In 1996, the Service implemented a Collection Appeals Program (CAP). This program provides an administrative appeal for certain collection actions. The appealable actions were initially limited to seizures, levies and liens.

On January 1, 1997, the appeal of terminated installment agreements was added to the program. This installment agreement appeal provision was added by the Taxpayer Bill of Rights 2, enacted July 30, 1996.

The IRS Restructuring and Reform Act of 1998 (RRA 98) provides taxpayers the right to appeal the rejection of installment agreements. That appeal has been added to the CAP procedures. However, there are some differences between rejections or terminations of installment agreement CAP cases and regular CAP cases on liens, levies and seizures.

The legislative history of IRC 7123 (enacted by RRA 1998) reflects Congressional intent that the CAP program be continued, although CAP is not specifically mandated by statute.

RRA 98 expands taxpayer rights to allow a "hearing" under Collection Due Process (CDP) after a Notice of Federal Tax Lien has been filed and before a levy may be made (jeopardy levies and levies on state income tax refunds are appealable after levy). The taxpayer has the right to go to court on Appeals' determinations under CDP but not under CAP.

CAP is available to taxpayers or third parties in a wide range of situations. See IRM 8.24.1.2. Collection Appeals Program. CAP is also available where the Collection Due Process (CDP), Equivalent Hearing (EH), or Retained Jurisdiction (RJ) right is not available (due to lapse of time or previous exercising of this one-time right for each tax period).

Taxpayers who file a CAP request may also be entitled to, and file for, a Collection Due Process, Equivalent , or Retained Jurisdiction hearing, if a CDP notice was issued. See IRM 8.22 on Retained Jurisdiction Determine which of these options is most beneficial for taxpayers based on their indicated interests. If the taxpayer chooses CAP, secure a withdrawal from the taxpayer for the CDP hearing, to ensure that the taxpayer understands what rights are given up by withdrawing the CDP right. If the taxpayer will not sign a withdrawal or does not seem sure which right to exercise, the taxpayer should be given the CDP hearing. The details of the appeal rights discussion should be clearly documented by the Appeals or IRS employee who ascertains which appeals right the taxpayer wishes to exercise.

Under CAP:

Under CDP:

If CDP, EH, or RJ is available to the taxpayer and preferable, Appeals will now input the TC 520 on the Collection Due Process Tracking System (CDPTS) by updating the CDPTS to Stage 4. If the CDP is withdrawn or changed from a CDP to CAP, the CDP tracking system will be updated to reflect the change.

When a taxpayer asks to be referred to TAS or the taxpayer meets TAS criteria (See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), prepare and forward Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), to the local TAS office for appropriate action. If the taxpayer's issue can be resolved within 24 hours or steps will be taken to begin resolving the taxpayer's issue within 24 hours, then do not forward the Form 911 unless the taxpayer asks to be referred to TAS.

To the extent possible, complete the Appeals determination before the local TAS office makes a relief determination, since the appeal process may resolve the taxpayer's concerns.

Several collection and examination issues have separate appeal procedures. Advise taxpayers who raise these issues under CAP to proceed with the appropriate appeal procedure. These include:

Also excluded from CAP:

Cases controlled by Criminal Investigation (CI) where CI concurs with collection activity may be entitled to a CAP. Appeals will generally delay a CAP hearing during the pendency of criminal investigation and proceedings, unless the determination is made consistent with Policy Statement P 4-84 that the CAP hearing will not imperil prosecution.

IRC 7122(e)(2) provides the right to appeal rejections of installment agreements. For installment agreement rejection appeals, IRC 6331(k)(2)(B) provides no levy may be made for 30 days after rejection of an installment agreement, and, if an appeal is filed in that 30-day period, during the period the appeal is pending.

For installment agreements proposed for termination, no levy may be made within 30 days of the proposed termination, and if an appeal is filed in that 30-day period, during the period the appeal is pending. See IRC 6331(k)(2)(D).

IRC 6331(k)(2)(D) provides for appeals of terminated installment agreements. For terminated installment agreements, IRC 6331(k)(2)(D) provides that no levy may be made within the 30-day period after termination, and, if an appeal is filed during that 30-day period, no levy may be made while the appeal is pending.

Appeals will allow taxpayers to appeal the proposed termination of installment agreements during the 30-day period after the notice of the proposed termination is issued (CP 523 or Letter 2975).

If the taxpayer appeals during the first 30 days after the proposed termination, and Appeals sustains the notice of termination, the taxpayer cannot appeal the termination of the installment agreement during the 30-days after termination.

The time frame for filing a CAP appeal for an installment agreement is as follows:

RRA 98 provides that rejected installment agreements will have an independent administrative review by a designated official within Collection before the rejection is communicated to the taxpayer.

Collection function will input the required TC 971 codes for levy suspension on rejected installment agreements.

The most common reasons for termination are:

When the IRS believes a taxpayer has defaulted, a notice is sent proposing termination. CP 523 is sent for campus cases and Letter 2975 is sent for field cases. Both letters ask the taxpayer to contact the Service or appeal within 30 days. Otherwise, the agreement is terminated.

Terminated installment agreements have an automatic reversion from status 64 (terminated installment agreement) to status 22 (ACS case) after 13 cycles. For any terminated installment agreement case not closed by the twelfth cycle after an agreement is terminated, a STAUP 22-09 is input for additional time. An additional STAUP may be necessary if the case is not resolved in the additional 9 cycles that were requested by the STAUP. Either the Collection function or Appeals may input the STAUP, per local arrangement, but Appeals is responsible for ensuring that it is done.

Form 9423 , Collection Appeal Request, is recommended for field Collection CAP appeals. This form also provides instructions on how to appeal. While Form 9423 is recommended for CAP appeals, any written request for a CAP hearing will be honored.

Taxpayers can obtain Form 9423 and these publications from the field Collection groups and the Service's web page at http://www.irs.gov/. Employees can obtain these forms from the internal Multimedia web site.

The request for a CAP appeal does not need to be completed prior to the group manager conference. However, the group manager must receive the taxpayer's request for an appeal within two business days after the manager conference or collection action will resume on all actions except rejected or terminated installment agreements. A conference with the group manager is not required on installment agreement CAP appeals.

CAP cases on liens, levies or seizures are sent to Appeals within 2 business days of the manager's rejection or receipt of the taxpayer's or third party's request, whichever occurs later. Local Appeals and field Collection functions have worked out their own procedures for prompt transmittal of cases to the local Appeals Office. CAP cases on rejected or terminated installment agreements are to be expeditiously sent to Appeals due to the statutory restrictions on levy.

The information needed for a CAP appeal will be faxed to the Appeals Office. Generally, a copy of the entire case file is not necessary and is burdensome. Collection and Appeals, on a case by case basis, will determine together what portion of the file needs to be transmitted to Appeals to adequately consider the appeal.

At a minimum, the appeals file should include:

All Appeals offices have access to the Integrated Data Retrieval System (IDRS) and Integrated Collection System (ICS). The Settlement Officer can access the Revenue Officer's ICS case file that includes case history, information on account transactions and the manager's comments regarding the conference. Collection no longer needs to provide paper copies of the following:

Appeals employees will contact the Revenue Officer or group manager to obtain additional information within the Service's control or readily available to the Collection employee that is needed to adequately consider the issues raised by the taxpayer.

Seizures are appealable either before the seizure action takes place or after it is completed. However, taxpayers have 10 business days after the Notice of Seizure is received or left at their home or business to appeal to the Collection manager.

The appeal will generally be handled in the Appeals office serving the taxpayer's home address or principal place of business, in the case of a corporation.

See IRM 5.1.9 - Collection Appeal Rights for field Collection CAP procedures.

Taxpayers may make an oral request for a CAP appeal on ACS (Automated Collection System) cases. However, taxpayers must speak to the ACS Manager prior to the case being sent to Appeals. This request for an appeal and statement about the issue is documented in the Comments section of the ACS Entity Screen.

The ACS CAP coordinator will fax a copy of the ENTITY, COMMENTS and MODULE screens to Appeals.

To obtain additional ACS case file information, Appeals Account Resolution Specialists, Appeals Officers or Settlement Officers can access the Integrated Case Processing through Desktop Integration (DI). Further information on DI can be obtained by accessing http://www.di.swr.irs.gov. The ACS manager is also available for any additional information.

Form 4442 , Inquiry Referral, will be used to fax CAP cases to the Appeals office.

Customer Service sites have a 2-business day period to send cases on liens or levies to Appeals.

In addition to Form 4442, which has space for a brief description of the problem, Customer Service personnel should send a copy of any other relevant information.

Upon closing a Customer Service CAP case, the Form 4442 will be returned via fax to the initiating representative with the Form 5402 and a copy of the closing letter.

Settlement Officers should treat CAP cases as their first priority (unless a statute will expire on another case within 5 days).

When resource limitations rather than case complexities will not allow cases to be closed in 5 days, work CAP cases in the following priority:

Employees should hold a conference with the taxpayer within 2 business days of case receipt to allow maximum flexibility for decision-making and paperwork preparation.

The stringent time frames were set for the following reasons:

Phone conferences are common in these cases.

It is vital that the Collection case be fully and clearly documented, since missing and unclear information could cause a case to take more than 5 days to resolve or result in Appeals reversing the collection action proposed or taken.

If a taxpayer presents new information to Appeals that the Revenue Officer has not considered, Appeals may ask the Revenue Officer to review and comment on the information, in accordance with the ex parte requirements. To the extent the Revenue Officer is expected to orally comment on the accuracy of the new information or the relative importance of the information to Appeals' decision, the taxpayer/representative must be given an opportunity to participate in any discussions with the Revenue Officer. If comments on the information are in writing, the comment should be sent simultaneously to Appeals and the taxpayer. See IRM 8.22, Collection Due Process.

Appeals should review the case for appropriateness based on law, regulations, policy and procedures (national and local), considering all the facts and circumstances.

Local procedures will only be considered appropriate if they are written and consistent with the IRM.

Judgment is likely to be an issue on these types of cases, although they can also involve legal or procedural issues. Appeals may reverse the Collection function's action if evaluation of the taxpayer's history and current facts and circumstances reveal a more appropriate solution.

Due to the extensive investigation and multiple levels of approval required in seizing property, the appropriate approval authority in Appeals must concur before a decision to direct release of a seizure is shared with Collection. If a Collection Area Director approved the seizure, the Appeals Director of Field Operations must approve the release; if the Collection Territory Manager approved the seizure, the Appeals Area Director must approve the release.

Appeals should inform both the Collection function and the taxpayer of the decision as soon as possible after receiving the necessary approvals.

The taxpayer's closing letter should clearly outline the following:

Give a copy of the closing letter to the Collection function at the same time it is mailed or faxed to the taxpayer.

Prepare an Appeals Case Memo (ACM), and provide a copy to the Collection function. The ACM should include complete instructions on the decisions made and any action that will need to be completed e.g., establish an installment agreement for XXX amount per month, investigate discharge, input currently not collectible with XX closing code, whether there are no restrictions on enforcement, etc.

If the taxpayer filed an ATAO, or if the case was otherwise referred to the Taxpayer Advocate Service, give a copy of the closing letter and the ACM to the controlling local Taxpayer Advocate Service office.

Decisions by Appeals are binding on the taxpayer and the Collection function, with certain limited exceptions. The Collection function will take the actions directed by Appeals. However, the default of the agreement by the taxpayer will release the Collection function from the terms of the agreement.

Material misrepresentation of fact or failure to fully disclose any material information by the taxpayer will make any agreement - such as a delay in lien or levy or an installment agreement etc., - reached on behalf of the Service voidable. Before the Collection function declares an agreement void under this provision, the Collection employee will confer with Appeals. If Appeals sustains the Collection function's action(s), the Collection function may resume any suspended actions.

Appeals Centralized Database System (ACDS) type codes are used to track this program:

Closing codes are used under the following circumstances.

A jeopardy levy requires the same conditions that would allow a jeopardy assessment. See the IRS policy statement in IRM 1.2.1,Policies of the Internal Revenue Service, regarding jeopardy assessments, IRM 1.2.1., P-4-88. for the conditions under which a jeopardy assessment will be made.

Collection's IRM 5.11.3 - Jeopardy Levy without a Jeopardy Assessment explains the administrative, legal and approval procedures that must be followed before a jeopardy level can be issued.

IRC § 7429 was amended by the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) to specify that jeopardy levies may be administratively appealed and challenged in court. Statutory authority to levy is contained in IRC section 6331. For normal, non-jeopardy assessments, which are in balance due status, there is generally a series of notices, prior to the delinquent account being issued to the Automated Collection System (ACS) or to a Revenue Officer. The first notice under IRC section 6331(a) is a 21 calendar day (10 business days if the amount is $100,000 or more) notice and demand notice. The notice under 6331(d) is the 30 day intent to levy notice. See IRM 5.11.1. for additional information regarding notice and demand procedures. In the case of jeopardy levy, notification of the right of appeal and right to review under IRC section 6330 is available. .

In order for a taxpayer to be entitled to an administrative appeal and judicial review under IRC § 7429 the following conditions must have been met:

The issue is whether the jeopardy levy is reasonable under the circumstances (collection is truly in jeopardy). If the appeal is rejected, the taxpayer can obtain judicial review of the jeopardy levy. If any of the liabilities on the jeopardy levy were being considered in Tax Court before the making of the jeopardy levy, the taxpayer can obtain judicial review of the jeopardy levy by the Tax Court.

If the jeopardy levy was issued after 30 days from the notice and demand and the taxpayer has not already been issued their appeal rights under IRC 6330, then Collection must notify the taxpayer of their appeal rights under IRC 6330. See IRM 5.11.3. The taxpayer has 30 days from the date of the Letter 2439A(CG) to request a Collection Due Process (CDP) hearing. The taxpayer must timely request a CDP hearing under IRC 6330 in order to be entitled to judicial review under that section. See IRM 8.22, Collection Due Process, for additional information about taxpayers' rights to appeal under IRC 6330.

If the taxpayer appeals or states that a suit is being filed, Collection will contact AIQ-Advisory and seek advice from Counsel, as needed. The local Appeals Office will handle the administrative appeal. Collection will also advise the levy recipient(s) to delay paying over the funds while the appeal is considered using Letter 2438(CG) , Jeopardy Levy Letter to Third Party Recipient.

If the taxpayer has received all the pre-levy notices and the waiting periods have passed, they can appeal under the Collection Appeals Program (CAP) or request an equivalent hearing. The taxpayer cannot go to court if they disagree with Appeals' decision. See IRM 5.1.9,Collection Appeal Rights, See IRM 8.24.1.2.and IRM 8.22 for additional information on CAP and equivalent hearings.