Timing of IRS Collection Due Process Appeal

Clients of mine, dissatisfied with the ACS process, have occasionally filed a CDP Appeal after they received a Notice of Intent to Levy, but not the FINAL Notice of Intent to Levy. These "premature" CDP Appeals were rejected and the client told no Appealable event (Notice-wise) has occurred.

I have informally told them to simply wait for the NEXT notice which will in fact (probably?) be the FINAL Notice of Intent to Levy. Is there any harm in telling them to sit back and wait for the Final Notice?

For Appeal minded taxpayers I wonder how few/many cases are resolved without an Appeal between the Notice of Intent to Levy and the Final Notice of Intent. Unless I'm missing something I feel it is a huge waste of everyone's time to bounce a "premature" Appeal that late in the case knowing that (I'd guess) 90%+ are eventually refiled anyway a few weeks later.

Any thoughts/ experiences appreciated.

Reply to
Michael
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I'm blissfully ignorant of the process, having retired from IRS Collection before Bill of Rights 3. I do know a little about human nature on both sides of the table, which I doubt has changed.

If everyone on both sides is behaving well this shouldn't be an issue. The taxpayer can or cannot pay, the IRS employee makes demands accordingly, and the taxpayer performs or doesn't.

If a taxpayer is hellbent on getting to Appeals without trying to resolve the issues, or after giving up trying, it's in the IRS's interest as well as the taxpayer's to get him there ASAP. Otherwise you're stuck with no movement in any direction on the case.

When I supervised TFRP claims processing, the issues had been fully addressed, and it was clear that the taxpayer wanted to file a refund suit, we disallowed them immediately so the taxpayer could get to court without waiting. What's the point of delaying? Were I still a revenue officer dealing with a taxpayer who wanted to get to Appeals I'd give the taxpayer whatever specific notice was required to get to Appeals so we could get moving.

ACS doesn't lend itself to creative thought. You're probably butting your head against a brick wall by trying to speed up the process. Your advice to just wait for the trigger notice is probably the best you can do.

I'd make one request for them to issue the magic notice, but then I'd just back off and wait. I'd also drop the Commissioner a note about the evident flaw in the process.

Reply to
Phil Marti

Absent accelerated collection (e.g repeater delinquent, high dollar) the CP 504 Notice of Intent to Levy was probably issued before the delinquent account made its way into ACS or Field Collection. Once the account is in collection status, one or more attempts will normally be made to contact the taxpayer before issuance of the Collection Due Process (CDP) Final Notice. I can't cite any numbers, but, from personal experience, a very large number of collection cases are settled at this point in the process. If resolution is not forthcoming, the next written correspondence the taxpayer is likely to receive will be the CDP Final Notice regarding levy (LT11 from ACS, L-1058 from the Revenue Officer.)

Issuance of the CP 504 gives the Service the right to file a Notice of Federal Tax Lien. If your client's intent is to avoid the filing of the lien, there may well be harm in telling them to sit back and wait. After the lien is filed, the taxpayer will be entitled to a Collection Due Process hearing in regard to the lien.

The CP 504 will trigger an increase in the accrual of failure to pay penalty from 1/2% to 1% per month, so if the taxpayer's intent is to enter into an agreement to pay, he/she/they may save penalty dollars by responding and resolving upon receipt of first notice.

Though the notice and hearing process may appear to be a huge waste of everyone's time, it is required by the IRC (Sec 6331) and is not arbitrary.

Reply to
Paultry

Phil:

Thanks for your incisive feedback. To me ACS has taken most of the joy and professionalism that back in our day (I'm ex-IRS Regional later District Counsel) existed in the collection function. There are still some good local ROs but if you get a bad one it's very bad.

Though most of my cases/clients involve Joint criminal/civil investigations, to me with the few Collection cases I accept, the only goal that makes sense if ACS is involved is somehow get to the Appeals Office where the case is often resolved appropriately. Of course the old-time AO's hate doing collection-type issues but they tend to be fair about it.

Thanks again for your feedback. It seems my instincts to just wait for the FINAL Notice was on course.

PS--In what offices did you work during your IRS career? I was Philly for 16 years.

Reply to
Michael

There is another way to get to Appeals if you are unable to get into an acceptable installment agreement with Taxpayer Service and that is the the CAP program using Form 9423.

Reply to
Mike Wellman

R/O and SPS advisor in Chicago from '71 to '79. R/O group manager and SPS unit manager in Los Angeles from '86 to '88. The rest of the time was at National Office. Retired during the down-I-mean-rightsizing buyouts in '97.

Reply to
Phil Marti

Paultry, Mike, Phil:

Again thanks to all. Things mentioned/suggested that I had not considered. I was aware of CAP Appeal option but for some reason I find it simpler to go CDP route.

Although many of my collection clients would like to avoid a Lien they rarely have the leverage or the money to make a proposal that would be so good the IRS would not file one anyway at some point to protect their interest/priority. As I mentioned earlier, I much prefer criminal tax/grand jury/joint investigation cases.

Reply to
Michael

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