What is the IRS Collection Appeals Program?

The IRS offers various levels of appeals to taxpayers with respect to a potential balance due. Additionally, taxpayers have the right to exercise a set of appeal rights regarding IRS enforcement actions - both prior to and after an action has been taken.

The two main appeal provisions of the IRS are Collection Due Process and the Collection Appeals Program. This article will focus on the Collection Appeals Program (CAP).

Most IRS actions relating to the collection of a tax balance can be appealed through the CAP process. Taxpayers are entitled to request CAP for the following actions:

A Notice of Federal Tax Lien has been issued

The Notice of Federal Tax Lien is a legal claim to a taxpayer's property as security or payment for an unpaid tax debt. A Notice of Federal Tax Lien may be filed only after the IRS assesses a balance and has provided notice and demand for payment, which has now gone unheeded.

By IRS definition, the lien publicly notifies creditors that the IRS has a claim against all of a taxpayer's property, including property acquired after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.

A Notice of Levy or Notice of Seizure has been served

By law, after the IRS provides written warning and opportunity for a taxpayer to voluntarily address their tax balance, the IRS may issue a levy on a taxpayer's wages, salary or other income. The IRS can also reach funds in bank accounts and credit unions.

Seizures are made as well, typically by Revenue Officers with respect to large tax balances when a taxpayer has significant assets to pay off or pay down a tax balance.

If you are requesting a CAP appeal after you receive a seizure notice, you must appeal to the Collection Manager within 10 business days after the Notice of Seizure is provided to you or left at your home or business.

Denial or termination of an Installment Agreement

At times, the IRS may deny a taxpayer an installment agreement. If a taxpayer makes a request for a monthly payment agreement for a specific amount, the IRS may hold this request in abeyance pending some other action that the taxpayer must first do in order to be eligible for an installment agreement.

An example of this may be if a taxpayer has unfiled tax returns that must legally be secured in order to be eligible for a repayment plan. If a taxpayer fails to file or refuses to do so, then the IRS will formally deny their request for the installment agreement. A set of appeal rights accompanies this denial, which then can be exercised through the CAP process.

The IRS may also terminate an existing installment agreement because a taxpayer filed another tax return with a balance that was unpaid or because they have missed their payments. This too can be appealed through CAP.

Timeframe to request CAP

If your only collection contact has been a notice or telephone call from the IRS, the first step in the CAP appeal is to request to speak to a collection supervisor. Explain your situation competently and reasonably. Do not engage the supervisor in an argument or view this as an opportunity to use the manager as a sounding board for frivolous tax squabbles. Be prepared to offer a solution.

If the manager concurs with the IRS action, then request that the case be elevated to the Office of Appeals. This can be an oral request, or Form 9423 Collection Appeal Rights may be used. If your disagreement is with an action or proposed action taken by an IRS Revenue Officer, you will need to use the Form 9423.

Per the instructions on the 9423, the IRS will generally stop the collection action(s) you disagree with until your appeal is settled, unless they have reason to believe that collection of the amount owed is at risk.

Once the Appeals Officer makes a decision on your case, that decision is binding on both you and the IRS. This means that both you and the IRS are required to accept the decision and live up to its terms.

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