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Collection Appeals Programs Overview
This Internal Revenue Manual provides instructions for Settlement Officers, Appeals Officers, Appeals Account Resolution Specialists, and Appeals Processing Service (APS) employees working Collection Appeals Program (CAP) and Jeopardy Levy cases.
Part 5 (Collection Process) of the IRM and the Internal Revenue Code are the primary authorities for the legal and procedural requirements that Appeals must follow in making determinations on CAP and jeopardy levy cases.
Administrative and Legislative History
In 1996, the Service implemented a Collection Appeals Program (CAP). This program provides an administrative appeal for certain collection actions. The appealable actions were initially limited to seizures, levies, and liens.
On January 1, 1997, the appeal of terminated installment agreements was added to the program. This installment agreement appeal provision was added by the Taxpayer Bill of Rights 2, enacted July 30, 1996.
The IRS Restructuring and Reform Act of 1998 (RRA 98) provides taxpayers the right to appeal the rejection of installment agreements. That appeal has been added to the CAP procedures.
However, there are some differences in the CAP procedures for appealing rejections or terminations of installment agreement and appealing cases involving liens, levies, and seizures.
RRA 98 expands taxpayer rights to allow a “hearing” under Collection Due Process (CDP) after a Notice of Federal Tax Lien has been filed and before a levy may be made (jeopardy levies and levies on state income tax refunds are appealable after levy).
The taxpayer has the right to go to court on Appeals’ determinations under CDP but not under CAP.
CAP is available to taxpayers or third parties in a wide range of situations. Collection Appeals Program. CAP is also available where the Collection Due Process (CDP), Equivalent Hearing (EH), or Retained Jurisdiction (RJ) right is not available (due to lapse of time or previous exercising of this one-time right for each tax period).
Taxpayers who file a CAP request may also be entitled to, and file for, a Collection Due Process, Equivalent, or Retained Jurisdiction hearing, if a CDP notice was issued. See IRM 8.22 on Retained Jurisdiction. Determine which of these options is most beneficial for each taxpayer based on their indicated interests.
If both a CDP and a CAP were requested by the taxpayer and the taxpayer chooses CAP, secure a withdrawal from the taxpayer for the CDP hearing, to ensure that the taxpayer understands what rights are given up by withdrawing the CDP right. If the taxpayer will not sign a withdrawal or does not seem sure which right to exercise, the taxpayer should be given the CDP hearing. The details of the appeal rights discussion should be clearly documented by the Appeals or IRS employee who ascertains which appeals right the taxpayer wishes to exercise.
Under CAP:
Appeals’ administrative decision is final.
Quicker response due to the 5 day turnaround goal.
The review is for appropriateness of the action proposed or taken based on law, regulations, policy and procedures after considering all of the relevant facts and circumstances.
Under CDP:
Appeals’ determination may be appealed in court.
Appeals
•verifies that legal and procedural requirements have been met,
•explores collection alternatives or challenges to the liability, and
•balances the proposed collection action with taxpayer’s legitimate concern of intrusiveness.
Appeals retains jurisdiction over its determinations.
Collection Appeals Program (CAP)
The following publications inform taxpayers about the CAP program:
Publication 594, The IRS Collection Process
Publication 1660, Collection Appeal Rights
A taxpayer, or a third party whose property is subject to a collection action, may appeal the following actions under CAP:
Levy or seizure action that has been or will be taken.
A NFTL that will be or has been filed.
The filing of a notice of lien against an alter-ego or nominee’s property.
Denials of requests to issue lien certificates, such as subordination, withdrawal, discharge or non-attachment.
Rejected, proposed for termination or terminated installment agreements.
Disallowance of taxpayer’s request to return levied property under IRC 6343(d).
Disallowance of property owner’s claim for return of property under IRC 6343.
A taxpayer may appeal in CAP:
A levy or seizure on each asset or even the same asset previously levied if a newly discovered legal defect is the issue. The reason for this is that each levied or to be levied asset may have different issues. For example, a bank account in a different bank than previously levied on may actually be the asset of the child of the taxpayer but the taxpayer’s SSN is on the account. Subsequent levies on the same asset, e.g., the same bank account, are not entitled to another CAP appeal unless there is a legal issue on the subsequent levy.
A NFTL filed in each subsequent location.
Each rejection or termination of an installment agreement.
Appeals has a goal to complete CAP cases as soon as possible with the Appeals technical employee normally resolving the CAP within 5 business days from the date the case is assigned to them.
Lien withdrawals or discharges, installment agreement, seizure, and claim issues may be quite complicated or require verification and will generally take longer than 5 business days to resolve. These cases should normally be resolved within 15 business days.
Third parties may appeal an IRC 6325(b)(4)”right of substitution of value” discharge. Under IRC 7426(a)(4) however, the third party has only 120 days after the discharge to file an action in federal district court challenging the Service’s determination of the government’s lien interest.
Before a taxpayer requests a CAP appeal, he or she must discuss the problem with the Collection manager. Taxpayers or representatives who make themselves unavailable to the manager for the mandatory discussion will not be entitled to a CAP appeal unless it is apparent the IRS manager did not offer a “reasonable” opportunity for such discussion to occur.
Note:
The discussion with the group manager on proposed termination, terminated or rejected installment agreements is not mandatory due to statutory right to appeal these actions. See IRC 7122(e)(2).
CAP cases should only be closed on ACDS as a premature referral, cc 20, in the following instances:
When the taxpayer appealed before entitlement to a CAP hearing. IRM 8.22 – Collection Due Process.
The taxpayer or the representative did not have the mandatory meeting with the manager (exception is installment agreement CAP requests).
CAP requests with excluded issues. IRM 8.22 – Collection Due Process.
The CAP appeal is not timely. The appeal was submitted later than allowed under the Collection Appeals Program time frames. For time frames for filing a CAP appeal for installment agreements, see IRM 8.24.1.2.3(6). For other Field Collection CAP appeals see IRM 8.24.1.2.4(3). Time frames do not apply to non installment agreement ACS and Customer Service CAP cases as the CAP request is made prior to the managerial conference.
By policy, collection action is suspended while the case is in Appeals for lien, levy, and seizure CAP appeals. The Collection function may continue enforcement action, however, if it believes withholding the action would put collection of the tax liability at risk. Examples:
Evidence that the taxpayer is dissipating assets.
Pyramiding additional tax liabilities, including unpaid Federal Tax Deposits (FTD) and delinquent tax returns.
Appeals should be notified immediately if Collection determines that enforcement should continue. The ex parte rules set forth in Rev. Proc. 2000–43 must be followed by both Collection and Appeals employees.
For installment agreement rejections and terminations, levy action is prohibited by statute. See IRC 6331(k)(2).
Note:
The prohibition of levy does not apply if the taxpayer waives the levy suspension. Levy prohibition also does not apply on a proposed installment agreement if the installment agreement is requested solely to delay collection.
