Miscellaneous Changes to Collection Due Process Procedures Relating to Notice and Opportunity for Hearing Upon Filing of Notice of Federal Tax Lien, 54681-54687 [05-18469]
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Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules
SUMMARY: This document corrects a
notice of proposed rulemaking (REG104143–05) that was published in the
Federal Register on Friday, August 26,
2005 (70 FR 50228). The document
contains regulations relating to
payments made for service not in the
course of the employer’s trade or
business, for domestic service in a
private home of the employer, for
agricultural labor, and for service
performed as a home worker within the
meaning of section 3121(d)(3)(C) of the
Internal Revenue Code.
Paul
Carlino, (202) 622–0047 (not a toll-free
number).
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
Background
The notice of proposed rulemaking
(REG–104143–05) that is the subject of
this correction is under section
3121(d)(3)(C) of the Internal Revenue
Code.
Need for Correction
As published, REG–104143–05
contains an error that may prove to be
misleading and is in need of
clarification.
Correction of Publication
Accordingly, the notice of proposed
rulemaking (REG–104143–05), that was
the subject of FR Doc. #05–16944, is
corrected as follows:
§ 31.3121(a)–2
[Corrected]
On page 50231, column 2,
§ 31.3121(a)–2, paragraph (d)(2), third
line from the bottom of the paragraph,
the language ‘‘paragraph (d)(2), see
§ 31.3102–1 in’’ is corrected to read
‘‘paragraph (d)(2), see § 31.3121(a)–2
in‘‘.
Cynthia Grigsby,
Acting Chief, Publications and Regulations
Branch, Legal Processing Division, Associate
Chief Counsel (Procedure and
Administration).
[FR Doc. 05–18468 Filed 9–15–05; 8:45 am]
BILLING CODE 4830–01–P
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG–150088–02]
RIN 1545–BB96
Miscellaneous Changes to Collection
Due Process Procedures Relating to
Notice and Opportunity for Hearing
Upon Filing of Notice of Federal Tax
Lien
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
AGENCY:
SUMMARY: This document contains
proposed amendments to the
regulations relating to a taxpayer’s right
to a hearing under section 6320 of the
Internal Revenue Code of 1986 after the
filing of a notice of Federal tax lien
(NFTL). The proposed regulations make
certain clarifying changes in the way
collection due process (CDP) hearings
are held and specify the period during
which a taxpayer may request an
equivalent hearing. The proposed
regulations affect taxpayers against
whose property or rights to property the
Internal Revenue Service (IRS) files a
NFTL on or after January 19, 1999. This
document also contains a notice of
public hearing on these proposed
regulations.
Written and electronic comments
must be received by December 15, 2005.
Outlines of topics to be discussed at the
public hearing scheduled for 10 a.m. on
January 19, 2006 must be received by
December 29, 2005.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–150088–02), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be handdelivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–150088–02),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
NW., Washington, DC, or sent
electronically, via the IRS Internet site
at https://www.irs.gov/regs or via the
Federal eRulemaking Portal at https://
www.regulations.gov (indicate IRS and
REG–150088–02). The public hearing
will be held in the IRS Auditorium,
Internal Revenue Building (7th Floor),
1111 Constitution Avenue, NW.,
Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the regulations, call
Laurence K. Williams, 202–622–3600
DATES:
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54681
(not a toll-free number); concerning
submissions and/or to be placed on the
building access list to attend the
hearing, call Robin Jones, 202–622–7180
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to the Regulations on
Procedure and Administration (26 CFR
part 301) relating to the provision of
notice under section 6320 of the Internal
Revenue Code to taxpayers of a right to
a CDP hearing (CDP Notice) after the IRS
files a NFTL. Final regulations (TD
8979) were published on January 18,
2002 in the Federal Register (67 FR
2558). The final regulations
implemented certain changes made by
section 3401 of the Internal Revenue
Service Restructuring and Reform Act of
1998 (Pub. L. 105–206, 112 Stat.
685)(RRA 1998), including the addition
of section 6320 to the Internal Revenue
Code. The final regulations affected
taxpayers against whose property or
rights to property the IRS files a NFTL.
Section 3401 of RRA 1998 also added
section 6330 to the Internal Revenue
Code. That statute provides for notice to
taxpayers of a right to a hearing before
or, in limited cases, after levy. A
number of the provisions in section
6330 concerning the conduct and
judicial review of a CDP hearing are
incorporated by reference in section
6320. On January 18, 2002, final
regulations (TD 8980) under section
6330 were published in the Federal
Register (67 FR 2549) along with the
final regulations under section 6320.
Explanation of Provisions
A taxpayer is entitled to one CDP
hearing with respect to the tax and tax
period covered by a CDP Notice
concerning a levy or a CDP Notice
concerning the filing of a NFTL. The IRS
Office of Appeals (Appeals) has
conducted over 92,000 CDP hearings
and more than 30,000 equivalent
hearings since sections 6320 and 6330
became effective for collection actions
initiated on and after January 19, 1999.
In general, the experience of the past
six years with CDP hearings has
demonstrated that there is a need for
changes to allow Appeals to effectively
and fairly handle the cases of taxpayers
who raise issues of substance. Appeals
has instituted many improvements in its
processing of CDP cases and has
conducted extensive training in an effort
to provide careful, but timely, review of
CDP cases, which currently are filed at
a rate of approximately 2,450 per
month. The proposed regulations, if
adopted as final regulations, will
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increase efficiency without
compromising the quality and fairness
of review.
In many CDP cases, significant time is
spent merely identifying the issues.
Although the Form 12153 used to
request a CDP hearing requires a
taxpayer to state a reason or reasons for
disagreeing with the NFTL filing, many
taxpayers either do not supply that
information, or raise new issues during
the CDP hearing process not identified
on the hearing request. Delays result
while taxpayers provide new supporting
documentation and Appeals personnel
reconsider prior conclusions in light of
the new information. Cases of other
taxpayers pending in Appeals are
delayed because other work must be
constantly rescheduled.
Cases are also delayed when
taxpayers propose collection
alternatives for which they are not
eligible. The IRS does not consider
offers in compromise or installment
agreements from taxpayers who have
failed to file required returns as of the
date the offer or the proposed
installment agreement is submitted. See
Publication 594, ‘‘What You Should
Know about the IRS Collection Process
(Rev. 2–2004).’’ Similarly, the IRS will
not consider an offer in compromise
from an in-business taxpayer unless the
taxpayer has timely filed all returns and
timely made all Federal tax deposits for
two consecutive quarters. See Form 656,
‘‘Offer in Compromise (Rev. 7–2004).’’
The resources of Appeals are
ineffectively utilized arranging and
conducting face-to-face conferences
requested by non-compliant taxpayers
whose only complaint is the rejection of
an offer to compromise or installment
agreement for which they are not
eligible.
Frivolous cases also cause
unnecessary delays. During fiscal year
2004, 5.4 percent of the 32,226 CDP and
equivalent-hearing cases Appeals
handled involved taxpayers who were
non-filers or raised only frivolous
issues. Cases raising frivolous issues, in
particular, consume a
disproportionately large amount of time,
because Appeals personnel must often
read lengthy, frivolous submissions in
search of any substantive issue buried
within. Delays also result when
taxpayers use face-to-face conferences as
a venue for frivolous oration and
harassment of Appeals personnel.
The proposed regulations attempt to
address these and other problems that
have become apparent during the first
six years of CDP practice. The proposed
changes are aimed at creating a more
focused procedure that will allow
Appeals to continue to provide careful
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review of NFTL filings as the volume of
cases increases.
A taxpayer must request a CDP
hearing in writing. The current
regulations require that a request for a
CDP hearing include the taxpayer’s
name, address, and daytime telephone
number, and that the request be dated
and signed by either the taxpayer or the
taxpayer’s authorized representative.
Section 301.6320–1(c)(2), Q&A–C1. A
Form 12153, ‘‘Request for a Collection
Due Process Hearing,’’ is included with
the CDP Notice sent to the taxpayer
pursuant to section 6320. The Form
12153 requests (1) The taxpayer’s name,
address, daytime telephone number,
and taxpayer identification number
(SSN or EIN), (2) the type of tax
involved, (3) the tax period at issue, (4)
a statement that the taxpayer requests a
hearing with Appeals concerning the
filing of the NFTL, and (5) the reason or
reasons why the taxpayer disagrees with
the NFTL filing. Although taxpayers are
encouraged to use a Form 12153 in
requesting a CDP hearing, the current
regulations do not require the use of
Form 12153.
Section 301.6320–1(c)(2), A–C1, of the
proposed regulations requires taxpayers
to state their reasons for disagreement
with the NFTL filing whether or not a
Form 12153 is used to request a CDP
hearing. In addition, a taxpayer who
fails to sign a timely CDP hearing
request because the request is made by
a spouse or other unauthorized
representative must affirm in writing
that the request was originally
submitted on the taxpayer’s behalf.
Failure to provide the written
affirmation within a reasonable time
after a request from Appeals will result
in the denial of a CDP hearing for that
taxpayer.
A CDP hearing is to be conducted by
an Appeals officer or employee who has
had no ‘‘prior involvement’’ with
respect to the tax for the tax periods to
be covered by the hearing, unless the
taxpayer waives this requirement.
Section 301.6320–1(d)(2), A–D4 of the
current regulations provides that ‘‘prior
involvement’’ by an Appeals officer or
employee includes participation or
involvement in an Appeals hearing that
the taxpayer may have had with respect
to the tax and tax period shown on the
CDP Notice, other than a CDP hearing
held under either section 6320 or
section 6330. It is important that ‘‘prior
involvement’’ be construed in a manner
that reasonably protects against
predisposition but at the same time does
not disqualify too broad a range of
Appeals personnel. A broad standard of
‘‘prior involvement’’ would lead to
uncertain application, could result in
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the disqualification of an entire Appeals
office, many of which have small staffs,
and could make it difficult to conduct
the CDP hearing. Section 301.6320–
1(d)(2), A–D4 of the proposed
regulations provides that prior
involvement exists only when the
taxpayer, the tax liability and the tax
period shown on the CDP Notice also
were at issue in the prior non-CDP
hearing or proceeding, and the Appeals
officer or employee actually participated
in the prior hearing or proceeding.
Examples are provided in § 301.6320–
1(d)(3) of the proposed regulations.
Section 301.6320–1(d)(2), A–D7, of the
proposed regulations clarifies that a
face-to-face conference is merely one
aspect of a CDP hearing under section
6320 and is not by itself the entire CDP
hearing.
A–D7 of the proposed regulations also
provides that, in all cases, the Appeals
officer or employee will review the
taxpayer’s request for a CDP hearing, the
case file, other written communications
from the taxpayer, and any notes of oral
communications with the taxpayer or
the taxpayer’s representative. If no faceto-face or telephonic conference is held,
review of those documents will
constitute the CDP hearing for purposes
of section 6320(b).
A–D7 of the proposed regulations
further clarifies that when a business
taxpayer is offered an opportunity for a
face-to-face conference it will be held at
the Appeals office closest to the
taxpayer’s principal place of business.
The current regulations have been
misinterpreted by some taxpayers as
requiring the IRS to hold a face-to-face
conference at the taxpayer’s principal
place of business. Q&A–D8 of the
proposed regulations is new. It
describes specific circumstances in
which Appeals will not hold a face-toface conference with the taxpayer or the
taxpayer’s representative because a
conference will serve no useful purpose.
The experience of Appeals is that
although most taxpayers request face-toface conferences, they are sometimes
difficult to schedule on a date and at a
time that is convenient for the taxpayer.
In some of these cases, taxpayers or
their representatives have used the
scheduling of a face-to-face conference
as a tactic to delay the IRS’s collection
efforts. In other cases, taxpayers have
requested a face-to-face conference
merely to raise frivolous arguments
concerning the Federal tax system or to
request collection alternatives for which
they do not qualify. Q&A-D8 of the
proposed regulations provides that a
face-to-face conference need not be
offered if the taxpayer or the taxpayer’s
representative raises only frivolous
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arguments concerning the Federal tax
system. See the IRS Internet site,
https://www.irs.gov/pub/irs-utl/
friv_tax.pdf, for examples of frivolous
arguments. A face-to-face conference
also will not be granted if the taxpayer
proposes collection alternatives that
would not be available to other
taxpayers in similar circumstances. A
face-to-face conference need not be
granted if the taxpayer does not provide
in the written request for a CDP hearing,
as perfected, the required information
set forth in A–C1(ii)(E) of paragraph
(c)(2) of the proposed regulations.
In addition, a face-to-face conference
will not be held at the location closest
to the taxpayer’s residence or principal
place of business if all Appeals officers
or employees at that location are
considered to have prior involvement as
provided in A–D4. In this case, the
taxpayer will be offered a hearing by
telephone or correspondence, or some
combination thereof. The taxpayer may
be able to obtain a face-to-face
conference at the Appeals office closest
to the taxpayer’s residence or principal
place of business under these
circumstances if the taxpayer waives the
requirement of section 6320(b)(3)
concerning impartiality of the Appeals
officer or employee. Appeals will offer
the taxpayer a face-to-face conference at
another Appeals office if in the exercise
of its discretion Appeals would have
offered the taxpayer a face-to-face
conference at the original location.
With the foregoing exceptions, it is
anticipated that a face-to-face
conference will ordinarily be offered
with respect to any relevant issues or
collection alternatives for which the
taxpayer qualifies.
Sections 301.6320–1(e)(1) and
301.6320–1(e)(3), A–E2 and A–E7 have
been changed to more closely follow the
language of section 6330(c)(2)(B), made
applicable to section 6320 by section
6320(c). These changes are necessary
because these regulations have been
misinterpreted as defining the
underlying tax liability that may be
considered at the CDP hearing under
section 6330(c)(2)(B) to be the tax
liability listed on the CDP Notice. The
intent of the existing regulations, which
refer to tax liability on the CDP Notice,
is that taxpayers may only challenge
taxes or tax periods listed on the CDP
Notice, not to supply a substantive
definition of underlying tax liability.
Section 301.6320–1(e)(3), A–E6 has
been amended to clarify that taxpayers
who receive CDP hearings can only
qualify for collection alternatives
available generally to taxpayers in
similar circumstances.
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The experience of the past six years
has revealed that many taxpayers raise
an issue with Appeals but fail to furnish
any documentation or evidence with
respect to the issue despite being given
a reasonable period to do so. For
example, a taxpayer may request an
installment agreement, but when an
Appeals officer or employee requests
financial data necessary to determine
eligibility for the installment agreement,
the taxpayer may not comply with the
request. Or a taxpayer may dispute
liability for a tax period by claiming
entitlement to deductions, but provide
no substantiation for the deductions in
response to requests from Appeals.
Current § 301.6320–1(f)(2), A–F5
provides that a taxpayer may not seek
judicial review of an issue that he has
not raised during the CDP hearing. A–
F5 is revised to clarify that in order to
obtain judicial review, a taxpayer must
not only bring the issue to the attention
of Appeals but must also submit, if
requested, evidence with respect to that
issue. Under revised A–F5, if the
taxpayer does not provide Appeals any
evidence with respect to the issue after
being given a reasonable opportunity to
submit such evidence, then he may not
ask a court to consider the issue.
There has been some confusion about
what documents Appeals should retain,
and what notations the Appeals officer
or employee conducting the hearing
should make, in order to provide a
judicially reviewable administrative
record. A new Q&A–F6 has been added
to specify the contents of the
administrative record required for court
review.
The IRS receives a number of tardy
requests for CDP hearings. The changes
to § 301.6320–1(i)(2) explain how these
requests will be treated. The proposed
amendments to the regulations add a
new Q&A–I1 to § 301.6320–1(i)(2) to
explain that a taxpayer must request an
equivalent hearing in writing. A
taxpayer may obtain an equivalent
hearing if the 30-day period described
in section 6320(a)(3) for requesting a
CDP hearing has expired. Unlike an
Appeals determination in a CDP
hearing, the Appeals decision in an
equivalent hearing is not reviewable in
court. Under new Q&A–I1, the IRS is
not required to treat a late-filed CDP
request as a request for an equivalent
hearing. Section 301.6320–1(c)(2), A–C7
has been amended to require that the
taxpayer be notified of the right to an
equivalent hearing in all cases in which
a tardy request for a CDP hearing is
received. It is expected that the IRS will
either send the taxpayer a letter or orally
inform the taxpayer that the CDP
hearing request is untimely and ask if
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the taxpayer wishes to have an
equivalent hearing. If the taxpayer elects
to have an equivalent hearing, the IRS
will treat the CDP hearing request as a
request for an equivalent hearing
without requiring the taxpayer to make
an additional request written request.
Current Q&A–I1 through I5 are
renumbered Q&A–I2 through I6. The
proposed regulations add Q&A–I7 to
§ 301.6320–1(i)(2) to clarify that the
period during which a taxpayer may
obtain an equivalent hearing is not
indefinite. The equivalent hearing
procedure is not provided by statute
but, consistent with the legislative
history of RRA 1998, was adopted in
order to accommodate taxpayers who
failed timely to exercise their right to a
CDP hearing. The equivalent hearing
was meant to occur near the time a CDP
hearing held pursuant to a timely
request would have occurred, because it
was meant to address the same matters
that would have been addressed at a
CDP hearing. The procedure was not
meant to provide a hearing right that
could be exercised months or years after
the circumstances that precipitated the
filing of the NFTL have passed. A
hearing before Appeals at a later time
may be obtained under the Collection
Appeals Program. Therefore, proposed
Q&A–I7 limits to one year the period
during which a taxpayer may request an
equivalent hearing. The period
commences the day after the end of the
five business day period following the
filing of the NFTL, described in section
6320(a)(2).
Because the time for requesting an
equivalent hearing will be limited, the
proposed regulations add new Q&A–I8,
Q&A–I9, Q&A–I10 and Q&A–I11 to
§ 301.6320–1(i)(2) to provide the same
rules governing mailing, delivery and
determination of timeliness that apply
to requests for CDP hearings. Unlike
existing § 301.6320–1(c)(2), A–C6, new
A–I10 does not identify the officials to
whom to send an equivalent hearing
request if the CDP Notice does not
specify where to send the request.
Because the identity and the address of
the person to whom the request should
be sent may change in the future,
taxpayers will be able to obtain more
current information by calling the 1–800
number listed in A–I10. Section
301.6320–1(c)(2), A–C6 also has been
revised in the proposed regulations to
provide that taxpayers should call the
1–800 number to obtain the address to
which the CDP hearing request should
be sent.
The proposed regulations are effective
the date 30 days after final regulations
are published in the Federal Register
with respect to requests for CDP
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hearings or eqivalent hearings made on
or after the date 30 days after final
regulations are published in the Federal
Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these regulations, and because the
regulations do not impose a collection
of information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to
section 7805(f) of the Internal Revenue
Code, this notice of proposed
rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment
on its impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations,
consideration will be given to any
electronic and written comments that
are submitted timely to the IRS. The IRS
and Treasury Department specifically
request comments on the clarity of the
proposed regulations and how they may
be made easier to understand. All
comments will be available for public
inspection and copying.
A public hearing has been scheduled
for January 19, 2006, at 10 a.m. in the
IRS Auditorium, Internal Revenue
Building (7th Floor), 1111 Constitution
Avenue, NW., Washington, DC. All
visitors must present photo
identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts. For
information about having a visitor’s
name placed on the building access list
to attend the hearing, see the FOR
FURTHER INFORMATION CONTACT caption.
An outline of the topics to be
discussed and the time to be devoted to
each topic must be submitted by any
person who wishes to present oral
comments at the hearing. Outlines must
be received by December 29, 2005.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. A period of 10
minutes will be allotted to each person
for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving requests to speak
has passed. Copies of the agenda will be
available free of charge at the hearing.
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Drafting Information
The principal author of these
regulations is Laurence K. Williams,
Office of Associate Chief Counsel,
Procedure and Administration
(Collection, Bankruptcy and
Summonses Division).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
proposed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation
for part 301 continues to read, in part,
as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6320–1 is
proposed to be amended as follows:
1. Paragraph (c)(2) A–C1, Q&A–C6
and A–C7 are revised.
2. Paragraph (d)(2) A–D4 and A–D7
are revised.
3. Paragraph (d)(2) Q&A–D8 is added.
4. Paragraph (d)(3) is added.
5. Paragraph (e)(1) is revised.
6. Paragraph (e)(3) A–E2, A–E6 and
A–E7 are revised.
7. Paragraph (f)(2) A–F5 is revised.
8. Paragraph (f)(2) Q&A–F6 is added.
9. Paragraph (i)(2) Q&A–I1 through
Q&A–I5 are redesignated as Q&A–I2
through Q&A–I6, a new paragraph (i)(2)
Q&A–I1 and new paragraphs Q&A–I7
through Q&A–I11 are added.
10. Paragraph (j) is revised.
§ 301.6320–1 Notice and opportunity for
hearing upon filing of notice of Federal tax
lien.
*
*
*
*
*
(c) * * *
(2) * * *
A–C1. (i) The taxpayer must make a
request in writing for a CDP hearing.
The request for a CDP hearing shall
include the information specified in A–
C1(ii) of this paragraph (c)(2). See A–D7
and A–D8 of paragraph (d)(2).
(ii) The written request for a CDP
hearing must be dated and must include
the following information:
(A) The taxpayer’s name, address,
daytime telephone number (if any), and
taxpayer identification number (SSN or
EIN).
(B) The type of tax involved.
(C) The tax period at issue.
(D) A statement that the taxpayer
requests a hearing with Appeals
concerning the filing of the NFTL.
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(E) The reason or reasons why the
taxpayer disagrees with the filing of the
NFTL.
(F) The signature of the taxpayer or
the taxpayer’s authorized representative.
(iii) The taxpayer must perfect any
timely written request for a CDP hearing
that does not provide the required
information set forth in A–C1(ii) of this
paragraph within a reasonable period of
time after a request from the IRS.
(iv) Taxpayers are encouraged to use
a Form 12153, ‘‘Request for a Collection
Due Process Hearing,’’ in requesting a
CDP hearing so that the request can be
readily identified and forwarded to
Appeals. Taxpayers may obtain a copy
of Form 12153 by contacting the IRS
office that issued the CDP Notice, by
downloading a copy from the IRS
Internet site, https://www.irs.gov/pub/irspdf/f12153.pdf, or by calling, toll-free,
1–800–829–3676.
(v) The taxpayer must affirm any
timely written request for a CDP hearing
which is signed or alleged to have been
signed on the taxpayer’s behalf by the
taxpayer’s spouse or other unauthorized
representative by filing, within a
reasonable period of time after a request
from the IRS, a signed, written
affirmation that the request was
originally submitted on the taxpayer’s
behalf. If the affirmation is not filed
within a reasonable period of time after
a request, the CDP hearing request will
be denied with respect to the nonsigning taxpayer.
*
*
*
*
*
Q–C6. Where must the written request
for a CDP hearing be sent?
A–C6. The written request for a CDP
hearing must be sent, or hand delivered
(if permitted), to the IRS office and
address as directed on the CDP Notice.
If the address of that office does not
appear on the CDP Notice, the taxpayer
should obtain the address of the office
to which the written request should be
sent or hand delivered by calling, tollfree, 1–800–829–1040 and providing the
taxpayer’s identification number (SSN
or TIN).
*
*
*
*
*
A–C7. If the taxpayer does not request
a CDP hearing in writing within the 30day period that commences on the day
after the end of the five business day
notification period, the taxpayer
foregoes the right to a CDP hearing
under section 6320 with respect to the
unpaid tax and tax periods shown on
the CDP Notice. If the request for CDP
hearing is received after the 30-day
period, the taxpayer will be notified of
the untimely request and of the right to
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an equivalent hearing. See paragraph (i)
of this section.
*
*
*
*
*
(d) * * *
(2) * * *
A–D4. Prior involvement by an
Appeals officer or employee includes
participation or involvement in an
Appeals hearing (other than a CDP
hearing held under either section 6320
or section 6330) that the taxpayer may
have had with respect to the tax and tax
period shown on the CDP Notice. Prior
involvement exists only when the
taxpayer, the tax liability and the tax
period at issue in the CDP hearing also
were at issue in the prior non-CDP
hearing or proceeding, and the Appeals
officer or employee actually participated
in the prior hearing or proceeding.
*
*
*
*
*
A–D7. Except as provided in A–D8 of
this paragraph (d)(2), a taxpayer who
presents in the CDP hearing request
relevant, non-frivolous reasons for
disagreement with the NFTL filing will
ordinarily be offered an opportunity for
a face-to-face conference at the Appeals
office closest to taxpayer’s residence. A
business taxpayer will ordinarily be
offered an opportunity for a face-to-face
conference at the Appeals office closest
to the taxpayer’s principal place of
business. If that is not satisfactory to the
taxpayer, the taxpayer will be given an
opportunity for a hearing by telephone
or by correspondence. In all cases, the
Appeals officer or employee will review
the case file, which includes the
taxpayer’s request for a CDP hearing,
any other written communications from
the taxpayer or the taxpayer’s
authorized representative, and any notes
made by Appeals officers or employees
of any oral communications with the
taxpayer or the taxpayer’s authorized
representative. If no face-to-face or
telephonic conference or
correspondence hearing is held, review
of those documents will constitute the
CDP hearing for purposes of section
6320(b).
Q–D8. In what circumstances will a
face-to-face CDP conference not be
granted?
A–D8. A taxpayer is not entitled to a
face-to-face CDP conference at a location
other than as provided in A–D7 of this
paragraph (d)(2) and this A–D8. If all
Appeals officers or employees at the
location provided for in A–D7 of this
paragraph have had prior involvement
with the taxpayer as provided in A–D4
of this paragraph, the taxpayer will not
be offered a face-to-face meeting at that
location, unless the taxpayer elects to
waive the requirement of section
6320(b)(3). The taxpayer will be offered
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18:38 Sep 15, 2005
Jkt 205001
a face-to-face conference at another
Appeals office if Appeals in the exercise
of its discretion would have offered the
taxpayer a face-to-face conference at the
location provided in A–D7. A face-toface CDP conference concerning a
taxpayer’s underlying liability will not
be granted if the request for a hearing or
other taxpayer communication indicates
that the taxpayer wishes only to raise
irrelevant or frivolous issues concerning
that liability. A face-to-face CDP
conference concerning a collection
alternative, such as an installment
agreement or an offer to compromise
liability, will not be granted unless the
alternative would be available to other
taxpayers in similar circumstances. For
example, because the IRS does not
consider offers to compromise from
taxpayers who have not filed required
returns or have not made certain
required deposits of tax, as set forth in
Form 656, ‘‘Offer in Compromise,’’ no
face-to-face conference will be offered to
a taxpayer who wishes to make an offer
to compromise but has not fulfilled
those obligations. A face-to-face
conference need not be granted if the
taxpayer does not provide the required
information set forth in A–C1(ii)(E) of
paragraph (c)(2). See also A–C1(iii) of
paragraph (c)(2).
(3) Examples. The following examples
illustrate the principles of this
paragraph (d):
Example 1. Individual A timely requests a
CDP hearing concerning a NFTL filed with
respect to A’s 1998 income tax liability.
Appeals employee B previously conducted a
CDP hearing regarding a proposed levy for
the 1998 income tax liability assessed against
individual A. Because employee B’s only
prior involvement with individual A’s 1998
income tax liability was in connection with
a section 6330 CDP hearing, employee B may
conduct the CDP hearing under section 6320
involving the NFTL filed for the 1998 income
tax liability.
Example 2. Individual C timely requests a
CDP hearing concerning a NFTL filed with
respect to C’s 1998 income tax liability
assessed against individual C. Appeals
employee D previously conducted a
Collection Appeals Program (CAP) hearing
regarding a NFTL filed with respect to C’s
1998 income tax liability. Because employee
D’s prior involvement with individual C’s
1998 income tax liability was in connection
with a non-CDP hearing, employee D may not
conduct the CDP hearing under section 6320
unless individual C waives the requirement
that the hearing will be conducted by an
Appeals officer or employee who has had no
prior involvement with respect to C’s 1998
income tax liability.
Example 3. Same facts as in Example 2,
except that the prior CAP hearing only
involved individual C’s 1997 income tax
liability and employment tax liabilities for
1998 reported on Form 941. Employee D
would not be considered to have prior
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Frm 00028
Fmt 4702
Sfmt 4702
54685
involvement because the prior CAP hearing
in which she participated did not involve
individual C’s 1998 income tax liability.
Example 4. Appeals employee F is
assigned to a CDP hearing concerning a NFTL
filed with respect to a trust fund recovery
penalty (TFRP) assessed pursuant to section
6672 against individual E. Appeals employee
F participated in a prior CAP hearing
involving individual E’s 1999 income tax
liability, and participated in a CAP hearing
involving the employment taxes of business
entity X, which incurred the employment tax
liability to which the TFRP assessed against
individual E relates. Appeals employee F
would not be considered to have prior
involvement because the prior CAP hearings
in which he participated did not involve the
TFRP assessed against individual E.
Example 5. Appeals employee G is
assigned to a CDP hearing concerning a NFTL
filed with respect to a TFRP assessed
pursuant to section 6672 against individual
H. In preparing for the CDP hearing, Appeals
employee G reviews the Appeals case file
concerning the prior CAP hearing involving
the TFRP assessed pursuant to section 6672
against individual H. Appeals employee G is
not deemed to have participated in the
previous CAP hearing involving the TFRP
assessed against individual H by such
review.
(e) Matters considered at CDP
hearing—(1) In general. Appeals has the
authority to determine the validity,
sufficiency, and timeliness of any CDP
Notice given by the IRS and of any
request for a CDP hearing that is made
by a taxpayer. Prior to issuance of a
determination, Appeals is required to
obtain verification from the IRS office
collecting the tax that the requirements
of any applicable law or administrative
procedure have been met. The taxpayer
may raise any relevant issue relating to
the unpaid tax at the hearing, including
appropriate spousal defenses,
challenges to the appropriateness of the
NFTL filing, and offers of collection
alternatives. The taxpayer also may raise
challenges to the existence or amount of
the underlying liability for any tax
period specified on the CDP Notice if
the taxpayer did not receive a statutory
notice of deficiency for that tax liability
or did not otherwise have an
opportunity to dispute the tax liability.
Finally, the taxpayer may not raise an
issue that was raised and considered at
a previous CDP hearing under section
6330 or in any other previous
administrative or judicial proceeding if
the taxpayer participated meaningfully
in such hearing or proceeding.
Taxpayers will be expected to provide
all relevant information requested by
Appeals, including financial statements,
for its consideration of the facts and
issues involved in the hearing.
*
*
*
*
*
(3) * * *
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16SEP1
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A–E2. A taxpayer is entitled to
challenge the existence or amount of the
underlying liability for any tax period
specified on the CDP Notice if the
taxpayer did not receive a statutory
notice of deficiency for such liability or
did not otherwise have an opportunity
to dispute such liability. Receipt of a
statutory notice of deficiency for this
purpose means receipt in time to
petition the Tax Court for a
redetermination of the deficiency
determined in the notice of deficiency.
An opportunity to dispute the
underlying liability includes a prior
opportunity for a conference with
Appeals that was offered either before or
after the assessment of the liability.
*
*
*
*
*
A–E6. Collection alternatives include,
for example, a proposal to withdraw the
NFTL in circumstances that will
facilitate the collection of the tax
liability, an installment agreement, an
offer to compromise, the posting of a
bond, or the substitution of other assets.
A collection alternative is not available
unless the alternative would be
available to other taxpayers in similar
circumstances. For example, the IRS
does not consider an offer to
compromise made by a taxpayer who, at
the time of the CDP hearing, has not
filed required returns or has not made
certain required deposits of tax, as set
forth in Form 656, ‘‘Offer in
Compromise.’’ The collection
alternative of an offer to compromise
would not be available to such a
taxpayer in a CDP hearing.
*
*
*
*
*
A–E7. The taxpayer may raise
appropriate spousal defenses,
challenges to the appropriateness of the
NFTL filing, and offers of collection
alternatives. The existence or amount of
the underlying liability for any tax
period specified in the CDP Notice may
be challenged only if the taxpayer did
not already have an opportunity to
dispute the tax liability. If the taxpayer
previously received a CDP Notice under
section 6330 with respect to the same
tax and tax period and did not request
a CDP hearing with respect to that
earlier CDP Notice, the taxpayer has
already had an opportunity to dispute
the existence or amount of the
underlying tax liability.
*
*
*
*
*
(f) * * *
(2) * * *
A–F5. In seeking Tax Court or district
court review of a Notice of
Determination, the taxpayer can only
ask the court to consider an issue,
including a challenge to the underlying
tax liability, that was properly raised in
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18:38 Sep 15, 2005
Jkt 205001
the taxpayer’s CDP hearing. An issue is
not properly raised if the taxpayer fails
to request consideration of the issue by
Appeals, or if consideration is requested
but the taxpayer fails to present to
Appeals any evidence with respect to
that issue after being given a reasonable
opportunity to present such evidence.
Q–F6. What is the administrative
record for purposes of court review?
A–F6. The case file, including written
communications and information from
the taxpayer or the taxpayer’s
authorized representative submitted in
connection with the CDP hearing, notes
made by an Appeals officer or employee
of any oral communications with the
taxpayer or the taxpayer’s authorized
representative and memoranda created
by the Appeals officer or employee in
connection with the CDP hearing, and
any other documents or materials relied
upon by the Appeals officer or
employee in making the determination
under section 6330(c)(3), will constitute
the record in any court review of the
Notice of Determination issued by
Appeals.
*
*
*
*
*
(i) * * *
(2) * * *
Q–I1. What must a taxpayer do to
obtain an equivalent hearing?
A–I1. (i) A request for an equivalent
hearing must be made in writing. A
written request in any form that requests
an equivalent hearing will be acceptable
if it includes the information required in
paragraph (ii) of this A–I1.
(ii) The request must be dated and
must include the following information:
(A) The taxpayer’s name, address,
daytime telephone number (if any), and
taxpayer identification number (SSN or
EIN).
(B) The type of tax involved.
(C) The tax period at issue.
(D) A statement that the taxpayer is
requesting an equivalent hearing with
Appeals concerning the filing of the
NFTL.
(E) The reason or reasons why the
taxpayer disagrees with the filing of the
NFTL.
(F) The signature of the taxpayer or
the taxpayer’s authorized representative.
(iii) The taxpayer must perfect any
timely written request for an equivalent
hearing that does not provide the
required information set forth in
paragraph (ii) of this A–I1 within a
reasonable period of time after a request
from the IRS. If the requested
information is not provided within a
reasonable period of time, the taxpayer’s
equivalent hearing request will be
denied.
(iv) The taxpayer must affirm any
timely written request for an equivalent
PO 00000
Frm 00029
Fmt 4702
Sfmt 4702
hearing that is signed or alleged to have
been signed on the taxpayer’s behalf by
the taxpayer’s spouse or other
unauthorized representative, and that
otherwise meets the requirements set
forth in paragraph (ii) of this A–I1, by
the taxpayer’s spouse or any other
representative, by filing, within a
reasonable time after a request from the
IRS, a signed written affirmation that
the request was originally submitted on
the taxpayer’s behalf. If the affirmation
is not filed within a reasonable period
of time, the equivalent hearing request
will be denied with respect to the nonsigning taxpayer.
*
*
*
*
*
Q–I7. When must a taxpayer request
an equivalent hearing with respect to a
CDP Notice issued under section 6320?
A–I7. A taxpayer must submit a
written request for an equivalent
hearing within the one-year period
commencing the day after the end of the
five-business-day period following the
filing of the NFTL. This period is
slightly different from the period for
submitting a written request for an
equivalent hearing with respect to a
CDP Notice issued under section 6330.
For a CDP Notice issued under section
6330, a taxpayer must submit a written
request for an equivalent hearing within
the one-year period commencing the
day after the date of the CDP Notice
issued under section 6330.
Q–I8. How will the timeliness of a
taxpayer’s written request for an
equivalent hearing be determined?
A–I8. The rules and regulations under
section 7502 and section 7503 will
apply to determine the timeliness of the
taxpayer’s request for an equivalent
hearing, if properly transmitted and
addressed as provided in A–I10 of this
paragraph (i)(2).
Q–I9. Is the one-year period within
which a taxpayer must make a request
for an equivalent hearing extended
because the taxpayer resides outside the
United States?
A–I9. No. All taxpayers who want an
equivalent hearing concerning the filing
of the NFTL must request the hearing
within the one-year period commencing
the day after the end of the fivebusiness-day period following the filing
of the NFTL.
Q–I10. Where must the written
request for an equivalent hearing be
sent?
A–I10. The written request for an
equivalent hearing must be sent, or
hand delivered (if permitted), to the IRS
office and address as directed on the
CDP Notice. If the address of the issuing
office does not appear on the CDP
Notice, the taxpayer should obtain the
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address of the office to which the
written request should be sent or hand
delivered by calling, toll-free, 1–800–
829–1040 and providing the taxpayer’s
identification number (SSN or EIN).
Q–I11. What will happen if the
taxpayer does not request an equivalent
hearing in writing within the one-year
period commencing the day after the
end of the five-business-day period
following the filing of the NFTL?
A–I11. If the taxpayer does not
request an equivalent hearing with
Appeals within the one-year period
commencing the day after the end of the
five-business-day period following the
filing of the NFTL, the taxpayer foregoes
the right to an equivalent hearing with
respect to the unpaid tax and tax
periods shown on the CDP Notice. The
taxpayer, however, may seek
reconsideration by the IRS office
collecting the tax, assistance from the
National Taxpayer Advocate, or an
administrative hearing before Appeals
under its Collection Appeals Program or
any successor program.
*
*
*
*
*
(j) Effective date. This section is
applicable 30 days after the date final
regulations are published in the Federal
Register with respect to requests made
for CDP hearings or equivalent hearings
on or after the date 30 days after final
regulations are published in the Federal
Register.
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 05–18469 Filed 9–15–05; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG–150091–02]
RIN 1545–BB97
Miscellaneous Changes to Collection
Due Process Procedures Relating to
Notice and Opportunity for Hearing
Prior to Levy
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
AGENCY:
SUMMARY: This document contains
proposed amendments to the
regulations relating to a taxpayer’s right
to a hearing before or after levy under
section 6330 of the Internal Revenue
Code of 1986. The proposed regulations
make certain clarifying changes in the
VerDate Aug<31>2005
18:38 Sep 15, 2005
Jkt 205001
way collection due process (CDP)
hearings are held and specify the period
during which a taxpayer may request an
equivalent hearing. The proposed
regulations affect taxpayers against
whose property or rights to property the
Internal Revenue Service (IRS) intends
to levy on or after January 19, 1999. This
document also contains a notice of
public hearing on these proposed
regulations.
DATES: Written and electronic comments
must be received by December 15, 2005.
Outlines of topics to be discussed at the
public hearing scheduled for 10 a.m. on
January 19, 2006 must be received by
December 29, 2005.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–150091–02), Room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be handdelivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–150091–02),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
NW., Washington, DC, or sent
electronically, via the IRS Internet site
at https://www.irs.gov/regs or via the
Federal eRulemaking Portal at https://
www.regulations.gov (indicate IRS and
REG–150091–02). The public hearing
will be held in the IRS Auditorium,
Internal Revenue Building (7th Floor),
1111 Constitution Avenue, NW.,
Washington, DC.
FOR FURTHER INFORMATION CONTACT:
Concerning the regulations, call
Laurence K. Williams, 202–622–3600
(not a toll-free number). Concerning
submissions and/or to be placed on the
building access list to attend the
hearing, call Robin Jones, 202–622–7180
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to the Regulations on
Procedure and Administration (26 CFR
part 301) relating to the provision of
notice under section 6330 of the Internal
Revenue Code to taxpayers of a right to
a CDP hearing (CDP Notice) before levy.
Final regulations (TD 8980) were
published on January 18, 2002 in the
Federal Register (67 FR 2549). The final
regulations implemented certain
changes made by section 3401 of the
Internal Revenue Service Restructuring
and Reform Act of 1998 (Pub. L. 105–
206, 112 Stat. 685) (RRA 1998),
including the addition of section 6330
to the Internal Revenue Code. The final
regulations affected taxpayers against
whose property or rights to property the
IRS intends to levy.
PO 00000
Frm 00030
Fmt 4702
Sfmt 4702
54687
Section 3401 of RRA 1998 also added
section 6320 to the Internal Revenue
Code. That statute provides for notice to
taxpayers of a right to a hearing after the
filing of a notice of Federal tax lien
(NFTL). A number of the provisions in
section 6330 concerning the conduct
and judicial review of a CDP hearing are
incorporated by reference in section
6320. On January 18, 2002, final
regulations (TD 8979) under section
6320 were published in the Federal
Register (67 FR 2558) along with the
final regulations under section 6330.
Explanation of Provisions
A taxpayer is entitled to one CDP
hearing with respect to the tax and tax
period covered by a CDP Notice
concerning a levy or a CDP Notice
concerning the filing of a NFTL. The IRS
Office of Appeals (Appeals) has
conducted over 92,000 CDP hearings
and more than 30,000 equivalent
hearings since sections 6320 and 6330
became effective for collection actions
initiated on and after January 19, 1999.
In general, the experience of the past
six years with CDP hearings has
demonstrated that there is a need for
changes to allow Appeals to effectively
and fairly handle the cases of taxpayers
who raise issues of substance. Appeals
has instituted many improvements in its
processing of CDP cases and has
conducted extensive training in an effort
to provide careful, but timely, review of
CDP cases, which currently are filed at
a rate of approximately 2,450 per
month. The proposed regulations, if
adopted as final regulations, will
increase efficiency without
compromising the quality and fairness
of review.
In many CDP cases, significant time is
spent merely identifying the issues.
Although the Form 12153 used to
request a CDP hearing requires a
taxpayer to state a reason or reasons for
disagreeing with the proposed levy,
many taxpayers either do not supply
that information, or raise new issues
during the CDP hearing process not
identified on the hearing request. Delays
result while taxpayers provide new
supporting documentation and Appeals
personnel reconsider prior conclusions
in light of the new information. Cases of
other taxpayers pending in Appeals are
delayed because other work must be
constantly rescheduled.
Cases are also delayed when
taxpayers propose collection
alternatives for which they are not
eligible. The IRS does not consider
offers in compromise or installment
agreements from taxpayers who have
failed to file required returns as of the
date the offer or the proposed
E:\FR\FM\16SEP1.SGM
16SEP1
]]>Agencies
[Federal Register Volume 70, Number 179 (Friday, September 16, 2005)]
[Proposed Rules]
[Pages 54681-54687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18469]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG-150088-02]
RIN 1545-BB96
Miscellaneous Changes to Collection Due Process Procedures
Relating to Notice and Opportunity for Hearing Upon Filing of Notice of
Federal Tax Lien
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed amendments to the regulations
relating to a taxpayer's right to a hearing under section 6320 of the
Internal Revenue Code of 1986 after the filing of a notice of Federal
tax lien (NFTL). The proposed regulations make certain clarifying
changes in the way collection due process (CDP) hearings are held and
specify the period during which a taxpayer may request an equivalent
hearing. The proposed regulations affect taxpayers against whose
property or rights to property the Internal Revenue Service (IRS) files
a NFTL on or after January 19, 1999. This document also contains a
notice of public hearing on these proposed regulations.
DATES: Written and electronic comments must be received by December 15,
2005. Outlines of topics to be discussed at the public hearing
scheduled for 10 a.m. on January 19, 2006 must be received by December
29, 2005.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-150088-02), room
5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
150088-02), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC, or sent electronically, via the IRS
Internet site at https://www.irs.gov/regs or via the Federal eRulemaking
Portal at https://www.regulations.gov (indicate IRS and REG-150088-02).
The public hearing will be held in the IRS Auditorium, Internal Revenue
Building (7th Floor), 1111 Constitution Avenue, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, call
Laurence K. Williams, 202-622-3600 (not a toll-free number); concerning
submissions and/or to be placed on the building access list to attend
the hearing, call Robin Jones, 202-622-7180 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Regulations on
Procedure and Administration (26 CFR part 301) relating to the
provision of notice under section 6320 of the Internal Revenue Code to
taxpayers of a right to a CDP hearing (CDP Notice) after the IRS files
a NFTL. Final regulations (TD 8979) were published on January 18, 2002
in the Federal Register (67 FR 2558). The final regulations implemented
certain changes made by section 3401 of the Internal Revenue Service
Restructuring and Reform Act of 1998 (Pub. L. 105-206, 112 Stat.
685)(RRA 1998), including the addition of section 6320 to the Internal
Revenue Code. The final regulations affected taxpayers against whose
property or rights to property the IRS files a NFTL.
Section 3401 of RRA 1998 also added section 6330 to the Internal
Revenue Code. That statute provides for notice to taxpayers of a right
to a hearing before or, in limited cases, after levy. A number of the
provisions in section 6330 concerning the conduct and judicial review
of a CDP hearing are incorporated by reference in section 6320. On
January 18, 2002, final regulations (TD 8980) under section 6330 were
published in the Federal Register (67 FR 2549) along with the final
regulations under section 6320.
Explanation of Provisions
A taxpayer is entitled to one CDP hearing with respect to the tax
and tax period covered by a CDP Notice concerning a levy or a CDP
Notice concerning the filing of a NFTL. The IRS Office of Appeals
(Appeals) has conducted over 92,000 CDP hearings and more than 30,000
equivalent hearings since sections 6320 and 6330 became effective for
collection actions initiated on and after January 19, 1999.
In general, the experience of the past six years with CDP hearings
has demonstrated that there is a need for changes to allow Appeals to
effectively and fairly handle the cases of taxpayers who raise issues
of substance. Appeals has instituted many improvements in its
processing of CDP cases and has conducted extensive training in an
effort to provide careful, but timely, review of CDP cases, which
currently are filed at a rate of approximately 2,450 per month. The
proposed regulations, if adopted as final regulations, will
[[Page 54682]]
increase efficiency without compromising the quality and fairness of
review.
In many CDP cases, significant time is spent merely identifying the
issues. Although the Form 12153 used to request a CDP hearing requires
a taxpayer to state a reason or reasons for disagreeing with the NFTL
filing, many taxpayers either do not supply that information, or raise
new issues during the CDP hearing process not identified on the hearing
request. Delays result while taxpayers provide new supporting
documentation and Appeals personnel reconsider prior conclusions in
light of the new information. Cases of other taxpayers pending in
Appeals are delayed because other work must be constantly rescheduled.
Cases are also delayed when taxpayers propose collection
alternatives for which they are not eligible. The IRS does not consider
offers in compromise or installment agreements from taxpayers who have
failed to file required returns as of the date the offer or the
proposed installment agreement is submitted. See Publication 594,
``What You Should Know about the IRS Collection Process (Rev. 2-
2004).'' Similarly, the IRS will not consider an offer in compromise
from an in-business taxpayer unless the taxpayer has timely filed all
returns and timely made all Federal tax deposits for two consecutive
quarters. See Form 656, ``Offer in Compromise (Rev. 7-2004).'' The
resources of Appeals are ineffectively utilized arranging and
conducting face-to-face conferences requested by non-compliant
taxpayers whose only complaint is the rejection of an offer to
compromise or installment agreement for which they are not eligible.
Frivolous cases also cause unnecessary delays. During fiscal year
2004, 5.4 percent of the 32,226 CDP and equivalent-hearing cases
Appeals handled involved taxpayers who were non-filers or raised only
frivolous issues. Cases raising frivolous issues, in particular,
consume a disproportionately large amount of time, because Appeals
personnel must often read lengthy, frivolous submissions in search of
any substantive issue buried within. Delays also result when taxpayers
use face-to-face conferences as a venue for frivolous oration and
harassment of Appeals personnel.
The proposed regulations attempt to address these and other
problems that have become apparent during the first six years of CDP
practice. The proposed changes are aimed at creating a more focused
procedure that will allow Appeals to continue to provide careful review
of NFTL filings as the volume of cases increases.
A taxpayer must request a CDP hearing in writing. The current
regulations require that a request for a CDP hearing include the
taxpayer's name, address, and daytime telephone number, and that the
request be dated and signed by either the taxpayer or the taxpayer's
authorized representative. Section 301.6320-1(c)(2), Q&A-C1. A Form
12153, ``Request for a Collection Due Process Hearing,'' is included
with the CDP Notice sent to the taxpayer pursuant to section 6320. The
Form 12153 requests (1) The taxpayer's name, address, daytime telephone
number, and taxpayer identification number (SSN or EIN), (2) the type
of tax involved, (3) the tax period at issue, (4) a statement that the
taxpayer requests a hearing with Appeals concerning the filing of the
NFTL, and (5) the reason or reasons why the taxpayer disagrees with the
NFTL filing. Although taxpayers are encouraged to use a Form 12153 in
requesting a CDP hearing, the current regulations do not require the
use of Form 12153.
Section 301.6320-1(c)(2), A-C1, of the proposed regulations
requires taxpayers to state their reasons for disagreement with the
NFTL filing whether or not a Form 12153 is used to request a CDP
hearing. In addition, a taxpayer who fails to sign a timely CDP hearing
request because the request is made by a spouse or other unauthorized
representative must affirm in writing that the request was originally
submitted on the taxpayer's behalf. Failure to provide the written
affirmation within a reasonable time after a request from Appeals will
result in the denial of a CDP hearing for that taxpayer.
A CDP hearing is to be conducted by an Appeals officer or employee
who has had no ``prior involvement'' with respect to the tax for the
tax periods to be covered by the hearing, unless the taxpayer waives
this requirement. Section 301.6320-1(d)(2), A-D4 of the current
regulations provides that ``prior involvement'' by an Appeals officer
or employee includes participation or involvement in an Appeals hearing
that the taxpayer may have had with respect to the tax and tax period
shown on the CDP Notice, other than a CDP hearing held under either
section 6320 or section 6330. It is important that ``prior
involvement'' be construed in a manner that reasonably protects against
predisposition but at the same time does not disqualify too broad a
range of Appeals personnel. A broad standard of ``prior involvement''
would lead to uncertain application, could result in the
disqualification of an entire Appeals office, many of which have small
staffs, and could make it difficult to conduct the CDP hearing. Section
301.6320-1(d)(2), A-D4 of the proposed regulations provides that prior
involvement exists only when the taxpayer, the tax liability and the
tax period shown on the CDP Notice also were at issue in the prior non-
CDP hearing or proceeding, and the Appeals officer or employee actually
participated in the prior hearing or proceeding. Examples are provided
in Sec. 301.6320-1(d)(3) of the proposed regulations. Section
301.6320-1(d)(2), A-D7, of the proposed regulations clarifies that a
face-to-face conference is merely one aspect of a CDP hearing under
section 6320 and is not by itself the entire CDP hearing.
A-D7 of the proposed regulations also provides that, in all cases,
the Appeals officer or employee will review the taxpayer's request for
a CDP hearing, the case file, other written communications from the
taxpayer, and any notes of oral communications with the taxpayer or the
taxpayer's representative. If no face-to-face or telephonic conference
is held, review of those documents will constitute the CDP hearing for
purposes of section 6320(b).
A-D7 of the proposed regulations further clarifies that when a
business taxpayer is offered an opportunity for a face-to-face
conference it will be held at the Appeals office closest to the
taxpayer's principal place of business. The current regulations have
been misinterpreted by some taxpayers as requiring the IRS to hold a
face-to-face conference at the taxpayer's principal place of business.
Q&A-D8 of the proposed regulations is new. It describes specific
circumstances in which Appeals will not hold a face-to-face conference
with the taxpayer or the taxpayer's representative because a conference
will serve no useful purpose. The experience of Appeals is that
although most taxpayers request face-to-face conferences, they are
sometimes difficult to schedule on a date and at a time that is
convenient for the taxpayer. In some of these cases, taxpayers or their
representatives have used the scheduling of a face-to-face conference
as a tactic to delay the IRS's collection efforts. In other cases,
taxpayers have requested a face-to-face conference merely to raise
frivolous arguments concerning the Federal tax system or to request
collection alternatives for which they do not qualify. Q&A-D8 of the
proposed regulations provides that a face-to-face conference need not
be offered if the taxpayer or the taxpayer's representative raises only
frivolous
[[Page 54683]]
arguments concerning the Federal tax system. See the IRS Internet site,
https://www.irs.gov/pub/irs-utl/friv_tax.pdf, for examples of frivolous
arguments. A face-to-face conference also will not be granted if the
taxpayer proposes collection alternatives that would not be available
to other taxpayers in similar circumstances. A face-to-face conference
need not be granted if the taxpayer does not provide in the written
request for a CDP hearing, as perfected, the required information set
forth in A-C1(ii)(E) of paragraph (c)(2) of the proposed regulations.
In addition, a face-to-face conference will not be held at the
location closest to the taxpayer's residence or principal place of
business if all Appeals officers or employees at that location are
considered to have prior involvement as provided in A-D4. In this case,
the taxpayer will be offered a hearing by telephone or correspondence,
or some combination thereof. The taxpayer may be able to obtain a face-
to-face conference at the Appeals office closest to the taxpayer's
residence or principal place of business under these circumstances if
the taxpayer waives the requirement of section 6320(b)(3) concerning
impartiality of the Appeals officer or employee. Appeals will offer the
taxpayer a face-to-face conference at another Appeals office if in the
exercise of its discretion Appeals would have offered the taxpayer a
face-to-face conference at the original location.
With the foregoing exceptions, it is anticipated that a face-to-
face conference will ordinarily be offered with respect to any relevant
issues or collection alternatives for which the taxpayer qualifies.
Sections 301.6320-1(e)(1) and 301.6320-1(e)(3), A-E2 and A-E7 have
been changed to more closely follow the language of section
6330(c)(2)(B), made applicable to section 6320 by section 6320(c).
These changes are necessary because these regulations have been
misinterpreted as defining the underlying tax liability that may be
considered at the CDP hearing under section 6330(c)(2)(B) to be the tax
liability listed on the CDP Notice. The intent of the existing
regulations, which refer to tax liability on the CDP Notice, is that
taxpayers may only challenge taxes or tax periods listed on the CDP
Notice, not to supply a substantive definition of underlying tax
liability. Section 301.6320-1(e)(3), A-E6 has been amended to clarify
that taxpayers who receive CDP hearings can only qualify for collection
alternatives available generally to taxpayers in similar circumstances.
The experience of the past six years has revealed that many
taxpayers raise an issue with Appeals but fail to furnish any
documentation or evidence with respect to the issue despite being given
a reasonable period to do so. For example, a taxpayer may request an
installment agreement, but when an Appeals officer or employee requests
financial data necessary to determine eligibility for the installment
agreement, the taxpayer may not comply with the request. Or a taxpayer
may dispute liability for a tax period by claiming entitlement to
deductions, but provide no substantiation for the deductions in
response to requests from Appeals. Current Sec. 301.6320-1(f)(2), A-F5
provides that a taxpayer may not seek judicial review of an issue that
he has not raised during the CDP hearing. A-F5 is revised to clarify
that in order to obtain judicial review, a taxpayer must not only bring
the issue to the attention of Appeals but must also submit, if
requested, evidence with respect to that issue. Under revised A-F5, if
the taxpayer does not provide Appeals any evidence with respect to the
issue after being given a reasonable opportunity to submit such
evidence, then he may not ask a court to consider the issue.
There has been some confusion about what documents Appeals should
retain, and what notations the Appeals officer or employee conducting
the hearing should make, in order to provide a judicially reviewable
administrative record. A new Q&A-F6 has been added to specify the
contents of the administrative record required for court review.
The IRS receives a number of tardy requests for CDP hearings. The
changes to Sec. 301.6320-1(i)(2) explain how these requests will be
treated. The proposed amendments to the regulations add a new Q&A-I1 to
Sec. 301.6320-1(i)(2) to explain that a taxpayer must request an
equivalent hearing in writing. A taxpayer may obtain an equivalent
hearing if the 30-day period described in section 6320(a)(3) for
requesting a CDP hearing has expired. Unlike an Appeals determination
in a CDP hearing, the Appeals decision in an equivalent hearing is not
reviewable in court. Under new Q&A-I1, the IRS is not required to treat
a late-filed CDP request as a request for an equivalent hearing.
Section 301.6320-1(c)(2), A-C7 has been amended to require that the
taxpayer be notified of the right to an equivalent hearing in all cases
in which a tardy request for a CDP hearing is received. It is expected
that the IRS will either send the taxpayer a letter or orally inform
the taxpayer that the CDP hearing request is untimely and ask if the
taxpayer wishes to have an equivalent hearing. If the taxpayer elects
to have an equivalent hearing, the IRS will treat the CDP hearing
request as a request for an equivalent hearing without requiring the
taxpayer to make an additional request written request.
Current Q&A-I1 through I5 are renumbered Q&A-I2 through I6. The
proposed regulations add Q&A-I7 to Sec. 301.6320-1(i)(2) to clarify
that the period during which a taxpayer may obtain an equivalent
hearing is not indefinite. The equivalent hearing procedure is not
provided by statute but, consistent with the legislative history of RRA
1998, was adopted in order to accommodate taxpayers who failed timely
to exercise their right to a CDP hearing. The equivalent hearing was
meant to occur near the time a CDP hearing held pursuant to a timely
request would have occurred, because it was meant to address the same
matters that would have been addressed at a CDP hearing. The procedure
was not meant to provide a hearing right that could be exercised months
or years after the circumstances that precipitated the filing of the
NFTL have passed. A hearing before Appeals at a later time may be
obtained under the Collection Appeals Program. Therefore, proposed Q&A-
I7 limits to one year the period during which a taxpayer may request an
equivalent hearing. The period commences the day after the end of the
five business day period following the filing of the NFTL, described in
section 6320(a)(2).
Because the time for requesting an equivalent hearing will be
limited, the proposed regulations add new Q&A-I8, Q&A-I9, Q&A-I10 and
Q&A-I11 to Sec. 301.6320-1(i)(2) to provide the same rules governing
mailing, delivery and determination of timeliness that apply to
requests for CDP hearings. Unlike existing Sec. 301.6320-1(c)(2), A-
C6, new A-I10 does not identify the officials to whom to send an
equivalent hearing request if the CDP Notice does not specify where to
send the request. Because the identity and the address of the person to
whom the request should be sent may change in the future, taxpayers
will be able to obtain more current information by calling the 1-800
number listed in A-I10. Section 301.6320-1(c)(2), A-C6 also has been
revised in the proposed regulations to provide that taxpayers should
call the 1-800 number to obtain the address to which the CDP hearing
request should be sent.
The proposed regulations are effective the date 30 days after final
regulations are published in the Federal Register with respect to
requests for CDP
[[Page 54684]]
hearings or eqivalent hearings made on or after the date 30 days after
final regulations are published in the Federal Register.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in Executive Order
12866. Therefore, a regulatory assessment is not required. It also has
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and because
the regulations do not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking will be submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any electronic and written comments that
are submitted timely to the IRS. The IRS and Treasury Department
specifically request comments on the clarity of the proposed
regulations and how they may be made easier to understand. All comments
will be available for public inspection and copying.
A public hearing has been scheduled for January 19, 2006, at 10
a.m. in the IRS Auditorium, Internal Revenue Building (7th Floor), 1111
Constitution Avenue, NW., Washington, DC. All visitors must present
photo identification to enter the building. Because of access
restrictions, visitors will not be admitted beyond the immediate
entrance area more than 30 minutes before the hearing starts. For
information about having a visitor's name placed on the building access
list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT
caption.
An outline of the topics to be discussed and the time to be devoted
to each topic must be submitted by any person who wishes to present
oral comments at the hearing. Outlines must be received by December 29,
2005.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. A period of
10 minutes will be allotted to each person for making comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving requests to speak has passed. Copies
of the agenda will be available free of charge at the hearing.
Drafting Information
The principal author of these regulations is Laurence K. Williams,
Office of Associate Chief Counsel, Procedure and Administration
(Collection, Bankruptcy and Summonses Division).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 301 is proposed to be amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
Paragraph 1. The authority citation for part 301 continues to read,
in part, as follows:
Authority: 26 U.S.C. 7805 * * *
*Par. 2. Section 301.6320-1 is proposed to be amended as follows:
1. Paragraph (c)(2) A-C1, Q&A-C6 and A-C7 are revised.
2. Paragraph (d)(2) A-D4 and A-D7 are revised.
3. Paragraph (d)(2) Q&A-D8 is added.
4. Paragraph (d)(3) is added.
5. Paragraph (e)(1) is revised.
6. Paragraph (e)(3) A-E2, A-E6 and A-E7 are revised.
7. Paragraph (f)(2) A-F5 is revised.
8. Paragraph (f)(2) Q&A-F6 is added.
9. Paragraph (i)(2) Q&A-I1 through Q&A-I5 are redesignated as Q&A-
I2 through Q&A-I6, a new paragraph (i)(2) Q&A-I1 and new paragraphs
Q&A-I7 through Q&A-I11 are added.
10. Paragraph (j) is revised.
Sec. 301.6320-1 Notice and opportunity for hearing upon filing of
notice of Federal tax lien.
* * * * *
(c) * * *
(2) * * *
A-C1. (i) The taxpayer must make a request in writing for a CDP
hearing. The request for a CDP hearing shall include the information
specified in A-C1(ii) of this paragraph (c)(2). See A-D7 and A-D8 of
paragraph (d)(2).
(ii) The written request for a CDP hearing must be dated and must
include the following information:
(A) The taxpayer's name, address, daytime telephone number (if
any), and taxpayer identification number (SSN or EIN).
(B) The type of tax involved.
(C) The tax period at issue.
(D) A statement that the taxpayer requests a hearing with Appeals
concerning the filing of the NFTL.
(E) The reason or reasons why the taxpayer disagrees with the
filing of the NFTL.
(F) The signature of the taxpayer or the taxpayer's authorized
representative.
(iii) The taxpayer must perfect any timely written request for a
CDP hearing that does not provide the required information set forth in
A-C1(ii) of this paragraph within a reasonable period of time after a
request from the IRS.
(iv) Taxpayers are encouraged to use a Form 12153, ``Request for a
Collection Due Process Hearing,'' in requesting a CDP hearing so that
the request can be readily identified and forwarded to Appeals.
Taxpayers may obtain a copy of Form 12153 by contacting the IRS office
that issued the CDP Notice, by downloading a copy from the IRS Internet
site, https://www.irs.gov/pub/irs-pdf/f12153.pdf, or by calling, toll-
free, 1-800-829-3676.
(v) The taxpayer must affirm any timely written request for a CDP
hearing which is signed or alleged to have been signed on the
taxpayer's behalf by the taxpayer's spouse or other unauthorized
representative by filing, within a reasonable period of time after a
request from the IRS, a signed, written affirmation that the request
was originally submitted on the taxpayer's behalf. If the affirmation
is not filed within a reasonable period of time after a request, the
CDP hearing request will be denied with respect to the non-signing
taxpayer.
* * * * *
Q-C6. Where must the written request for a CDP hearing be sent?
A-C6. The written request for a CDP hearing must be sent, or hand
delivered (if permitted), to the IRS office and address as directed on
the CDP Notice. If the address of that office does not appear on the
CDP Notice, the taxpayer should obtain the address of the office to
which the written request should be sent or hand delivered by calling,
toll-free, 1-800-829-1040 and providing the taxpayer's identification
number (SSN or TIN).
* * * * *
A-C7. If the taxpayer does not request a CDP hearing in writing
within the 30-day period that commences on the day after the end of the
five business day notification period, the taxpayer foregoes the right
to a CDP hearing under section 6320 with respect to the unpaid tax and
tax periods shown on the CDP Notice. If the request for CDP hearing is
received after the 30-day period, the taxpayer will be notified of the
untimely request and of the right to
[[Page 54685]]
an equivalent hearing. See paragraph (i) of this section.
* * * * *
(d) * * *
(2) * * *
A-D4. Prior involvement by an Appeals officer or employee includes
participation or involvement in an Appeals hearing (other than a CDP
hearing held under either section 6320 or section 6330) that the
taxpayer may have had with respect to the tax and tax period shown on
the CDP Notice. Prior involvement exists only when the taxpayer, the
tax liability and the tax period at issue in the CDP hearing also were
at issue in the prior non-CDP hearing or proceeding, and the Appeals
officer or employee actually participated in the prior hearing or
proceeding.
* * * * *
A-D7. Except as provided in A-D8 of this paragraph (d)(2), a
taxpayer who presents in the CDP hearing request relevant, non-
frivolous reasons for disagreement with the NFTL filing will ordinarily
be offered an opportunity for a face-to-face conference at the Appeals
office closest to taxpayer's residence. A business taxpayer will
ordinarily be offered an opportunity for a face-to-face conference at
the Appeals office closest to the taxpayer's principal place of
business. If that is not satisfactory to the taxpayer, the taxpayer
will be given an opportunity for a hearing by telephone or by
correspondence. In all cases, the Appeals officer or employee will
review the case file, which includes the taxpayer's request for a CDP
hearing, any other written communications from the taxpayer or the
taxpayer's authorized representative, and any notes made by Appeals
officers or employees of any oral communications with the taxpayer or
the taxpayer's authorized representative. If no face-to-face or
telephonic conference or correspondence hearing is held, review of
those documents will constitute the CDP hearing for purposes of section
6320(b).
Q-D8. In what circumstances will a face-to-face CDP conference not
be granted?
A-D8. A taxpayer is not entitled to a face-to-face CDP conference
at a location other than as provided in A-D7 of this paragraph (d)(2)
and this A-D8. If all Appeals officers or employees at the location
provided for in A-D7 of this paragraph have had prior involvement with
the taxpayer as provided in A-D4 of this paragraph, the taxpayer will
not be offered a face-to-face meeting at that location, unless the
taxpayer elects to waive the requirement of section 6320(b)(3). The
taxpayer will be offered a face-to-face conference at another Appeals
office if Appeals in the exercise of its discretion would have offered
the taxpayer a face-to-face conference at the location provided in A-
D7. A face-to-face CDP conference concerning a taxpayer's underlying
liability will not be granted if the request for a hearing or other
taxpayer communication indicates that the taxpayer wishes only to raise
irrelevant or frivolous issues concerning that liability. A face-to-
face CDP conference concerning a collection alternative, such as an
installment agreement or an offer to compromise liability, will not be
granted unless the alternative would be available to other taxpayers in
similar circumstances. For example, because the IRS does not consider
offers to compromise from taxpayers who have not filed required returns
or have not made certain required deposits of tax, as set forth in Form
656, ``Offer in Compromise,'' no face-to-face conference will be
offered to a taxpayer who wishes to make an offer to compromise but has
not fulfilled those obligations. A face-to-face conference need not be
granted if the taxpayer does not provide the required information set
forth in A-C1(ii)(E) of paragraph (c)(2). See also A-C1(iii) of
paragraph (c)(2).
(3) Examples. The following examples illustrate the principles of
this paragraph (d):
Example 1. Individual A timely requests a CDP hearing concerning
a NFTL filed with respect to A's 1998 income tax liability. Appeals
employee B previously conducted a CDP hearing regarding a proposed
levy for the 1998 income tax liability assessed against individual
A. Because employee B's only prior involvement with individual A's
1998 income tax liability was in connection with a section 6330 CDP
hearing, employee B may conduct the CDP hearing under section 6320
involving the NFTL filed for the 1998 income tax liability.
Example 2. Individual C timely requests a CDP hearing concerning
a NFTL filed with respect to C's 1998 income tax liability assessed
against individual C. Appeals employee D previously conducted a
Collection Appeals Program (CAP) hearing regarding a NFTL filed with
respect to C's 1998 income tax liability. Because employee D's prior
involvement with individual C's 1998 income tax liability was in
connection with a non-CDP hearing, employee D may not conduct the
CDP hearing under section 6320 unless individual C waives the
requirement that the hearing will be conducted by an Appeals officer
or employee who has had no prior involvement with respect to C's
1998 income tax liability.
Example 3. Same facts as in Example 2, except that the prior CAP
hearing only involved individual C's 1997 income tax liability and
employment tax liabilities for 1998 reported on Form 941. Employee D
would not be considered to have prior involvement because the prior
CAP hearing in which she participated did not involve individual C's
1998 income tax liability.
Example 4. Appeals employee F is assigned to a CDP hearing
concerning a NFTL filed with respect to a trust fund recovery
penalty (TFRP) assessed pursuant to section 6672 against individual
E. Appeals employee F participated in a prior CAP hearing involving
individual E's 1999 income tax liability, and participated in a CAP
hearing involving the employment taxes of business entity X, which
incurred the employment tax liability to which the TFRP assessed
against individual E relates. Appeals employee F would not be
considered to have prior involvement because the prior CAP hearings
in which he participated did not involve the TFRP assessed against
individual E.
Example 5. Appeals employee G is assigned to a CDP hearing
concerning a NFTL filed with respect to a TFRP assessed pursuant to
section 6672 against individual H. In preparing for the CDP hearing,
Appeals employee G reviews the Appeals case file concerning the
prior CAP hearing involving the TFRP assessed pursuant to section
6672 against individual H. Appeals employee G is not deemed to have
participated in the previous CAP hearing involving the TFRP assessed
against individual H by such review.
(e) Matters considered at CDP hearing--(1) In general. Appeals has
the authority to determine the validity, sufficiency, and timeliness of
any CDP Notice given by the IRS and of any request for a CDP hearing
that is made by a taxpayer. Prior to issuance of a determination,
Appeals is required to obtain verification from the IRS office
collecting the tax that the requirements of any applicable law or
administrative procedure have been met. The taxpayer may raise any
relevant issue relating to the unpaid tax at the hearing, including
appropriate spousal defenses, challenges to the appropriateness of the
NFTL filing, and offers of collection alternatives. The taxpayer also
may raise challenges to the existence or amount of the underlying
liability for any tax period specified on the CDP Notice if the
taxpayer did not receive a statutory notice of deficiency for that tax
liability or did not otherwise have an opportunity to dispute the tax
liability. Finally, the taxpayer may not raise an issue that was raised
and considered at a previous CDP hearing under section 6330 or in any
other previous administrative or judicial proceeding if the taxpayer
participated meaningfully in such hearing or proceeding. Taxpayers will
be expected to provide all relevant information requested by Appeals,
including financial statements, for its consideration of the facts and
issues involved in the hearing.
* * * * *
(3) * * *
[[Page 54686]]
A-E2. A taxpayer is entitled to challenge the existence or amount
of the underlying liability for any tax period specified on the CDP
Notice if the taxpayer did not receive a statutory notice of deficiency
for such liability or did not otherwise have an opportunity to dispute
such liability. Receipt of a statutory notice of deficiency for this
purpose means receipt in time to petition the Tax Court for a
redetermination of the deficiency determined in the notice of
deficiency. An opportunity to dispute the underlying liability includes
a prior opportunity for a conference with Appeals that was offered
either before or after the assessment of the liability.
* * * * *
A-E6. Collection alternatives include, for example, a proposal to
withdraw the NFTL in circumstances that will facilitate the collection
of the tax liability, an installment agreement, an offer to compromise,
the posting of a bond, or the substitution of other assets. A
collection alternative is not available unless the alternative would be
available to other taxpayers in similar circumstances. For example, the
IRS does not consider an offer to compromise made by a taxpayer who, at
the time of the CDP hearing, has not filed required returns or has not
made certain required deposits of tax, as set forth in Form 656,
``Offer in Compromise.'' The collection alternative of an offer to
compromise would not be available to such a taxpayer in a CDP hearing.
* * * * *
A-E7. The taxpayer may raise appropriate spousal defenses,
challenges to the appropriateness of the NFTL filing, and offers of
collection alternatives. The existence or amount of the underlying
liability for any tax period specified in the CDP Notice may be
challenged only if the taxpayer did not already have an opportunity to
dispute the tax liability. If the taxpayer previously received a CDP
Notice under section 6330 with respect to the same tax and tax period
and did not request a CDP hearing with respect to that earlier CDP
Notice, the taxpayer has already had an opportunity to dispute the
existence or amount of the underlying tax liability.
* * * * *
(f) * * *
(2) * * *
A-F5. In seeking Tax Court or district court review of a Notice of
Determination, the taxpayer can only ask the court to consider an
issue, including a challenge to the underlying tax liability, that was
properly raised in the taxpayer's CDP hearing. An issue is not properly
raised if the taxpayer fails to request consideration of the issue by
Appeals, or if consideration is requested but the taxpayer fails to
present to Appeals any evidence with respect to that issue after being
given a reasonable opportunity to present such evidence.
Q-F6. What is the administrative record for purposes of court
review?
A-F6. The case file, including written communications and
information from the taxpayer or the taxpayer's authorized
representative submitted in connection with the CDP hearing, notes made
by an Appeals officer or employee of any oral communications with the
taxpayer or the taxpayer's authorized representative and memoranda
created by the Appeals officer or employee in connection with the CDP
hearing, and any other documents or materials relied upon by the
Appeals officer or employee in making the determination under section
6330(c)(3), will constitute the record in any court review of the
Notice of Determination issued by Appeals.
* * * * *
(i) * * *
(2) * * *
Q-I1. What must a taxpayer do to obtain an equivalent hearing?
A-I1. (i) A request for an equivalent hearing must be made in
writing. A written request in any form that requests an equivalent
hearing will be acceptable if it includes the information required in
paragraph (ii) of this A-I1.
(ii) The request must be dated and must include the following
information:
(A) The taxpayer's name, address, daytime telephone number (if
any), and taxpayer identification number (SSN or EIN).
(B) The type of tax involved.
(C) The tax period at issue.
(D) A statement that the taxpayer is requesting an equivalent
hearing with Appeals concerning the filing of the NFTL.
(E) The reason or reasons why the taxpayer disagrees with the
filing of the NFTL.
(F) The signature of the taxpayer or the taxpayer's authorized
representative.
(iii) The taxpayer must perfect any timely written request for an
equivalent hearing that does not provide the required information set
forth in paragraph (ii) of this A-I1 within a reasonable period of time
after a request from the IRS. If the requested information is not
provided within a reasonable period of time, the taxpayer's equivalent
hearing request will be denied.
(iv) The taxpayer must affirm any timely written request for an
equivalent hearing that is signed or alleged to have been signed on the
taxpayer's behalf by the taxpayer's spouse or other unauthorized
representative, and that otherwise meets the requirements set forth in
paragraph (ii) of this A-I1, by the taxpayer's spouse or any other
representative, by filing, within a reasonable time after a request
from the IRS, a signed written affirmation that the request was
originally submitted on the taxpayer's behalf. If the affirmation is
not filed within a reasonable period of time, the equivalent hearing
request will be denied with respect to the non-signing taxpayer.
* * * * *
Q-I7. When must a taxpayer request an equivalent hearing with
respect to a CDP Notice issued under section 6320?
A-I7. A taxpayer must submit a written request for an equivalent
hearing within the one-year period commencing the day after the end of
the five-business-day period following the filing of the NFTL. This
period is slightly different from the period for submitting a written
request for an equivalent hearing with respect to a CDP Notice issued
under section 6330. For a CDP Notice issued under section 6330, a
taxpayer must submit a written request for an equivalent hearing within
the one-year period commencing the day after the date of the CDP Notice
issued under section 6330.
Q-I8. How will the timeliness of a taxpayer's written request for
an equivalent hearing be determined?
A-I8. The rules and regulations under section 7502 and section 7503
will apply to determine the timeliness of the taxpayer's request for an
equivalent hearing, if properly transmitted and addressed as provided
in A-I10 of this paragraph (i)(2).
Q-I9. Is the one-year period within which a taxpayer must make a
request for an equivalent hearing extended because the taxpayer resides
outside the United States?
A-I9. No. All taxpayers who want an equivalent hearing concerning
the filing of the NFTL must request the hearing within the one-year
period commencing the day after the end of the five-business-day period
following the filing of the NFTL.
Q-I10. Where must the written request for an equivalent hearing be
sent?
A-I10. The written request for an equivalent hearing must be sent,
or hand delivered (if permitted), to the IRS office and address as
directed on the CDP Notice. If the address of the issuing office does
not appear on the CDP Notice, the taxpayer should obtain the
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address of the office to which the written request should be sent or
hand delivered by calling, toll-free, 1-800-829-1040 and providing the
taxpayer's identification number (SSN or EIN).
Q-I11. What will happen if the taxpayer does not request an
equivalent hearing in writing within the one-year period commencing the
day after the end of the five-business-day period following the filing
of the NFTL?
A-I11. If the taxpayer does not request an equivalent hearing with
Appeals within the one-year period commencing the day after the end of
the five-business-day period following the filing of the NFTL, the
taxpayer foregoes the right to an equivalent hearing with respect to
the unpaid tax and tax periods shown on the CDP Notice. The taxpayer,
however, may seek reconsideration by the IRS office collecting the tax,
assistance from the National Taxpayer Advocate, or an administrative
hearing before Appeals under its Collection Appeals Program or any
successor program.
* * * * *
(j) Effective date. This section is applicable 30 days after the
date final regulations are published in the Federal Register with
respect to requests made for CDP hearings or equivalent hearings on or
after the date 30 days after final regulations are published in the
Federal Register.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 05-18469 Filed 9-15-05; 8:45 am]
BILLING CODE 4830-01-P
