Administrative Appeals Lawyer in Fairfax, VA
In addition to the Collection Due Process Hearing system discussed above, there are many other ways to contest IRS actions. Most notably, the IRS has an extensive appeals system for a taxpayer who disagrees with the results of an audit of his or her tax return. It is also possible to file appeals contesting penalties, seeking the abatement of interest, arguing against the assertion of the Trust Fund Recovery Penalty, or objecting to the Service’s denial of a refund claim. We can represent you in all kinds of IRS appeals proceedings, and have done so for many other clients over the years.
Collection Appeals Program
The Collection Appeals Program (or CAP) gives taxpayers the right to appeal a variety of collection actions, including liens, levies, seizures, and the threatened termination of installment agreements. Though useful within its limits, the CAP doesn’t cover certain important and common sources of conflict with the Collection Division. Specifically, it doesn’t cover the Trust Fund Recovery Penalty, penalty abatements, or the rejection of an offer in compromise.
Before a taxpayer can have a CAP hearing, he must first discuss with the Revenue Officer’s manager. Often the manager will simply back up his Revenue Officer, but knowing the rules and approaching the manager in a calm and professional manner can sometimes yield positive results. You need to be prepared to present the facts in a brief, clear and coherent manner. And most importantly, you must be prepared to suggest and defend a reasonable and appropriate alternative to the protested action.
The CAP process is initiated by filing a Form 9423, “Collection Appeal Request.” Collection action will usually be suspended while the CAP Request is being evaluated, but only if the Form 9423 is filed within two days of the manager conference. Appeals Officers are expected to close CAP cases within five business days. They therefore try to hold a conference within two days of receipt of the case. Upon making the decision, the Appeals Officer will inform the Collection Division and the taxpayer, and enforcement action may resume after notification of the decision if Appeals has sustained the Collection Division’s position.
Application for Taxpayer Assistance Order
Another parallel track for contesting IRS actions is an “Application for Taxpayer Assistance Order to Relieve Hardship” or “ATAO” (Form 911). The ATAO is filed with the Office of the Taxpayer Advocate (formerly called the Problem Resolution Office). The Office of the Taxpayer Advocate has the power to halt adverse collection actions, even if only temporarily so that other procedures can be pursued.
The Office of the Taxpayer Advocate, by issuing a Taxpayer Assistance Order, can accomplish great things on behalf of a beleaguered taxpayer. Specifically, a TAO can be issued to relieve “a significant hardship as a result of the manner in which the Internal Revenue laws are being administered.” What constitutes a significant hardship is now specified by statute:
- an immediate threat of adverse action;
- a delay of more than thirty days in resolving taxpayer account problems;
- the incurring of significant costs (including fees for representation); or
- irreparable injury to or long-term adverse impact on the taxpayer.
In applying these factors, the Taxpayer Advocate is required to construe them “in the manner most favorable to the taxpayer.” The following are some of the actions which may be ordered by a TAO:
- Release levies, and bank or third party levies prior to payout; and, personal property seizures prior to sale;
- Stop or postpone IRS actions that deal with receiverships and bankruptcies;
- Stop or postpone IRS actions that deal with the statute of limitations for collection or assessment;
- Stop or postpone actions relating to the collection of taxes; or,
- Suspend any other provisions of law administered by the IRS.
One of the benefits of the ATAO procedure is that the IRS must respond quickly. The Internal Revenue Manual provides that the Taxpayer Advocate will generally make a determination within two days of receipt of the hardship verification. The Collection Division must suspend all enforcement actions until a final decision on relieving the hardship is made.
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Enhanced Opportunities to Appeal Collection Actions, published by the Maryland Society of Accountants in “The Freestate Accountant” as part of Mr. Haynes’ series on “Dealing with the IRS Collection Division.”