After a notice of intent to levy (the "final" notice) or notice of lien filing is issued, the taxpayer must make a written request for a CDP hearing within 30 days as specified in IRC §§ 6320 and 6330. Otherwise, the taxpayer is only entitled to an equivalent hearing (assuming the equivalent hearing request is timely under Treas. Reg. §§ 301.6320-1(i)(2) and 301.6330-1(i)(2), which is not subject to judicial review. IRC §§ 6320(a)(3)(B) and 6330(a)(3)(B). While CDP notices generally must be provided prior to levy, in some circumstances they may be provided after levy. IRC 6330(f).

Under IRC 6330(d)(1), a taxpayer has 30 days from the date of the notice of determination in which to appeal the determination to the Tax Court.

A taxpayer may raise any appropriate spousal defense at a CDP hearing. IRC 6330(c)(2)(A)(i). Spousal defenses raised in a CDP hearing are governed by the provisions of IRC 6015 or IRC 66. A taxpayer may not, however, raise a spousal defense at a CDP hearing when the IRS has made a final determination as to the spousal defense in a final determination letter or statutory notice of deficiency. See Treas. Reg. §§ 301.6320-1(e)(3) Q&A E4, 301.6330-1(e)(3) Q&A E4.

The existence and amount of the underlying tax liability cannot be challenged at a CDP hearing if the taxpayer received a statutory notice of deficiency for the taxes in question or otherwise had an earlier opportunity to dispute the tax liability. IRC 6330(c)(2)(B). An opportunity to dispute a liability includes a prior opportunity for a conference with Appeals that was offered either before or after assessment of the liability. Treas. Reg. §§ 301.6320-1(e)(3) Q&A E2, 301.6330-1(e)(3) Q&A E2.

An issue may not be raised at the CDP hearing if the issue was raised and considered at a previous hearing under IRC 6320 or in any other previous administrative or judicial proceeding and the person seeking to raise the issue participated meaningfully in such hearing or proceeding. IRC 6330(c)(4).

In seeking Tax Court review of the notice of determination, the taxpayer can generally only request that the court consider an issue that was raised in the taxpayer’s CDP hearing. Giamelli v. Commissioner, 129 T.C. 107 (2007); Treas. Reg. §§ 301.6320-1(f)(2) Q&A F3, 301.6330-1(f)(2) Q&A F3. The Tax Court, however, can review whether the IRS complied with all applicable law and administrative procedures without regard to whether the taxpayer raised it at the CDP hearing. Hoyle v. Commissioner, 131 T.C. 187 (2008).

A taxpayer cannot challenge the amount of court-ordered restitution at a CDP hearing. The district court’s restitution order is final and cannot be challenged or modified during the CDP hearing. Section 6201(a)(4) prohibits collateral attacks on a restitution order in any subsequent legal or administrative proceeding under the Internal Revenue Code of which a CDP hearing is an example. The challenge to the amount of restitution is also prohibited under section 6330(c)(4), because the criminal tax case is considered a prior judicial hearing in which a taxpayer meaningfully participated. Thus, in cases where an assessment is made of the amount ordered as restitution, that amount may not be later challenged in the Tax Court. In addition, section 6213(b)(5) prohibits assessment of restitution to be subject to deficiency procedures. Any deficiency asserted as a result of a subsequent examination is, however, subject to challenge by the taxpayer.

If, after the Appeals hearing, the tax, including all interest and penalty accruals, is fully paid and the assessment abated, generally the case should be dismissed as moot. There is no tax liability to collect, the NFTL will be or has been released, the proposed levy will be abandoned, and there is therefore no case or controversy for the Tax Court to adjudicate. The Tax Court’s jurisdiction under IRC 6330(d) is generally limited to reviewing whether the NFTL should remain filed or the proposed levy should proceed, and the Tax Court will dismiss as moot cases in which there is no unpaid tax liability upon which the lien or the proposed levy could be based. Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006). The attorney must ensure that the NFTL is released prior to filing this motion. See Exhibit 35.11.1-222, Motion to Dismiss for Mootness in a Collection Due Process Case, for a sample motion. If only some of the tax years at issue are fully paid and the Tax Court retains jurisdiction with respect to one or more tax periods, the court can enter a decision addressing the unpaid years and declaring the paid years as moot.

The attorney should ensure that the underlying tax liability, including accruals, has been fully satisfied. The Form 4340 transcript may show a zero tax balance while there is still outstanding tax liability because it does not reflect unassessed interest accruals. The Service is not required to make a separate assessment of interest on an assessed underlying tax liability in order to collect that interest, and the Service usually allows interest to accrue unassessed until paid.

If the taxpayer is raising liability and requesting a refund, the CDP case is not the appropriate forum to resolve those issues because the Tax Court does not have refund jurisdiction in the CDP case and can only address the legality or appropriateness of the NFTL or proposed levy. Greene-Thapedi, id.

If the tax has been fully paid, a motion to dismiss for mootness is inappropriate if the notice of determination rejected interest abatement or spousal relief and the taxpayer would be entitled to a refund if interest abatement or spousal relief is granted. In those cases, the Tax Court has independent overpayment jurisdiction under IRC §§ 6404(h) and 6015(e). The case should proceed with only the interest abatement or spousal relief issues addressed.

A motion to dismiss for mootness is also appropriate if after the Appeals hearing the assessment has been abated because it is invalid (e.g., invalid notice of deficiency) or the Service has decided to forgo collection after a bankruptcy discharge. If the assessment has not yet been abated, a stipulated decision would be appropriate in these situations. See the sample Stipulated Decision at Exhibit 35.11.1-214, Notice of Determination Addressing Only Tax Liability or Collection Issues Not Sustained.

Not all bankruptcy discharge situations justify a motion to dismiss for mootness or a stipulated decision. If a taxpayer has received a bankruptcy discharge and the taxpayer’s tax liabilities are dischargeable, the taxpayer is no longer personally liable for the taxes and the Service is enjoined from collecting the liability from the taxpayer personally. The Service may collect a discharged liability from prebankruptcy assets if a NFTL was filed before the taxpayer’s bankruptcy. The Service may also collect a discharged liability from pension assets excluded from the bankruptcy estate, even if a NFTL is not on file prepetition. The federal tax lien, however, will only attach to the portion of the pension asset that existed as of the petition date. The lien is not limited to the value of the property as of the petition date. Once a tax lien attaches to property existing at the petition date, it attaches to any appreciation or diminution of that asset until the lien is enforced against that property.

The amount of restitution assessed may not be challenged in any proceeding authorized under the Internal Revenue Code. See IRC § 6201(a)(4)(C). Also, the assessment of criminal restitution is not subject to deficiency procedures. See IRC § 6213(b)(5). Therefore, the Tax Court does not have jurisdiction over a case that is filed to challenge the amount or existence of court-ordered restitution. The attorney should file a motion to dismiss such petitions for lack of jurisdiction. Nonetheless, if a taxpayer petitions the Tax Court based on a statutory notice of deficiency issued following an examination for the same tax years for which restitution is ordered or a CDP notice of determination for the same years, such petition is valid and the Tax Court will have jurisdiction over the entire deficiency without regard to the restitution ordered or the CDP determination.

In the absence of error by Appeals, the trial attorney should not agree to a remand to Appeals for the consideration or reconsideration of any issue, including a collection alternative, unless remand is appropriate for changed circumstances as specified in CCDM 35.3.23.7(7). For example, remand is not appropriate when a taxpayer wishes to submit a collection alternative during the Tax Court proceeding after having failed to take advantage of the opportunity to submit an alternative during the CDP hearing. This includes cases in which the taxpayer was not eligible for a collection alternative (e.g., by filing required returns) during the CDP hearing after being given an opportunity to become eligible.

If remand is not appropriate, the trial attorney is not required to agree to have an issue considered by Collection, Examination, or other Service function to facilitate settlement of a case. However, there may be situations in which consideration by a Service function other than Appeals is the best practice for the fair treatment of taxpayers or to avoid undesirable legal precedent. For example,

The trial attorney should notify the Appeals officer who made the determination that the issue is being considered by Collection, Examination, or other Service function. For cases involving collection alternatives being referred to Collection, the trial attorney is responsible for informing Collection of any deadlines imposed by the court on the Service’s consideration of the collection alternative, and for seeking any continuances necessary for adequate investigation and review. The attorney will not ask Collection to consider collection alternatives that are on their face clearly unprocessable or frivolous. The attorney will also not ask Collection to consider collection alternatives identical to those that have been rejected by Appeals, absent a subsequent change in the taxpayer’s circumstances.

The court should uphold a determination in cases in which the Appeals officer erred if the error does not affect the outcome of the case. As a consequence, any error should be evaluated to determine whether it is harmless. The harmless error rule is often applied when the taxpayer is only making frivolous or groundless arguments. For example, if the taxpayer was not permitted to record his conference under section 7521(a)(1), but relies on frivolous or groundless arguments, the Tax Court will not remand the case.

Some errors by Appeals on nonliability issues may not require reconsideration even if the error was not harmless, because the issue involves the application of law to uncontested facts. These issues may include whether the unpaid tax was discharged in bankruptcy, whether the statute of limitations has expired, or whether a notice of deficiency was properly issued. If an issue that was wrongly decided by Appeals does not require further fact-finding or a determination by Appeals, in appropriate cases the issue can be conceded.

A Motion for Remand should be filed as early as possible in the proceeding after the petition is answered. If the case is calendared, the Motion for Remand should be filed with a separate motion for continuance. If the case is not calendared, only a Motion for Remand should be filed. The Motion for Remand should explain the error in the determination or hearing that is to be remedied on remand. A sample motion is in Exhibit 35.11.1-213, Motion to Remand in a Collection Due Process Case.

Prior to filing a Motion for Remand, the trial attorney should consult with Appeals and advise the Appeals officer and his or her manager of the reasons for remand.

After receiving the court’s remand order, the trial attorney should promptly (generally, within three business days) send a remand memorandum and the case file directly to the Appeals Team Manager responsible for the supplemental hearing (ordinarily the manager responsible for the original hearing, but if the court ordered the supplemental hearing to be conducted by a different office, the manager of the office specified by the court). If the trial attorney does not have time to address all issues in the remand memorandum, the trial attorney should send a supplemental memorandum after sending the initial memorandum.

No later than three weeks before the deadline the court set for Appeals to hold the supplemental hearing, the trial attorney should contact Appeals to confirm that the hearing has been, or will be, timely held. If the hearing will not be timely held, the trial attorney should file with the court a motion for extension of time explaining the need for the extension. The motion for extension of time must be filed before the deadline set by the court for Appeals to hold the supplemental hearing.

After the case is remanded, the Appeals officer should not issue a standard notice of determination using Letter 3193. Instead, a Letter 3978, Supplemental Notice of Determination Concerning Collection Action(s) under IRC §§ 6320 and/or 6330, should be issued to the taxpayer. This supplemental notice should not have the standard language concerning the right to file a petition with the Tax Court to appeal the determination, as the case is already docketed with the court.

Following the issuance of the supplemental notice, a status report should be filed with the court attaching the supplemental determination.

If issuance of the supplemental notice makes it unnecessary for the court to review the Commissioner’s position taken before the determination was supplemented, the court will review only the supplemental notice and not prior determinations.

Care should be taken in remanded cases to ensure that the Appeals officer maintains the role of an independent officer. Therefore, Rev. Proc. 2012-18, 2012-10 I.R.B. 455 (providing rules limiting ex parte communications in nondocketed cases), should be followed in remanded cases.

If the taxpayer is only raising frivolous or groundless arguments, and there is no need to go beyond the pleadings, a motion to dismiss for failure to state a claim upon which relief can be granted should be filed within 45 days after service of the petition. If there is a need to go outside the pleadings, a motion for summary judgment should generally be filed.

A summary judgment motion should also be filed when the only issues raised by the taxpayer are precluded by IRC 6330(c)(2)(B) (preclusion of liability) or IRC 6330(c)(4) (preclusion due to prior proceedings), and there is no dispute as to material fact with respect to the facts supporting the preclusion.

A full or partial summary judgment motion should also be considered if the petitioner raises an issue, including liability, that petitioner cannot raise before the court because it was not raised in the administrative hearing.

Under IRC 6330(c)(2)(B), a taxpayer may challenge the existence or amount of the underlying tax liability in a CDP hearing under IRC §§ 6320 and 6330 if the taxpayer did not receive a statutory notice of deficiency for the tax liability or did not otherwise have an opportunity to dispute the tax liability. The term "underlying tax liability" means the total amount of tax (including interest and penalties) assessed for a particular tax period, including tax assessed under the deficiency procedures, tax reported on a tax return, or a combination of both. An opportunity to dispute a liability includes a prior opportunity for a conference with Appeals offered either before or after assessment of the liability. Treas. Reg. §§ 301.6320-1(e)(3) Q&A E2, 301.6330-1(e)(3) Q&A E2.

If the Service filed a proof of claim regarding an unpaid tax liability in a bankruptcy proceeding, the debtor could have filed an objection to the proof of claim. 11 U.S.C. § 502. If the bankruptcy court had jurisdiction to determine the liability, the taxpayer is precluded from challenging the underlying liability in a subsequent CDP hearing (without regard to whether the debtor or Trustee actually filed an objection to the proof of claim). The facts of a particular case should be examined to determine if the taxpayer had standing to object to the proof of claim and if the taxpayer had an actual opportunity to raise liability in the bankruptcy case. The IRC 6330(c)(2)(B) bar should not be asserted when the taxpayer is disputing a tax liability for which the Service did not file a proof of claim in a no-asset Chapter 7 case.

In cases in which a taxpayer is barred from challenging the existence or amount of the underlying liability pursuant to IRC 6330(c)(2)(B), but the taxpayer is raising a legitimate liability issue, processing of returns and audit reconsiderations should not be delayed just because a CDP Tax Court petition has been filed. The goal should always be to ensure that the correct amount of tax liability is being fairly collected even if consideration of liability is precluded under IRC 6330(c)(2)(B). On the other hand, the trial attorney should vigorously rely on IRC 6330(c)(2)(B) and seek summary judgment when the taxpayer is raising only frivolous or groundless issues or was uncooperative during the CDP hearing.

In cases in which a taxpayer is raising only frivolous or groundless challenges to the underlying liability, and it is questionable whether actual or constructive receipt of the deficiency notice can be proven, the trial attorney should consider not raising IRC 6330(c)(2)(B) because defeating the challenge on the merits may be easier than proving receipt.

A sample summary judgment motion covering cases in which IRC 6330(c)(2)(B) preclusion is at issue is in Exhibit 35.11.1-228, Motion for Summary Judgment in a CDP Case, Section 6330(c)(2)(B).

Many cases involving nonfrivolous issues can also be decided through summary judgment when there are no genuine issues of material fact. This is especially the case when the only issues in the case are reviewable for abuse of discretion. In these cases, the Tax Court should resolve the case based on the administrative record and should be reviewing the Appeals officer’s findings for abuse of discretion rather than finding its own facts. All non-frivolous factual and legal issues raised by the taxpayer must specifically be addressed and resolved in the motion.

In abuse of discretion cases, the fact that petitioner plans to introduce evidence at trial that was not presented to the Appeals officer should not preclude summary judgment because the court must confine its review to the administrative record. Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009); Murphy v. Commissioner, 469 F.3d 27 (1st Cir. 2006); Robinette v. Commissioner, 439 F.3d 455 (8th Cir. 2006). The Tax Court does not follow Keller, Murphy, and Robinette, so in cases not appealable to the First, Eighth, or Ninth Circuit Court of Appeals, the Tax Court’s view is that its abuse of discretion review is not limited to the administrative record. Robinette v. Commissioner, 123 T.C. 85 (2004). The court, nonetheless, will exclude evidence not submitted to the Appeals officer because it is not relevant to whether Appeals abused its discretion. See, e.g., Murphy v. Commissioner, 125 T.C. 301 (2005). A sample motion for summary judgment, involving only claims subject to abuse of discretion review, is in Exhibit 35.11.1-229, Motion for Summary Judgment in a CDP Case, Abuse of Discretion Issues.

The court may hear evidence not in the administrative record when the taxpayer raises an issue as to how the administrative hearing was conducted. For example, the Tax Court may resolve issues of material fact with respect to whether the Appeals officer was impartial, refused to accept the submission of evidence, failed to consider issues raised by the taxpayer, or properly communicated to the taxpayer deadlines for the submission of evidence. These issues are generally treated as involving exceptions to the record rule. See generally Robinette v. Commissioner, 439 F.3d 455 (8th Cir. 2006); Murphy v. Commissioner, 469 F.3d 27, 31 (1st Cir. 2006). As a result, a summary judgment motion will not be successful if the taxpayer disputes facts concerning the conduct of the CDP hearing, unless the taxpayer offers no support for the alleged factual dispute or respondent can demonstrate that the taxpayer’s allegations are irrelevant or immaterial.

A declaration from the Appeals officer making the determination should be filed with the summary judgment motion. The declaration should authenticate and attach the documents that support the motion for summary judgment, i.e., all documents which establish that no material facts are in dispute and the Commissioner is entitled to judgment as a matter of law. The entire administrative record does not need to be submitted to the court with a summary judgment motion and declaration; however, all documents relied upon by the Appeals officer and relevant to the issues to be resolved pursuant to the motion should be included. See Exhibit 35.11.1-230, Declaration in Support of Motion for Summary Judgment in a CDP Case, for a sample declaration.

The documents that support a motion for summary judgment in a CDP case will vary depending upon the facts and issues in each case. IRC 6330(c)(3) requires that the notice of determination address the verification requirement, all issues raised by the taxpayer, and whether the collection action balances the need for efficient collection with the taxpayer’s concern that the collection action be no more intrusive than necessary. Examples of documents relevant to these issues that should generally be attached to the declaration of the Appeals officer in support of a motion for summary judgment are:

A certified copy of an updated Form 4340 transcript should also be submitted with all summary judgment motions. Even though this transcript is prepared after the issuance of the notice of determination, submission of the Form 4340 is not a violation of the record rule because it generally contains the same information originally reviewed by the Appeals or settlement officer in making the CDP determination. Except as it may bear on the issue of mootness, the court should not consider transactions reflected on the Form 4340 that occurred after the CDP hearing because these transactions are not part of the administrative record subject to abuse of discretion review. Because the Form 4340 is self-authenticating, it does not need to be attached to the declaration. The Form 4340 should be reviewed thoroughly, and any issues raised by entries on the Form 4340, or inconsistencies with other documents, should be explained in the motion.

Among the documents that the Appeals officer may rely upon are the printouts from Integrated Collection System or ACS screens; documents pertaining to the evaluation of collection alternatives, such as financial statements; and documents that establish that an issue raised in the CDP proceeding was previously raised in an administrative or judicial proceeding in which the taxpayer participated meaningfully, for purposes of IRC 6330(c)(4).

Additionally, if any face-to-face or telephone conference between the Appeals officer and the taxpayer was recorded, a copy of the tape or a transcript of the recording, authenticated by the Appeals officer, should be submitted as part of the administrative record. If the taxpayer submits a transcript of the recorded conference, the Appeals officer should authenticate the taxpayer’s transcript only after comparing it to the tape recording made by the Appeals officer.

The declaration should set forth the Appeals officer’s job position, that the Appeals officer was assigned responsibility to handle the taxpayer’s hearing request, and that, pursuant to this assignment, the Appeals officer made the determination required under IRC 6330(c)(3). If any of the materials require interpretation (e.g., transaction codes) or authentication, the declaration should include appropriate explanation.

The underlying tax liability is not "at issue" merely because the taxpayer challenges it. Liability is not at issue, for example, if a taxpayer challenges underlying liability in the petition, but the court is precluded from considering that liability, pursuant to IRC 6330(c)(2)(B). Liability is also not at issue if the petition makes only frivolous arguments or general unsubstantiated allegations. Unless the challenge to liability is both allowed under IRC 6330(c)(2)(B) and bona fide, a motion to permit levy may be appropriate.

If the notice of determination contains multiple tax years and periods, but a taxpayer disputes only the tax liabilities (or interest or additions) for some of the periods, an IRC 6330(e)(2) motion may be brought with respect to the undisputed tax liabilities.

The primary focus of an IRC 6330(e)(2) motion should be the required showing of "good cause" not to suspend the levy during the pendency of the judicial review period. A showing of good cause may be made in any case in which a taxpayer is using the CDP provisions in a manner inconsistent with or inappropriate to their purpose. The purpose of the CDP statutes, IRC §§ 6320 and 6330, is to provide taxpayers with a forum to raise relevant issues with respect to a proposed levy or NFTL. IRC § 6330(c)(2)(A); H.R. Conf. Rep. No. 105-599, 105 Cong., 2d Sess., 263-267 (1998). An IRC 6330(e)(2) motion should be considered in all CDP levy cases which are not brought for this purpose, but are used solely as a forum for frivolous arguments or otherwise to delay collection action. Generally, good cause will be proven as part of the summary judgment or other dispositive motion filed with the motion to permit levy.

While good cause to permit levy during appeal will exist primarily in cases when a taxpayer raises solely frivolous or groundless issues, there may also be good cause for relief in other types of cases. For example, an IRC 6330(e)(2) motion may be appropriate in some cases involving the pyramiding of tax liabilities.

IRC 6330(e)(2) motions filed with the Tax Court should be captioned as "Respondent’s Motion to Permit Levy." The opening paragraph should state that respondent moves, pursuant to Tax Court Rule 50(a) and IRC 6330(e)(2), that the court remove the suspension of the levy under IRC 6330(e)(1) because the underlying liability is not at issue and respondent has shown good cause for the removal of the suspension of the levy. The body of the motion should set forth the background of the case and establish that the two criteria for relief from the stay have been met. The motion should conclude by requesting expedited handling by the court to minimize further unnecessary collection delays. See Exhibit 35.11.1-231, Motion to Permit Levy in a Collection Due Process Case.

The IRC 6330(e)(2) motion may be filed at any point at which the court retains jurisdiction over the case. Of course, the motion and the accompanying dispositive motion should be filed as early in the case as possible to minimize delays in resuming collection. When filed with a summary judgment or other dispositive motion, two separate motions must be filed, in accordance with T.C. Rule 54.

The trial attorney should, as a general rule, consider filing an IRC 6330(e)(2) motion in all cases involving taxpayers raising solely frivolous or groundless arguments in which we are filing summary judgment motions and/or seeking imposition of the IRC 6673(a)(1) penalty. While this motion may be made up to the time a final decision is entered, the attorney should file these motions as soon as possible in all applicable cases. In the absence of an order permitting levy, a litigious taxpayer may delay collection for a significant period by appealing the Tax Court’s decision to the court of appeals.

Generally, the Tax Division of the Department of Justice will not file an IRC 6330(e)(2) motion with a court of appeals because it is the trial attorney’s responsibility to file the motion in the first instance with the Tax Court. In some limited circumstances, however, it may be appropriate to file an IRC 6330(e)(2) motion for the first time in the court of appeals when there are new circumstances justifying seeking relief. For example, we may discover after a case has been appealed to a court of appeals that a taxpayer is dissipating assets or placing collection in jeopardy. Please contact the P&A attorney assigned to the case if there are grounds for requesting filing of an IRC 6330(e)(2) motion with a court of appeals.

Finally, since the purpose of an IRC 6330(e)(2) motion is to permit immediate levy, alert the Service before filing the motion, and immediately after the motion is granted, so that it will be prepared to proceed promptly with a levy. For cases which originate from the field, contact the group manager of the revenue officer who referred the case to Appeals. For cases that originate from ACS, contact the CDP coordinator for the state of taxpayer’s residence.