C O L L E C T I O N A P P E A L R I G H T S

20/20 Tax Resolut ion

D E C E M B E R 1 5

TODAY’S PRESENTER

- Consultant with 20/20 Tax Resolution, Inc.

- Over 18 years of tax resolution experience

- Works nationally as a taxpayer representative, focusing on state

and IRS collections

- Active educator of other tax practitioners on a national level

- Published in the EA Journal (most recently in the spring / summer

2015 edition)

- Has been interviewed relating to a range of tax topics for various

news articles as well as Denver television

- Served as an instructor at the 2011 - 2015 NTPI conferences

- Currently serves on the NAEA’s Government Relations and

Education committees

D a v i d F . M i l e s , E . A .

WEBINAR INTRODUCTION

This webinar will focus on the Collection Due Process (CDP) and Collection Appeals

(CAP) programs, including how to initiate each, appropriate timing and use, as well as

what should be accomplished in the course of each appeal. We will touch on other

appeals as well.

✓ Identify what proposed or actual actions taken by the Collection Division are appealable to the Appeals Division.

✓ Successfully navigate relevant sections of the Internal Revenue Manual (IRM), notably Part 8 and Part 5.

✓ Examine the scope of authority of the Appeals Division on Collection enforcement issues.

✓ Discuss if enforcement actions by Collection Division employees may be appealed through other avenues and what those avenues are.

✓ Identify what actions must be taken, and what forms must be filed to file a proper and timely request for a Collection Appeal.

✓ Highlight what information is needed to file an effective appeal.

OBJECTIVES:

A P P E A L S O V E R V I E W

- Independent of any other IRS office and provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis for both the taxpayer and the government.

- Taxpayer Bill of Rights (TBOR)

- Independence is the most important of Appeals’ core values

✓ The Right to Be Informed

✓ The Right to Pay No More than the Correct Amount of Tax

✓ The Right to Challenge the IRS’ Position and Be Heard

✓ The Right to Appeal an IRS Decision in an Independent Forum

A P P E A L S O V E R V I E W ( c o n t i n u e d )

- Less formal and less costly than court proceedings (not subject to judicial rules of evidence or procedure)

- Commitments from Appeals✓ Explain Appeal rights and the Appeals process

✓ Listen, be courteous and professional

✓ Timely and responsive

✓ Fair and impartial

H I S T O R Y O F A P P E A L S

- Formed in 1927

- Mission has remained the same:

- IRS Restructuring & Reform Act of 1998 (RRA) tasked, in part, with maintaining Appeals’ independence.

✓ To resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government

and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity

and efficiency of the Service.

✓ Enhanced taxpayer advocate independence

✓ Prohibited ex-parte communication

✓Created Collection Due Process Hearing

H O W H A S A P P E A L S D E V E L O P E D S I N C E R R A 9 8 ?

- Protection from Collections even when it may not appear necessary

- Do not rely on client or Collections when it comes to enforcement

- Potential to win

L O O K I N G B A C K

✓ Although some of the randomness attributed to past decisions has been lost to

programs such as AJAC, it is still possible to achieve a favorable resolution when

you least expect it.

- Many asking if it’s time to restructure again

- Continued IRS budget cuts and impact on service

A P P E A L S J U D I C I A L A P P R O A C H & C U L T U R E

- Mission: Reinforce Appeals’ quasi-judicial approach to how it handles cases, with the goal of enhancing internal and external customer perceptions of a fair, impartial and independent office of Appeals.

- Phase 2 began July 2014

- Not developing case facts, but instead, ruling on the appeal of a specific issue

- New information from taxpayer or representative remains relevant

C O L L E C T I O N A P P E A L R I G H T S

- The right to appeal Collection actions, proposed or taken.

- Collection Due Process (CDP)

- Collection Appeal Program (CAP)

✓ IRC Section 6320 – Liens

✓ IRC Section 6330 – Levies

✓ IRC Section 7122 – Installment Agreement Rejections, Modifications & Terminations

✓ Actions proposed or already taken, i.e., lien, levy, seizures

- IRS requirement to notify taxpayers of all available Collection Appeal Rights

U N D E R S T A N D I N G

C O L L E C T I O N D U E P R O C E S S ( C D P )

- Restructuring & Reform Act of 1998 (RRA) established Collection Due Process for levies under IRC 6330 and liens under IRC 6320.

- Requested using Form 12153. A request can also be made in letter form, but it must include certain elements to qualify. Form 12153 is safer and easier.

- Must be fi led within 30 days of letter date. Usually fi led in response to the following letters:

- CP 90: Intent to Levy- CP 297: Intent to Levy- LT 11: Intent to Levy- Letter 1058: Intent to Levy ( issued by Revenue Off icers)- Letter 3172: Not ice of Lien

- Timeliness determination

C o l l e c t i o n D u e P r o c e s s ( c o n t i n u e d )

- Disagreeing with decision

✓ Lien withdrawal

✓ Installment Agreement

✓Offer in Compromise

✓Currently Not Collectible

✓ Tax Court

✓Decision belongs to taxpayer

✓ Lose right to judicial review

✓ Filed using Form 12256 or a written request (*not required on EH Appeal)

- Face-to-face hearing

- Alternatives: Whether the action taken or proposed balances the governments need for the efficient collection of taxes with the taxpayer’s legitimate concern that any action be no more intrusive than necessary.

- Withdrawing Appeals

R E A S O N S T O F I L E

- The opportunity to consider alternatives prior to levy

- Collection hold

- Evaluate extenuating circumstances related to lien filings

- Provides opportunity to elevate case to Tax Court

- Fresh set of eyes on case

- Potential for more qualified IRS representative

- Time: can allow other issues and / or circumstances to develop

T H I N G S T O C O N S I D E R B E F O R E F I L I N G

- Requesting a CDP puts the Collection Statute on hold

- Extends the 3 year & 120 day periods for dischargeability in bankruptcy

- Some Revenue Officers refuse to continue working the case

- Realizing a resolution plan can take longer

E Q U I V A L E N T H E A R I N G ( E H )

- Filed on Form 12153

- After CDP’s 30 days, but before 1 year from lien or levy notice

- Resolution alternatives considered

- No Tax Court recourse

- Does not guarantee a collection hold, although usually honored –especially by ACS

- Does not affect bankruptcy dischargeability

U N D E R S T A N D I N G

C O L L E C T I O N A P P E A L S P R O G R A M ( C A P )

- Appeal program available to taxpayers or third parties whose property is subject to collection action:

- May not be heard under CAP:

- Levy act ion that has been or wi l l be taken- NFTL that has been or wi l l be f i led- Special condit ion NFTL’s- Rejected, terminated or proposed for modif icat ion Instal lment

Agreements (statutory)- Denial of l ien cert i f icates- Disal lowance of returned levied propert ies

- Pre or post Trust Fund Recovery Penalty - Reject ion of Offer in Compromise- Penalty appeals- Audit reconsiderat ion - Jeopardy levy- Claims for refund or abatement - Original requests for return of levied property

- Quick Process: Request for group manager meeting. Reply expected within two days. If no agreement following conference, revenue officer or manager must be notified within two days of intent to appeal. CAP, Form 9423, postmarked within three days to avoid collection. Still entitled to CAP but not collection hold if not received within three days. Appeals is then instructed to make decision within five business days (15 days if complex) of receipt of case.

✓Group manager meeting not required in Installment Agreement cases since the right to

CAP is statutory. But, it is encouraged.

C A P P R O C E S S

- Collection Alternatives: None. Appeals is directed to review law, regulation policy & procedure, only.

- Withdrawing Appeals: Can be done by simply providing a statement in writ ing. Not usually relevant but could become necessary if agreement reached with Collections.

- In cases of Installment Agreements, CAP must be requested within 30 days of proposed or actual action

- In cases of seizure only, CAP must be requested within 10 days of seizure notice

- Except for seizures and Installment Agreements (noted above), no other CAP deadlines exist

C A P N U A N C E S

C O L L E C T I O N A P P E A L S P R O G R A M ( c o n t i n u e d )

- Be mindful of:✓Ex parte communication

✓General stay of collection (including lien filing) during appeal

✓Collection may resume upon receipt of decision of Appeals

✓Decisions are binding on taxpayer and Collections

O T H E R T Y P E S O F

C O L L E C T I O N A P P E A L S

- Trust Fund Recovery Penalty (TFRP) / IRM 5.7.4.7 / 8.25.1

✓ Small v. large case requests

✓ Letter 1153 & Form 2751

- Audit Reconsideration / Publication 3598

- Offer in Compromise / IRM 8.23

✓Within 30 days of rejection. Use Form 13711 or in writing requires inclusion of specific information.

- Alternative Dispute Resolution Program / IRM 8.26

✓ Fast Track Mediation

✓ Post-Appeals Mediation

W H O W I L L H E A R A P P E A L & W H E N ?

- Who?✓ Appeals Officer

✓ Settlement Officer

✓Campus Appeals – Appeals Tax Specialist (penalty cases)

✓ Appeals Account Resolution Specialist (AARS)

A P P E A L P R I O R I T I E S

- When?

✓ Assigned, in part, by minimum GS level for issue

✓CAP cases:

- Priority given to pyramiding employment tax cases

- Lien, levy, seizure

- Installment Agreement rejections, modifications or terminations

A P P E A L S W O R K L O A D S N A P S H O T

*Indicates end of 2014 Fiscal Year; September 30, 2014

W H A T Y O U S H O U L D K N O W

P R E P A R I N G F O R A P P E A L

- To decide if you should appeal your tax dispute, consider:

✓ If you believe the IRS made an incorrect decision based on misinterpretation of the

law, check the publications discussing your issue(s), or refer to ‘Tax Topics’ on IRS

website.

✓ If you believe the IRS did not properly apply the law due to a misunderstanding of

the facts, be prepared to clarify and support your position.

✓ If you believe the IRS is taking inappropriate collection action against you, or your

offer in compromise was denied and you disagree with that decision, be prepared to

clarify and support your problem.

✓ If you believe the facts used by the IRS are incorrect, then you should have records

or other evidence to support your position.

W R A P - U P : A S K Y O U R S E L F

- Will the IRS consider rescinding the letter that was issued?

- What are appropriate col lect ion or assessment statutes of l imitat ions for each year involved?

- Has the cl ient f i led bankruptcy, an OIC, or any prior requests for CAP or CDP rel ief for the tax periods in question?

- Is the cl ient currently in compliance with tax f i l ing and payment requirements?

- Is there any reason to bel ieve that the underlying l iabi l i t ies are incorrect?

- Has the cl ient had the chance to challenge the underlying l iabi l i t ies?

- Has the IRS complied with al l the appropriate laws and procedures relat ive to the attempted enforced col lect ion actions?

- Are there any extraordinary issues that need to be brought to the attention of the Appeals or Sett lement Off icer such as health, signif icant economic factors, loss of employment, etc.?

Provide client education on various Appeal opportunities, which may be critical to successful

results.

Ensure that clients’ appeal rights are properly considered in order to maximize benefit and

minimize risk.

Prepare clients for possibilities outside of those presented by Collections.

O P P O R T U N I T I E S

Navigate client case files to vet pros and cons of Appeals in order to serve relationships more effectively while simultaneously accomplishing clients’ goals within appropriate time frame.

D o y o u n e e d

David F. Miles, EA

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20/20 Tax Resolution || Broomfield, Colorado

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