eligible for a penalty reduction under IRC 6702(d), the penalty should be reduced to no less than $500, which was the original amount of the penalty prior to the 2006 amendments to IRC 6702 which increased the penalty to $5,000 and provided for a reduction of the penalty.

A taxpayer may challenge the liability for IRC 6682 and IRC 6702 penalties on the grounds that required approval was not obtained in accordance with IRC 6751(b)(1), which states that no penalty shall be assessed unless it is approved in writing by the manager of the individual making the determination. Form 8278 Assessment and Abatement of Miscellaneous Civil Penalties is the document the manager signs to approve the assessment of IRC 6682 and IRC 6702 penalties. An electronic signature, stamp or any other mark which indicates the manager's approval on Form 8278 is sufficient to meet the requirements of IRC 6751.

If a taxpayer challenges the liability for the IRC 6682 and IRC 6702 penalties, secure a copy of Form 8278 by requesting an ESTAB of the MFT 30 TC 150 and the MFT 55 TC 240. Form 8278 is attached to one of those two documents. Block (10b) reflects the typed name of the manager and a signature block for the manager titled "Reviewer." An electronic version of Form 8278 may be the only copy available and may be used to verify managerial approval.

The Frivolous Return Program (FRP) maintains back-up documents for frivolous penalties while they have an open control. When an ESTAB search does not turn up Form 8278 and IDRS confirms FRP has an open control, you may contact them to secure a copy. The FRP toll free numbers are 1-866-883-0235 and 1-801-620-2406. FRP is located at the following address:

If you determine that proper approval was not obtained, the penalty must be abated.

If you determine that Form 8278 is missing, you may rely on the presumption of official regularity to sustain the penalty.

IRC 6707 provides a penalty for the failure to furnish information regarding a reportable transaction. IRC 6707A provides a penalty for the failure to include on any return or statement any information required to be disclosed under IRC 6011 regarding a reportable transaction.

A taxpayer may dispute a IRC 6707 and IRC 6707A penalty in CDP if the taxpayer did not have a prior opportunity to do so. If ACDS confirms a prior IRC 6707 or IRC 6707A Appeals hearing for the same tax period, the taxpayer had a prior opportunity.

Appeals has no authority to rescind IRC 6707 or IRC 6707A on the grounds specified in IRC 6707(c) and 6707A(d) in CDP. When the taxpayer is permitted to raise the liability, Appeals may determine that the penalty does not apply or may propose a settlement based on hazards of litigation. Appeals may consider whether:

The “Small Business Jobs Act of 2010” amended the IRC 6707A penalty calculation retroactively for penalties assessed after December 31, 2006. The Abusive Transactions Unit in Ogden reviewed the calculation of the IRC 6707A penalty and made adjustments where appropriate. A taxpayer who can't raise liability in a CDP hearing because of prior opportunity is still able to contest the amount of the recalculation, except where the penalty has been recalculated to the minimum amount allowed under SBJA 2010, which is $10,000 for businesses and $5,000 for individuals.

IRC 6707 and IRC 6707A penalties are Appeals Coordinated Issues. When the taxpayer is able to raise liability as a CDP issue, a new WUNO will be created for this liability issue as per IRM 8.22.8.5.1, Referring a Liability Issue. . The Appeals Officer will obtain the review and concurrence of Technical Specialist for 6707/ 6707A penalties before returning the case to the Hearing Officer. Technical Specialists are found at http://appeals.web.irs.gov/TG_locator/application/query.asp.

An interest abatement request is not a challenge to the existence or amount of the underlying tax liability and IRC 6330(c)(2)(B), Prior Opportunity, does not apply in determining whether Appeals can consider interest abatement in CDP. A taxpayer may raise interest abatement in a CDP hearing unless the issue is precluded under IRC 6330(c)(4). Interest abatement is precluded from CDP when the issue was previously:

Taxpayers may raise interest abatement even if the CDP liability has been paid or a disputed lien released.

If Appeals is considering an interest abatement claim at the same time a CDP request is made, associate the file and consider the claim within the CDP hearing.

To raise interest abatement in CDP, the taxpayer must provide a written statement that identifies:

If the taxpayer's CDP request includes a general statement about interest, e.g." I think interest should be abated," ask them to provide the information described above. If the taxpayer fails to do so, note in the attachment to the determination or decision letter that interest abatement was not considered because the taxpayer failed to provide the information requested. is

When the taxpayer submits a properly perfected request for interest abatement, provide APS with a copy of the CDP case summary card requesting:

Interest on employment, excise, and other taxes that are not subject to deficiency procedures do not qualify for abatement under IRC 6404(e). However, the IRS has authority to abate interest under IRC 6404(a) if it is:

APS has a Complex Interest Team that can assist with complex or restricted interest computations. Hearing officers can request interest computation assistance following the procedures in IRM 8.22.7.8.1, Interim Adjustments. Instead of preparing a Form 3870, prepare the ACDS Update Form in APGolf.

Additional guidance on interest abatement is found at:

A Doubt as to Liability Offer (DATL) submitted in a CDP hearing is a challenge to the underlying liability. Consider the DATL offer in CDP if the taxpayer is not precluded from raising the underlying liability. Examine the liability at issue to determine if the taxpayer had a prior opportunity per IRM 8.22.8.3, When Liability is Raised. See also IRM 8.22.8.5, At Issue, Precluded or Precluded but Considered.

The taxpayer must offer some amount of consideration. The offer would generally be the amount of the expected liability, penalties and interest.

The taxpayer is not required to pay an OIC application fee or make a TIPRA payment in a DATL OIC.

When a DATL OIC is not precluded:

When a DATL OIC is precluded:

When a DATL OIC is precluded AND the liability was determined in Appeals:

In the case of TFRP or PLET liabilities, negotiate a settlement in a manner similar to considering hazards of litigation. See IRM 8.23.3.10.2 for Appeals consideration of DATL offers.

Taxpayers who are partners in TEFRA entities may not challenge the treatment of partnership items in a CDP hearing, because IRC 6221 requires that the tax treatment of any partnership item be determined at the partnership level.

Partners also are precluded under section 6330(c)(2)(B) from challenging the treatment of partnership items, because a partnership-level proceeding is an “opportunity.” After an Final Partnership Administrative Adjustment (FPAA) is mailed to the Tax Matters Partner (TMP) and notice partners, IRC 6226(a) allows the TMP 90 days to file a petition for a readjustment of partnership items with the Tax Court, the United States Court of Federal Claims, or the United States District Court in which the partnership's principal place of business is located. If the TMP does not file a petition, any notice partner or a 5-percent group of non-notice partners (group owning in the aggregate 5 percent or more of the interest in partnership profits) may file a petition with any of these courts within 60 days after the close of the 90-day period. Regardless of which partner files the petition, IRC 6226(c) provides that:

For partnership tax years ending after August 5, 1997, the applicability of penalties is determined at the partnership level. For the same reasons as described above, an individual partner may be precluded from challenging a partnership-level penalty in CDP. Individual partners may, however, assert partner-level penalty defenses, including partner-level reasonable cause, even if they received a notice of computational adjustment giving them an opportunity to file a refund claim within 6 months after the IRS mailed the computation to the taxpayer. This is true even if the penalties were included in a settlement of partnership-level issues agreement, a defaulted FPAA, or a federal court decision.

When a taxpayer claims that they did not receive proper notification of the adjustment, the hearing officer will review the case file for the following indications of proper notification such as:

A taxpayer cannot contest erroneous mathematical computations applying the determined partnership items to the taxpayer's return, including interest computations, if the taxpayer received a notice of computational adjustment that offers the taxpayer an administrative opportunity to address any mathematical errors and the administrative opportunity has lapsed before issuance of the CDP notice. The administrative opportunity need not be before the Office of Appeals. A taxpayer can, however, contest erroneous mathematical computations applying the determined partnership items to the taxpayer's return, including interest computations, if the taxpayer has not received a notice of computational adjustment that offers the taxpayer an administrative opportunity to address any mathematical errors. Because the IRS only started providing such an opportunity on (insert date new letter started being sent) when it began sending letters giving this right, if the notice of computational adjustment was issued prior to that date, the taxpayer may raise this issue at the CDP hearing. 6) If the taxpayer was issued and received a notice of deficiency relating to the partnership items adjustments, the taxpayer may not dispute issues that were or could have been raised in that deficiency proceeding.

Taxpayers can raise interest abatement as part of a TEFRA-related CDP hearing. Abatement of interest is not a liability issue under section 6330(c)(2)(B). However, if the taxpayer previously sought IRC 6404(e) relief from Appeals, section 6330(c)(4) prevents the taxpayer from obtaining a determination by Appeals in the CDP hearing, unless he did not meaningfully participate in the prior Appeals proceeding. Generally, Appeals will not grant abatement of interest under IRC 6404(e) in a TEFRA-related CDP case without special circumstances. Where abatement appears warranted, discuss the issue with the Appeals TEFRA Technical Specialist.

For additional information see IRM 8.19.8, Appeals Pass-Through Entity Handbook.

The Service determined that Son of Boss (SOB) transactions, described in Notice 2000-44, 2000-2 C.B. 255 are abusive and were designed, marketed, and undertaken solely to create tax benefits unintended by any reasonable interpretation of the tax laws. The Service believes that it would prevail in litigation on the merits of these transactions and that the imposition of penalties would be upheld. For efficient tax administration reasons, the Service offered taxpayers an opportunity to resolve their civil tax liabilities under the SOB settlement initiative described in Announcement 2004-46, 2004-21 C.B. 964 to avoid litigation.

Taxpayers who elected to participate in the SOB settlement initiative were sent a closing agreement under IRC 7121 and were expected to full pay upon submission of the signed Form 906 closing agreement to the Revenue Agent within 30 days. Those taxpayers who indicated they could not pay the liability in full were required to submit complete financial statements and to agree to other financial arrangements, acceptable to the Service, before the Service would execute the closing agreement. Taxpayers were considered to be ineligible to participate in this initiative if an agreement regarding an acceptable financial arrangement was not reached. Taxpayers participating in the SOB settlement initiative were eligible for certain tax benefits and penalty relief.

Under Announcement 2004-46, eligible taxpayers had until June 21, 2004 to elect to participate in the settlement initiative. For taxpayers who were either ineligible or who failed to elect and settle their cases under the settlement initiative, Announcement 2004-46 was clear there would be no administrative Appeals consideration in SOB cases. For all taxpayers ineligible or not participating in the settlement initiative, the Service developed the cases, disallowed all tax benefits and attributes claimed from the SOB transaction, including out-of-pocket costs and fees, determined appropriate penalties, including those under section 6662 or section 6663, and issued a Notice of Deficiency or Notice of Final Partnership Administrative Adjustment, as appropriate. The unresolved cases were to be treated as designated for litigation.

Despite the general designation of SOB cases for litigation, a SOB non-participant taxpayer may challenge a SOB liability within CDP when the conditions described in IRM 8.22.8.3,When Liability is Raised, are met. See also IRM 8.22.8.20, TEFRA, if applicable.

A qualified offer is a proposal by the taxpayer to settle a dispute about a tax liability. If the government does not accept the offer within 90 days and the taxpayer meets the other requirements of IRC 7430, it must receive a judgment in excess of the amount the taxpayer offered to settle the case or pay reasonable administrative and litigation costs. IRC 7430(c)(4)(E).

A qualified offer is a settlement offer, not an offer in compromise.

A taxpayer's proposal must meet the requirements in IRC 7430(g) to constitute a qualified offer. The taxpayer will be considered a "prevailing party" if a court determine the taxpayer's liability is equal to or less than the amount offered to settle in a valid qualified offer.

A taxpayer may submit a qualified offer during a CDP hearing if:

A Hearing Officer will consider the qualified offer within 90 days as the offer is deemed rejected by statute if the Service does not respond within 90 days or the time period stated in the offer. The time period for the Service's response as stated in the offer must be 90 days or more for the offer to be a qualified offer.

Appeals does not have to formally reject a qualified offer and does not have to justify an affirmative or default rejection in the determination or decision letter attachment.

For procedures for evaluating and responding to qualified offers, see:

Identity (ID) theft is a crime where someone uses another individual’s personal information (i.e., SSN) without permission to commit fraud or deception. A taxpayer who has had their ID stolen with tax consequences has suffered either:

An ID Theft claim is a challenge to the liability since the taxpayer is disputing either reported income or a filed tax return. ID theft arises in CDP when either:

When ID theft arises as an issue in CDP, add Feature Code “ID” to the Appeals Centralized Database System case control. Input of the feature code is important because it is currently the only way to track ID theft cases in Appeals inventory.