The IRS Restructuring and Reform Act of 1998 (RRA 98) created Collection Due Process (CDP) appeal rights and, with them, the ability for taxpayers to contest their liability under certain circumstances.

Internal Revenue Code (IRC) sections 6320 and 6330 are the primary sources of authority, in addition to applicable IRM sections. Further, the Taxpayer Bill of Rights, IRC 7803(a)(3), applies to Appeals employees’ interactions with taxpayers.

The Policy analyst shown as the originator on the Product Catalog page is the assigned author of this IRM.

PPQ&A provides trend and data analyses and detailed summary reports for Appeals.

See IRM Exhibit 8.22.4-3, Common Terms and Acronyms Used in Collection Due Process, for such common terms and their definitions.

Appeals’ mission is to resolve tax controversies on a basis which is fair and impartial to the Government and the taxpayer. To accomplish this mission in CDP cases, the Appeals hearing officer is responsible for making a determination based on the facts and the law known to Appeals during the time of the hearing.

The Tax Court's standard of review for non-liability CDP determinations is for abuse of discretion. The Tax Court considers:

CDP files sent to Appeals should contain sufficient documentation for Appeals to make a determination. Due to statutory requirements, if a CDP file lacks documentation, it cannot be returned to Collection as a premature referral. Instead, the hearing officer must decide whether to:

Part 5 Collection Process IRM contains the primary administrative policies and procedures for considering alternatives to collection and case resolutions such as:

Appeals researches Part 5, in general, to:

References in IRM Part 5 to take or propose any enforcement or investigative activity do not apply to Appeals employees.

Taxpayers may request a CDP hearing upon receipt of a:

IRC 6320 requires the IRS to notify the taxpayer of the filing of a Notice of Federal Tax Lien (NFTL) and the right to request a CDP lien hearing within 5 business days after the first NFTL for a tax period is filed.

IRC 6330 requires the IRS to notify the taxpayer of the right to request a CDP hearing not less than 30 days before issuing the first levy to collect a tax period.

IRC 6330(f) contains exceptions to a right to a hearing before levy. When a levy is served in the following instances, the taxpayer is offered an opportunity to request a post-levy hearing:

IRC 6320 and IRC 6330 provide for one hearing per type of tax and tax period for the tax debt listed on the NFTL or Notice of Intent to Levy. The right to request a CDP hearing applies to the first NFTL filed or the first levy notice issued for a particular tax debt.

The taxpayer may receive more than one CDP pre-levy hearing under IRC 6330 where the same type of tax for the same period is involved, but where the amount of the unpaid tax has changed as a result of an additional assessment of tax (not including interest or penalties) for that period or an additional accuracy-related or filing-delinquency penalty has been assessed.

The taxpayer is not entitled to another CDP hearing under IRC 6330 if the additional assessment represents accruals of interest, penalties, or both. However, an exception to one hearing per type of tax and tax period can occur with penalties. The taxpayer is entitled to a second CDP notice/second opportunity for a hearing for Failure to Pay (FTP) penalty if the prior CDP notice listed no accrued or assessed FTP. See Treas. Reg. 301.6330-1(d)(2) Q&A D-1.

IRC 6320 refers to IRC 6330 for the legal requirements regarding:

A CDP lien hearing is held in conjunction with a CDP levy hearing whenever an NFTL is filed and Notice of Intent to Levy are concurrently issued, and the taxpayer requests a hearing under both Code sections.

In making a CDP determination, IRC 6330(c)(3) requires Appeals to:

The taxpayer may raise any non-frivolous issue relating to the NFTL or the proposed levy.

An issue may not be raised at the CDP lien or levy hearing if the taxpayer participated meaningfully in any previous administrative or judicial proceeding where the same issue was already raised and considered.

The taxpayer may seek judicial review of the Notice of Determination by filing a petition in the United States Tax Court.

In CDP, Appeals has no responsibility to protect a collection statute from expiration.

Appeals has no requirement in CDP to prepare a Form 3999, Statute Expiration Report, for expired collection statutes.

Refer to IRM 8.21.5, Statutes on Collection Cases, for collection statute issues.

The use of digital signatures in taxpayer correspondence is commonplace. When digitally signing any document being sent to the taxpayer or representative, the signature must be only a scanned facsimile of your actual signature.

Signatures must not include Adobe graphics, the date, SEID, e-mail address or other employee information or be merely a typewritten signature font.

Contact Appeals BSP, the lead program analyst for CDP, or the Appeals Exchange web site for assistance creating digital signatures.

Regardless of how the CDP case file is managed (as a paper file, electronic, or a hybrid of the two), certain key documents should always be attached electronically to the ACDS record. This will ensure the secure storage and ease of availability of these key documents.

Documents should be attached electronically to the ACDS record for the CDP key file.

These documents include the following:

See Exhibit 8.22.4-4, CDP Naming Conventions for Documents Attached to ACDS, for appropriate file naming conventions for certain uploaded documents.

Appeals manages an increasing number of Collection Due Process cases via electronic means. This process renders most paper documents obsolete once they have been scanned and uploaded to ACDS.

For cases that are managed electronically or as a paper/electronic hybrid, take the following steps for scanned documents:

For cases managed by fully electronic means, be sure to retain electronically in ACDS all documents you reviewed in making your determination. Such documentation is necessary to frame the complete basis of your decision, which is critical in the event a case needs to be defended in Tax Court. See IRM 8.22.9.2 for details pertaining to the content of the administrative record.

Documents that require an original signature should be retained but also attached to the electronic record in ACDS. At closing, following existing procedures, any documents that require an original signature should be forwarded by APS to the appropriate compliance function monitoring section that will monitor the agreement.

Retain with the CDP case any related work unit (WUNO) or other paper files that were used in making your determination. If a Notice of Determination (NOD) is issued, these related paper files should be suspended along with the CDP administrative file, whether the CDP was managed as a paper file, fully electronically, or as a paper and electronic hybrid. For more information, see IRM 8.20.6.20.2, CDP Notices of Determination (NOD), and IRM 8.22.9.2, Administrative Record.

AOs conduct hearings by considering issues and alternatives to collection action in CDP cases. AOs are generally specialized to work either Examination or Collection issues.

AARS duties may include, but are not limited to:

The AARS may document the receipt of a case for screening and corrective actions taken. Verification actions during the screening process include:

AARS may request a withdrawal of the CDP hearing using Letter 4388, Withdrawal Solicitation. See IRM 8.22.5.2.5, CDP Withdrawals.

The Fresno AARS team provides Customer Service on closed cases. The following are examples of problems that AARS can resolve:

AARS does not have the authority to change case determinations or decisions.

ATMs generally have supervisory responsibilities for Appeals Officers and Appeals Account Resolution Specialists (AARS). ATMs review cases for completeness, accuracy and decision quality. ATMs have approval authority in most CDP cases. See Exhibit 8.22.4-1, Delegation Order Appeals-193-1.

ATMs are also responsible for monitoring compliance with ex parte communication requirements.