- 8.24.1 Collection Appeals Program (CAP)
- 126.96.36.199 Collection Appeals Program Overview
- 188.8.131.52.1 Administrative and Legislative History
- 184.108.40.206 Collection Appeals Program (CAP)
- 220.127.116.11.1 Referrals to the Taxpayer Advocate Service (TAS)
- 18.104.22.168.2 Exclusions from CAP
- 22.214.171.124.3 Rejected, Modified, Proposed for Modification, Terminated and Proposed for Termination Installment Agreements under CAP
- 126.96.36.199.4 Collection Field CAP Cases
- 188.8.131.52.5 ACS CAP Cases
- 184.108.40.206.6 Accounts Management CAP Cases
- 220.127.116.11.7 Case Procedures under CAP
- 18.104.22.168.8 CAP Premature Referrals
- 22.214.171.124.9 Effect of Decision under CAP
- 126.96.36.199.9.1 Disagreement with Appeals Decision
- 188.8.131.52.10 CAP "Type" and "Closing" Codes for ACDS
- 184.108.40.206 APS CAP Case Closing Procedures.
- 220.127.116.11 Procedures for Shipping Personally Identifiable Information (PII)
- Exhibit 8.24.1-1 Instructions for Completing Customized CAP Form 5402
- Exhibit 8.24.1-2 Step-by-Step Paperless CAP Process for Non-Field Sourced Cases
- Exhibit 8.24.1-3 Step-by-Step Paperless CAP Process for Field Sourced Cases
Part 8. Appeals
Chapter 24. Collection Appeals Program and Jeopardy Levy Appeals
Section 1. Collection Appeals Program (CAP)
December 02, 2014
(1) This revises IRM 8.24.1, Collection Appeals Program and Jeopardy Levy Appeals, Collection Appeals Program (CAP).
(1) This IRM contains the following substantial changes, including the content from Interim Guidance (IG) memorandum AP-08–0514–0002, Interim Guidance on Paperless Collection Appeals Program (CAP) Process for Appeals Field Offices, dated May 21, 2014:
|Item||IRM Citation||Description of Change|
|1||IRM 18.104.22.168.1, Administrative and Legislative History||IRM 22.214.171.124.1(8) provides additional guidance regarding situations when both a CDP and CAP are simultaneously requested by the taxpayer.|
|2||IRM 126.96.36.199.1, Administrative and Legislative History||IRM 188.8.131.52.1(8)(Note) clarifies that the prior involvement requirement is not applicable to CAP hearings.|
|3||IRM 184.108.40.206, Collection Appeals Program||IRM 220.127.116.11(9) reflects the guidance on premature referrals was moved to IRM 18.104.22.168.8, CAP Premature Referrals.|
|4||IRM 22.214.171.124.3, Rejected, Modified, Proposed for Modification, Terminated and Proposed for Termination Installment Agreements under CAP||IRM 126.96.36.199.3(8) provides a new table with the time frames to file a CAP IA.|
|5||IRM 188.8.131.52.7, Case Procedures under CAP||IRM 184.108.40.206.7(7)(Note) cites it is extremely rare that Appeals will ask Collection to review and comment on new information. Ultimately, however, the Appeals hearing officer will need to exercise judgment and consider if the new taxpayer information should be reviewed by Collection or if the current facts and circumstances are sufficient for Appeals to determine the appropriateness of the issue under appeal.|
|6||IRM 220.127.116.11.7, Case Procedures under CAP||IRM 18.104.22.168.7(12) clarifies that Account and Processing Support (APS) will ensure the closing letter is timely faxed or mailed (if a fax number is not available) to the taxpayer.|
|7||IRM 22.214.171.124.8, CAP Premature Referrals||IRM 126.96.36.199.8 was updated to provide guidance regarding premature referrals (previously located in IRM 188.8.131.52(9)). This section also provides an additional reason to close a CAP as a premature referral: when the taxpayer submits an appeal on the same issue based on the same facts after Appeals rendered a decision on the issue (e.g., the taxpayer files a subsequent CAP appeal against a levy on the same asset, but does not offer any new information).|
|8||IRM 184.108.40.206.9.1, Disagreement with Appeals Decision||IRM 220.127.116.11.9.1(1) notes that if there is a disagreement with an Appeals decision and a resolution cannot be reached informally at the local level, the *AP Formal Dissents mailbox is available to elevate concerns and issues to Appeals.|
|9||IRM 18.104.22.168.10, CAP "Type" and "Closing" Codes for ACDS||IRM 22.214.171.124.10(2) deletes the language in the table under a partially sustained collection action, noting closing code 16 is also used for situations where the taxpayer presents Appeals with a new proposal not offered to Collection. Appeals does not consider alternatives to the issue under appeal, but solely determines the appropriateness of the issue under appeal (see IRM 126.96.36.199.1(9)(d)).|
|10||IRM 188.8.131.52, APS CAP Case Closing Procedures||IRM 184.108.40.206(3) deletes the language in the table advising closing code 16 is also used for situations where the taxpayer presents Appeals with a new proposal not offered to Collection. Appeals does not consider alternatives to the issue under appeal, but solely determines the appropriateness of the issue under appeal (see IRM 220.127.116.11.1(9)(d)).|
|11||IRM 18.104.22.168, APS CAP Case Closing Procedures||IRM 22.214.171.124(1) clarifies that the Appeals Team Manager (ATM), upon entering the ACAPDATE on ACDS, will forward the closed CAP file to APS via encrypted email.|
|12||IRM 126.96.36.199, APS CAP Case Closing Procedures||IRM 188.8.131.52(4) cites that APS will forward the closing documents (Form 5402, closing letter and Appeals Case Memo, if prepared) to the originating function via encrypted email.|
|13||IRM 184.108.40.206, Procedures for Shipping Personally Identifiable Information (PII)||IRM 220.127.116.11 is new and provides the procedures for shipping PII in the rare event that a paper CAP file is shipped.|
|14||Exhibit 8.24.1-1, Instructions for Completing Customized CAP Form 5402||IRM Exhibit 8.24.1-1, Step 14, was updated to add that, for field sourced CAPs, the email addresses of the originating RO and RO Group Manager need to be entered in the Remarks section of the Form 5402.|
|15||Exhibit 8.24.1-3, Step-by-Step Paperless CAP Process for Field Sourced Cases||IRM Exhibit 8.24.1-3 was added to explain the step-by-step paperless CAP process for field sourced CAPs.|
(2) This IRM has been updated for editorial changes throughout.
John V. Cardone
Director, Policy, Quality and Case Support
This Internal Revenue Manual provides instructions for Settlement Officers, Appeals Officers, Appeals Account Resolution Specialists, and Account and Processing Support (APS) employees working Collection Appeals Program (CAP) cases.
Part 5 (Collection Process) of the IRM and the Internal Revenue Code are the primary authorities for the legal and procedural requirements that Appeals must follow in making determinations on CAP cases.
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 in the CAP procedures for appealing rejections, modifications or terminations of installment agreements and appealing cases involving 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 18.104.22.168, 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 22.214.171.124, Retained Jurisdiction (RJ) Hearings. Determine which of these options is most beneficial for each taxpayer based on their indicated interests.
If the taxpayer requests both a CDP and a CAP about the proposed levy or the NFTL filing, the taxpayer must choose one or the other. 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 hearing request. If the taxpayer will not sign a withdrawal or cannot decide between a CDP and CAP, the taxpayer should be given the CDP hearing. The Appeals hearing officer should clearly document the case history with the details of the discussion regarding the taxpayer's appeal rights.
When a CAP and CDP are simultaneously requested (on a proposed levy or NFTL filing), there is no legal requirement that a taxpayer be given the right to a CAP hearing. Appeals may decide for policy reasons not to provide a CAP hearing (e.g. taxpayer will not sign CDP withdrawal or is unsure about which option to pursue). In this case, the Appeals hearing officer would close the CAP case using Closing Code 14 on the Form 5402. The Closing Letter should note the CAP was withdrawn in favor of exercising the taxpayer's CDP rights. This information should also be documented in the case history.
The prior involvement requirement is not applicable to CAP hearings. However, if the taxpayer believes the assigned Appeals hearing officer, who was assigned and worked a prior CDP (involving the same taxpayer, tax and tax period), is biased against him/her, Appeals may decide to assign a different Appeals hearing officer to conduct the CAP hearing.
Appeals' administrative decision is final.
The goal is to provide a response with a 5-day turnaround.
Appeals' review is for appropriateness of the action proposed or taken based on law, regulations, policy and procedures after considering all of the relevant facts and circumstances.
Appeals does NOT consider alternatives to the issue under appeal, but solely determines the appropriateness of the issue under appeal.
Example 1: Proposed Lien Filing
The taxpayer submits a CAP appeal request upon completion of the required managerial conference, which did not produce a resolution to the disagreement concerning the proposed Notice of Federal Tax Lien filing. During the Appeals conference, the Appeals hearing officer determines the taxpayer's income tax liability is under audit reconsideration and confirms with Examination that the balance is going to be reduced to an amount that would qualify the taxpayer for a streamlined installment agreement.
In this case, Appeals does not sustain Collection's position concerning the proposed Notice of Federal Tax Lien filing. Appeals' determination directs that Collection's lien determination will be deferred, pending Collection's consideration of a streamlined installment agreement. Having considered the appropriateness of the issue under appeal, the Appeals hearing officer will not negotiate the collection alternative(s) (e.g. installment agreement).
Example 2: Levy
The taxpayer submits a CAP appeal, requesting a levy release. The taxpayer acknowledges he has a delinquent return but claims the levy is creating an economic hardship. Aside from the delinquent return, the taxpayer is cooperative, having provided the requested Collection Information Statement (CIS) and supporting financial documentation to Collection.
Appeals reviews the financial documentation forwarded by Collection and determines the levy is creating an economic hardship against the taxpayer. Considering IRC 6343(a)(1)(D), Appeals does not sustain Collection, directing that the levy be released. Having considered the appropriateness of the issue under appeal, the Appeals hearing officer will not consider any other case resolutions (e.g., collection alternatives or placing the account in CNC status).
Appeals' determination may be appealed in court.
•verifies that legal and procedural requirements have been met,
•explores collection alternatives or challenges to the liability, and
•balances the proposed collection action with taxpayer's legitimate concern of intrusiveness.
Appeals retains jurisdiction over its determinations.
The following publications inform taxpayers about the CAP program:
Pub 594, The IRS Collection Process
Pub 1660, Collection Appeal Rights
A taxpayer, or a third party whose property is subject to a collection action, may appeal the following actions under CAP:
Levy or seizure action that has been or will be taken.
A Notice of Federal Tax Lien (NFTL) that has been or will be filed.
The filing of a NFTL against an alter-ego or nominee's property.
Denials of requests to issue lien certificates, such as subordination, withdrawal, discharge or non-attachment.
Rejected, proposed for modification or modified, or proposed for termination or terminated installment agreements.
Disallowance of taxpayer's request to return levied property under IRC 6343(d).
Disallowance of property owner's (third party's) claim for return of property under IRC 6343(b) (request for return of wrongfully levied property). For more information, see Pub 4528.
A taxpayer may appeal in CAP:
A levy or seizure on each asset or even the same asset previously levied if a newly discovered legal defect is the issue. The reason for this is that each levied or to be levied asset may have different issues. For example, a bank account in a different bank than previously levied on may actually be the asset of the child of the taxpayer but the taxpayer's SSN is on the account. Subsequent levies on the same asset, e.g., the same bank account, are not entitled to another CAP appeal unless there is a legal issue on the subsequent levy.
A NFTL filed in each subsequent location.
Each rejection, proposed modification, modification, proposed termination or termination of an installment agreement.
Appeals has a goal to complete CAP cases as soon as possible with the Appeals hearing officer normally resolving the CAP within 5 business days from the date the case is assigned to them.
Given the CAP program is an administrative appeal process, taxpayers are not entitled to a face-to-face hearing by statute. However, there may be situations in which a face-to-face hearing request should be granted to reach account resolution. These situations will more than likely be rare, but if requested, the employee and their manager should consider the facts and circumstances in making the determination to approve or deny the request.
Lien withdrawals or discharges, installment agreement, seizure, and claim issues may be quite complicated or require verification and will generally take longer than 5 business days to resolve. These cases should normally be resolved within 15 business days.
Third parties may appeal an IRC 6325(b)(4)"right of substitution of value" discharge. If a certificate of discharge has been issued and the third party wants to challenge the Service's determination of the value of the government's interest in the property under IRC 7426(a)(4), the third party has only 120 days after the day on which such certificate is issued to file an action in federal district court.
Before a taxpayer requests a CAP appeal, he or she must discuss the problem with the Collection manager. Taxpayers or representatives who make themselves unavailable to the manager for the mandatory discussion will not be entitled to a CAP appeal unless it is apparent the IRS manager did not offer a "reasonable" opportunity for such discussion to occur.
The CAP guidance on premature referrals is in IRM 126.96.36.199.8, CAP Premature Referrals.
By policy, collection action is suspended while lien, levy and seizure CAP cases are in Appeals. Collection may continue enforcement action, however, if they believe withholding the action would put collection of the tax liability at risk. Below are examples of such situations:
Evidence that the taxpayer is dissipating assets.
Pyramiding additional tax liabilities, including unpaid Federal Tax Deposits (FTD).
Appeals should be notified immediately if Collection determines that enforcement should continue. That contact should simply let Appeals know what will happen, and not the reason why enforcement should continue. The ex parte rules set forth in Rev. Proc. 2012–18 must be followed by both Collection and Appeals employees. Any discussion of why enforcement should continue would require bringing the taxpayer into the discussion which might be detrimental to any jeopardy action.
For installment agreement rejections and terminations, levy action is prohibited by statute. See IRC 6331(k)(2).
A taxpayer should be referred to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) in accordance with local procedures using a Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), under the following two circumstances:
When the taxpayer meets TAS criteria (See IRM 13.1.7 - Taxpayer Advocate Service (TAS) Case Criteria ) and the taxpayer's issue cannot be resolved within 24 hours. If the taxpayer's issue can be resolved within 24 hours or you have taken steps to begin resolving the taxpayer's issue within 24 hours, do not forward the case to TAS, unless the taxpayer asks to be referred to TAS.
When a taxpayer asks to be referred to TAS and their issue meets TAS criteria, their case should be forwarded even if the issue can be resolved the same day. See IRM 188.8.131.52 - Same-Day Resolution by Operations.
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:
Trust fund recovery penalties
Offers in compromise
Jeopardy levies: unless the time to appeal under IRC 7429 has expired and the taxpayer will not be given a CDP hearing (e.g., no hearing request was submitted within 30 days of the notice granting CDP rights or a prior CDP hearing was held for the liability at issue); or, unless the jeopardy levy was issued during an IA, OIC, or on the date of a summons. See IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment.
Claims for refund or requests for abatement of tax .
Also excluded from CAP:
Actions under the control of a court.
Issues not within the scope of Internal Revenue laws, i.e., moral, religious or constitutional issues.
Challenges to the existence or amount of a liability (liability issues are addressed under CDP; see IRM 8.22.8, Liability Issues and Relief from Liability).
Collection's decision not to release a lien. See Treas. Reg. 301.6326–1(f) and IRC 6326.
Cases controlled by Criminal Investigation (CI) where CI concurs with the 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 IRM 184.108.40.206.11, Policy Statement 4–26, and 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.
Treas. Regs 301.6159–1(e)(5) allows for the appeal of the proposed modification or actual modification of an installment agreement; notice of the proposed modification is issued at least 30 days before the modification is to take effect. The taxpayer may appeal between the time the Service issues a notice of proposed modification and prior to the expiration of the 30-day period commencing the day after the modification is to take effect.
If the taxpayer requests a CAP hearing prior to modification, the taxpayer may not request another CAP hearing on the same issue once the modification takes place.
Treas. Regs 301.6159–1(e)(5) allows for the appeal of the proposed termination or actual termination of an installment agreement; notice of the proposed termination is issued at least 30 days before the termination is to take effect. The taxpayer may appeal between the time the Service issues a notice of proposed termination and prior to the expiration of the 30-day period commencing the day after the termination is to take effect.
If the taxpayer requests a CAP hearing prior to termination, the taxpayer may not request another CAP hearing on the same issue once the termination takes place, even if the taxpayer wishes to provide new information.
No levy may be made after issuance of the notice of proposed termination (CP 523 or Letter 2975) or within 30 days of termination. If an appeal is filed within that time, no levy may be made during the period the appeal is pending. See IRC 6331(k)(2)(D).
To recap, the following table provides the time frames for filing a CAP IA appeal:
If the CAP involves a... Then the taxpayer has... Rejected IA 30 days to request an appeal; the appeal must be timely postmarked. Modified or Proposed Modification of IA 30 days from the proposed modification of the IA to submit an appeal; the TP may also appeal prior to the expiration of the 30–day period commencing the day after the modification is to take effect. Proposed Termination of IA (Defaulted IA) 30 days to request an appeal after the proposed termination of the IA. Terminated IA 30 days to request an appeal after the IA is terminated; the 30 day period commences the day after the date the notice says the termination is to take effect.
IRC 7122(e) 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:
Failing to make agreed payments,
Incurring new unpaid liabilities subsequent to the installment agreement, or
See IRM 5.14 - Installment Agreements for additional reasons.
When the IRS believes a taxpayer has defaulted on an installment agreement 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 needs to be input for additional time.
An additional STAUP 22-xx may be necessary if the case is not resolved in the additional 9 cycles that were requested by the STAUP. xx is equal to the number of cycles for which the additional cycles STAUP are being requested.
It is the Appeals hearing officer's responsibility to monitor the status of the CAP and ensure it does not default to status 22 while they are working the CAP.
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. Taxpayers, however, need to let the Collection office know within two (2) business days after the conference with the Collection manager that they plan to submit Form 9423. The Form 9423 must be received or postmarked within three (3) business days of the conference with the Collection manager or collection may resume on all actions except rejected or terminated installment agreements. A conference with the group manager is not required on installment agreement CAP appeals.
Taxpayers will still be entitled to a CAP appeal if their Form 9423 (or other written request) is received up to ten business days after the required managerial conference (the CAP request should be submitted to the office or revenue officer that took the action). However, the stay of collection is not required if their request is received more than two business days after the conference date. This does not apply to installment agreement appeals.
If a taxpayer requests a conference and is not contacted by a manager within two (2) business days of making the request, the taxpayer may contact Collection again or submit Form 9423. If the taxpayer chooses to submit Form 9423, the date of the taxpayer's request for a conference and information reflecting he/she was not contacted by a manager should be noted in Block 15 of the Form 9423. The Form 9423 should be received or postmarked within four (4) business days of the taxpayer's request for a conference or collection action may resume.
Cases should be efaxed to the Memphis Appeals Campus using the following Enterprise Electronic Fax (E-eFax) number: 855–214–7525. E-eFax converts the paper fax into an electronic pdf file, ready to be carded in and routed to the designated Appeals Team Manager for assignment.
If Collection secures a CAP request through E-eFax, it will be in pdf form and should be forwarded via encrypted email to the following mailbox: *AP Collection Appeals Program.
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.
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 efaxed to the Appeals Office. Generally, a copy of the entire case file is not necessary and is burdensome. Although infrequent, should additional documentation be necessary, Collection and Appeals, on a case by case basis, may determine together what portion of the file needs to be transmitted to Appeals to adequately consider the appeal. Any communications should be limited to ministerial, administrative or procedural matters and not extend into the merits, accuracy of the facts or strengths and weaknesses of the case (see Rev. Proc. 2012–18, Section 2.03(2) &(3)).
At a minimum, the Appeals file should include:
Fax Cover Sheet with the Field Revenue Officer's name, email address, telephone number and fax number
Form 9423, Collection Appeal Request, and any taxpayer correspondence
Copies of the relevant levy, lien, and/or seizure documents
Form 433A and/or Form 433B
Any other relevant documents, such as copies of deeds, mortgages, counsel opinions and appropriate financial documentation
Copy of Form 2848, Power of Attorney and Declaration of Representative, if the POA is not on IDRS
All Appeals offices have access to the Integrated Data Retrieval System (IDRS) and Integrated Collection System (ICS). The Appeals hearing 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:
Power of attorney information (IDRS cc CFINK), or
Installment agreement details (IDRS cc IADIS).
The Appeals hearing officer or their manager 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.
Communications between Appeals and other IRS employees are strictly limited to ministerial, administrative, or procedural matters and the merits of the case cannot be discussed. See Rev. Proc. 2012-18 at §2.03(2) regarding such matters. Additional information and clarification concerning ex parte communications is available under IRM 8.1.10, Ex Parte Communications.
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 in the case of a corporation, the principal place of business.
See IRM 5.1.9 - Collection Appeal Rights for field Collection CAP procedures.
Taxpayers may make an oral request for a CAP appeal on Automated Collection System (ACS) cases. This request for an appeal and a statement about the issue is documented in the Comments section of the ACS Entity Screen.
Taxpayers must speak to the ACS Manager prior to the case being sent to Appeals. CAP cases on liens or levies should be sent to Appeals within two business days of receipt of the taxpayer's or third party's request, subsequent to the conference with the manager, which did not result in a resolution.
The ACS CAP coordinator will efax to the Appeals Office serving the taxpayer's address a Form 3210 , Document Transmittal , along with a copy of the following:
Copies of Taxpayer's correspondence.
Form 9423, if available
Form 433F, Form 433A and/or Form 433B, if available
Copy of Form 2848, (Power of Attorney) if the POA is not on IDRS
ACS screen prints, including the Entity, Comments, and Module screens.
The Integrated Case Processing screen information available through Account Management Services (AMS).
Other pertinent information.
The use of Form 4442, Inquiry Referral, is encouraged.
To obtain additional ACS case file information, Appeals hearing officers can access Account Management Services (AMS). Further information on AMS can be obtained by accessing http://ams.web.irs.gov. You can also request additional information from the ACS manager.
Upon closing an ACS CAP case, the Form 4442, if used, will be returned via encrypted email to the originating ACS CAP coordinator, together with the Form 5402, Appeals Case Memo (if prepared) and a copy of the closing letter.
A taxpayer may make an oral request for a CAP appeal on cases which are worked by Accounts Management. These will normally be cases which are not assigned to either ACS or Field Collection.
Form 4442, Inquiry Referral, will be used to efax CAP cases to the Appeals office.
Customer Service sites have a two business day period to send cases on liens or levies to Appeals. Taxpayers must speak to the Customer Service Manager prior to the CAP being sent to Appeals. Normally the CAP will be forwarded to Appeals by the CAP coordinator for the location where the CAP is received.
In addition to Form 4442, Inquiry Referral, which has space for a brief description of the problem, and Form 3210, Document Transmittal, Customer Service personnel should also efax a copy of:
The taxpayer's correspondence.
The Integrated Case Processing screen information available through Account Management Services (AMS).
Other pertinent information.
When a CAP case has been forwarded to Appeals, Accounts Management Services will utilize IDRS to input a STAUP for four cycles and to enter a history item indicating a CAP case has been received and forwarded to Appeals.
CAPLNOP - CAP, Lien Issue.
CAPLVOP - CAP, Levy Issue.
CAPIAOP - CAP, IA Termination.
IADENIAL - CAP, IA Denial.
Upon closing an Accounts Management CAP case, the Form 4442 will be returned via encrypted email to the initiating CAP coordinator, together with the Form 5402, Appeals Transmittal and Case Memo, a copy of the closing letter and Appeals Case Memo (if prepared).
Appeals hearing 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 business days from the Appeals hearing officer's receipt, work CAP cases in the following priority:
In-business employment tax cases,
Other lien and levy (includes seizure) cases, and
Installment agreement rejections, modifications or terminations.
Cases with complex issues, such as lien withdrawals, discharges or subordinations, installment agreement, seizure or claim issues, may be quite complicated and/or require verification and cannot realistically be completed within 5 business days. Employees should give the issue the necessary time for completion in a quality manner. If the case involves an issue for which the period for filing suit (wrongful levy suit is 9 months from the date of the levy) is due to expire, the party should be directed to file suit in lieu of a CAP hearing (when a third party has already filed a request for the return of property under IRC 6343(b), the period for filing a wrongful levy suit is 12 months from the date of filing the request or 6 months from the date of the disallowance by Collection, whichever is shorter).
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:
To give taxpayers an almost immediate decision,
To ensure that taxpayers do not appeal these actions solely to delay collection, and
To avoid inconveniencing third parties longer than is necessary when these parties are holding attached property.
Phone conferences are common in these cases.
If requested, allow taxpayers a reasonable time to schedule a conference. Normally this should be no more than 5 business days.
Generally, if the taxpayer does not elect a conference within the limits given, Appeals will make a decision based on available information.
Communicate and coordinate any delays with Collection.
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 business days to resolve or result in Appeals reversing the collection action proposed or taken.
Before the conference with the taxpayer, contact the Revenue Officer to clarify the content of any illegible or unclear statements or documents or to secure a document referred to in the file that was not included with the file. Such contact is permissible ex parte contact. See Rev. Proc. 2012–18 at § 2.03(2)(a) Examples (i) and (iii).
Question the Revenue Officer about any unclear procedural matters, such as where compliance with the IRM requirements for seizure was contemporaneously documented. Such contact is permissible ex parte contact. See IRM 220.127.116.11.2, Administrative File. But, do not discuss the actions themselves.
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, but communication may not be conducted ex parte. 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 comments should be sent simultaneously to Appeals and the taxpayer. In this event, the taxpayer must be given a reasonable opportunity to respond. See IRM 18.104.22.168.1.3 - New Information Received or New Issues Raised.
Due to the quick turnaround goal on CAP cases (5 days), it is extremely rare that Appeals will ask Collection to review and comment on new information. Ultimately, however, the assigned Appeals hearing officer will need to exercise judgment and consider if any new taxpayer information should be reviewed by Collection or if the current facts and circumstances (as provided to Collection and forwarded to Appeals) are sufficient for Appeals to determine the appropriateness of the issue under appeal.
Appeals should review the case for appropriateness of the action, proposed or taken, based on law, regulations, policy, and procedures (national and local), considering all of the relevant 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 indicate that the proposed or taken action is inappropriate.
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 determination to release.
Appeals should inform both the Collection function and the taxpayer of the decision as soon as possible after receiving the necessary approvals to direct release of a seizure.
Approval may initially be oral to speed up the notification process.
Follow any oral communication of approval with managerial documentation in the case activity record.
The written closing letter should be faxed or mailed to the taxpayer's current address no later than 3 business days after the final approval of Appeals' decision. If a fax number is not available and the taxpayer's current address is unknown, send the letter to the last known address. APS will ensure the closing letter is timely faxed or mailed (if a fax number is not available).
The Appeals decision will be implemented, as applicable, after both Collection and the taxpayer have been informed of the decision. Collection will be informed via encrypted email.
Appeals' CAP hearing decision is limited to sustaining Collection or otherwise directing Collection to take the appropriate corrective action (e.g. release levy).
Example 1: Rejected Installment Agreement
A BMF taxpayer requests an installment agreement (IA) with payment terms of $2,000 per month to resolve their outstanding corporate income tax liabilities of approximately $100,000. The taxpayer provides the requested financial documentation and they are in compliance with no issues precluding them from qualifying for an IA.
The Revenue Officer informs the taxpayer the proposal is rejected because Collection's review of the financial documentation reflects they can pay $3,000 per month. The Independent Reviewer concurs with the rejection determination and the taxpayer files a CAP appeal to protest the denial.
Copies of the Collection Information Statement (Form 433B) and attachments are forwarded to Appeals for the CAP hearing. The assigned Appeals hearing officer reviews the financial documentation and calculates the taxpayer has the ability to pay $2,500 per month.
In this case, if the taxpayer is agreeable to a monthly IA of $2,500, Appeals will direct Collection to arrange an IA for this amount. If the taxpayer is not agreeable to a monthly IA of $2,500 and they insist on their original IA request of $2,000 per month, Appeals will sustain Collection.
Example 2: Proposed Seizure
During a field visit to the taxpayer's address of record, the Revenue Officer (RO) is informed the property is being rented and the taxpayer resides at another location. The taxpayer is uncooperative with information concerning the real property but the RO conducts research and learns the taxpayer owns the property and it is unencumbered.
The RO proceeds with the required pre-seizure paperwork and advises the taxpayer that seizure is the next planned action, pursuant to IRM 22.214.171.124.2 , Personal Contact to Advise the Taxpayer of Proposed Seizure Action. In response, the taxpayer's POA submits a CAP appeal against the proposed seizure after the required managerial conference does not generate a resolution.
During the CAP hearing, the POA acknowledges the subject property is free and clear but informs the Appeals hearing officer that the home is occupied by the taxpayer's former spouse and dependent minor children.
Upon Appeals' discovery concerning the occupancy of the home, it is acknowledged that judicial approval is required prior to seizure pursuant to IRM 6334(e)(1) and IRM 126.96.36.199, Judicial Approval for Principal Residence Seizures. As a result, Appeals directs Collection to cease pursuing seizure of the property until judicial approval is secured.
The taxpayer's closing letter should clearly outline the following:
Prepare an Appeals Case Memo (ACM). 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, whether there are no restrictions on enforcement, etc.
Closing letters with sufficient information may serve as the ACM. Appeals managers will verify the appropriateness of tone and completeness of closing letters used as an ACM. Both the government's position and the taxpayer's proposal need to be discussed, and the rationale for and appropriateness of the Appeals' decision must be clearly shown through the analysis of the taxpayers' history and current facts and circumstances. If the case involved a third party claimant to property under IRC 6343(b) and Appeals sustains Collection's denial of the request, the closing letter must include the claimant's rights. For example, the third party should be informed of the opportunity to file a wrongful levy suit pursuant to IRC 7426(a)(1) . Include the applicable time limitations provided in IRC 6532(c).
An Appeals Case Memo (ACM), if prepared, is not required to be issued to the taxpayer as an attachment to the closing letter.
The Appeals hearing officer will forward the entire closed CAP case file (i.e. the original efaxed documents, any additional documents received from the taxpayer/representative during the hearing and the closing documents), via encrypted email, to the ATM for approval.
If the taxpayer filed a Form 911, Request for Taxpayer Advocate Service Assistance, or if the case was otherwise referred to the Taxpayer Advocate Service, provide a copy of the closing letter and the ACM to the controlling local Taxpayer Advocate Service office.
CAP cases should be closed on ACDS as a premature referral (cc 20) in the following instances:
The taxpayer appealed before entitlement to a CAP hearing.
The taxpayer or representative did not have the mandatory meeting with the manager (not applicable to installment agreement CAP requests).
The CAP request is an excluded issue. IRM 188.8.131.52.2, Exclusions from CAP.
The CAP appeal is not timely. The appeal was submitted later than allowed under the Collection Appeals Program time frames. The time frames for filing a CAP IA are listed in IRM 184.108.40.206.3, Rejected, Modified, Proposed for Modification, Terminated and Proposed for Termination Installment Agreements under CAP. For other CAP appeals, see IRM 220.127.116.11.4, Collection Field CAP Cases.
The taxpayer submitted an appeal on the same issue based on the same facts after Appeals rendered a decision on the issue (e.g., the taxpayer filed a subsequent CAP appeal against a levy on the same asset, but did not offer any new information).
Appeals does not issue a Uniform Acknowledgment Letter for CAP cases. While there is no requirement to notify the taxpayer the CAP request is being returned to Collection as a premature referral, it is a best practice to send a brief letter to the taxpayer advising the CAP appeal is being returned to Collection, along with the reason for the return (e.g., due to issue excluded from CAP).
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 as described in IRM 18.104.22.168.9.1, Disagreement with Appeals Decision. If Appeals sustains the Collection function's action(s), the Collection function may resume any suspended actions.
If there is concern or disagreement with respect to a decision reached by Appeals in a particular case, local management in Collection and Appeals should work to address concerns and resolve disagreements. If resolution cannot be reached informally at the local level, the *AP Formal Dissents centralized mailbox is available as a formal process to elevate concerns and issues to Appeals. This information is outlined in IRM 5.1.9 -Disagreement with Appeals Decisions. It is expected local management in Collection will contact local Appeals management within two business days of the faxing of information (Form 5402, copy of the closing letter and ACM, if any) from Appeals to Collection.
These discussions will not take place until the Appeals case has been concluded (i.e., determination or decision letter or closing letter issued to the taxpayer) and the case returned to Collection. This will ensure an independent Appeals function within the Internal Revenue Service, to the extent that such communications during Appeals' decision making process appear to compromise the independence of the Appeals hearing officers. See IRM 8.1.10, Ex Parte Communications.
If Appeals determination is reopened then Appeals will notify the taxpayer. The taxpayer will be given an opportunity to respond to Collection's facts and arguments in favor of reopening the determination.
Appeals Centralized Database System (ACDS) type codes are used to track this program:
ACDS Code Is used for... CAPLV levies, third party claims to property under 6343(b), taxpayer requests for return of property under 6343(d) CAPLN liens, lien issues, denied requests to issue lien certificates such as subordination, withdrawal, discharge, or non-attachment CAPSZ seizures CAPIA rejected, modified, proposed for modification, terminated or proposed for termination installment agreements
Closing codes are used under the following circumstances.
If the Collection Action is Use Closing Code When.. Fully sustained 14 the collection action is supported with no change. Not sustained 15 the collection action is completely overturned. For example, closing code 15 would be used when a levy is released. Partially sustained 16 only minor changes are made in the collection action. For example, if filing of a Notice of Federal Tax Lien is proposed, a minor change would be to give the taxpayer 10 more days to come up with the funds before the lien is filed.
The ATM will enter the ACAPDATE on ACDS and forward the closed CAP file (to include all Appeals documents and the original E-eFax file from the originating function), via encrypted email, to APS for processing.
The critical CAP time restraints require the closing of a CAP case in APS by the end of the business day following the date the case was received in APS.
Close the case on ACDS using general closing instructions. The chart below contains the closing codes that are used.
Use CLOSINGCD: When... 14 Fully sustained. Collection’s action is supported with no change. 15 Not sustained. Collection’s action is completely overturned (e.g. levy is released). 16 Partially sustained. Minor changes are made to Collection’s action (e.g., in a CAP lien, Appeals gives the taxpayer 10 more days to come up with the funds before the lien is filed).
APS will forward the following items, via encrypted email, to the originating function:
ACM, if prepared
For additional information on the Step-by-Step Paperless CAP Process for Non-Field Sourced Cases, see Exhibit 8.24.1-2.
For additional information on the Step-by-Step Paperless CAP Process for Field Sourced Cases, see Exhibit 8.24.1-3.
In the extreme rare event that a paper CAP file is shipped, follow the shipping policy for PII documents located at: http://publish.no.irs.gov/mailtran/piihardcopy.html.
For additional information on shipping PII, go to Employee Toolkit, Shipping Procedures for Personally Identifiable Information (PII).
|1. Date||Leave blank; APS will fill in date.|
|2. Route to||Include complete address of the ACS, Customer Service unit or Collection Field group where case is to be returned|
|3. From/Appeals Code||Populated from ACDS|
|4. Description||Select from Drop Down Box|
|5. Taxpayer||Populated from ACDS|
|6. SSN/TIN||Populated from ACDS|
|7. WORKUNIT NO.||Populated from ACDS|
|8. Tax Years/applicable tax periods||Appeals hearing officer will complete with applicable tax periods|
|9. Type of Case||Populated from ACDS|
|10. Category Code||Populated from ACDS|
|11. Related Taxpayers||Complete with related taxpayer info as appropriate|
|12. Disposal Information||ARDI Code 7 automatically populated; Premature Referral Code, Closing Code, Resolution Reason Code will be selected from "pick list;" Other - Optional|
|13. Special Features||Short statute, Compliance Follow-up, Case involves an "OAR" selected as applicable; Other-Optional|
|14. Remarks and/or Supporting Statement||Select appropriate closing information from pick list; for field sourced CAPs, enter the email addresses of the originating RO and RO Group Manager.|
|15. Taxpayer Representative/Phone #||Populated from ACDS|
|16. Appeals hearing officer Signature/Date||self-explanatory|
|17. Approval / Date||ATM signs and dates|
|1||CAP Case Coordinator uses E-eFax (Enterprise electronic fax # 855-214-7525) to transmit a CAP case to Memphis APS; E-eFax converts the paper fax into a pdf document.|
|2||Memphis APS cards in the CAP on ACDS and routes the case to a Campus Appeals Team in Memphis.|
|3||Upon the direction of an Appeals Team Manager (ATM), the group secretary assigns the CAP to an Appeals hearing officer.|
|4||The assigned Appeals hearing officer holds the hearing with the taxpayer and renders a case decision; should the Appeals hearing officer receive any additional documents during the hearing, they will be scanned and incorporated into the case file.|
|5||The Appeals hearing officer submits the entire case (including the closing documents), via encrypted email, to the ATM for approval.|
|6||Upon approval of the case decision, the ATM digitally signs the closing documents (Closing Letter and Form 5402) and forwards the entire case file to APS via encrypted email.|
|7||APS makes the necessary inputs on ACDS upon receipt of the CAP case closure; if the case is selected for AQMS review as APS inputs the closing data on ACDS (pop-up box will appear), APS uses encrypted email to transmit the entire case file to the designated AQMS reviewer.|
|8||APS sends the closing documents (Form 5402, Closing Letter and Appeals Case Memo, if prepared) to the CAP Case Coordinator via encrypted email.|
|9||APS verifies the closing documents were received by the originating function (CAP Case Coordinator) through a confirmation of receipt of the encrypted email.|
|10||Upon verification that the closing documents were received by the CAP Case Coordinator, the closed case is purged per the IRM requirement.|
|1||The Field Collection Revenue Officer (RO) uses E-eFax (Enterprise electronic fax # 855–214–7525) to transmit a CAP case to Memphis APS; E-eFax converts the paper file into a pdf document.|
|2||Memphis APS cards in the CAP and routes the case, via encrypted email, to the designated ATM of the Appeals Field Office per the CAP Case Routing page on the Appeals website.|
|3||The ATM assigns and transmits the CAP case to the Appeals hearing officer via encrypted email.|
|4||The assigned Appeals hearing officer holds the hearing with the taxpayer/representative and reaches a case decision; any additional documents submitted by the taxpayer will be secured via E-eFax and incorporated into the case file.|
|5||The Appeals hearing officer submits the entire case, including the closing documents, via encrypted email to the ATM for approval.|
|6||Upon approval of the case decision, the ATM electronically signs the closing documents (Closing Letter and Form 5402) and forwards the entire case file to APS via encrypted email.|
|7||APS makes the necessary inputs on ACDS upon receipt of the CAP case closure. If the CAP is selected for AQMS review, APS will forward the case file (including all original efaxed documents, any additional documents received during the hearing and the closing documents) to the designated reviewer, via encrypted email, and proceed with Step 8 of the process.|
|8||APS sends the closing documents (Form 5402, Closing Letter and Appeals Case Memo, if prepared), via encrypted email, to the Field Collection RO with a cc to the RO Group Manager.|
|9||APS verifies the closing documents were received by Collection through a confirmation of receipt of the encrypted email.|
|10||APS purges the closed CAP case per the IRM requirement.|