# Collection Due Process Deskbook

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae1cb2dbd1ddbc21b

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

Collection Due Process Deskbook
Contents
CHAPTER ONE – INTRODUCTION ...................................................................................................................... 3
A. PURPOSE 3
B. STATUTORY PROVISIONS
C. REGULATORY PROVISIONS
D. TAX COURT RULES 4
E. MANUAL PROVISIONS

3
4
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CHAPTER TWO – CDP NOTICES AND THE RIGHT TO A CDP HEARING ................................................. 5
A. NOTICE OF FEDERAL TAX LIEN FILING AND RIGHT TO HEARING - SECTION 6320
6
B. NOTICE OF INTENT TO LEVY AND RIGHT TO HEARING - SECTION 6330
6
C. EXCEPTIONS TO PRE-LEVY NOTICE AND OPPORTUNITY FOR A HEARING
D. NOTICE ISSUANCE 7
8
E. NOMINEES AND OTHER THIRD PARTIES
F. GENERAL PARTNERS IN PARTNERSHIPS 8
G. OWNERS OF SINGLE-MEMBER LLCS 9

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CHAPTER THREE – REQUESTING A HEARING AND THE EFFECT OF REQUESTING A HEARING .5
A. HEARING REQUESTS 9
1. One hearing opportunity per tax and period 9
2. Procedures for requesting a CDP hearing 10
3. Equivalent hearing
11
12
B. EFFECT OF REQUESTION A CDP HEARING
1. Statute of limitations
12
2. Levy action and injunctive relief 13
3. Permitted collection actions
13
CHAPTER FOUR – THE CDP HEARING ........................................................................................................... 13
A. CDP HEARINGS ARE INFORMAL
13
B. CONCLUDING THE HEARING AND SUBMISSION DEADLINES
C. FACE-TO-FACE CONFERENCE NOT REQUIRED 15
D. WHEN FACE-TO-FACE CONFERENCE IS NOT OFFERED 16
E. RECORDING OF CDP HEARINGS UNDER SECTION 7521(A)(1)
F. IMPARTIAL APPEALS OFFICER OR EMPLOYEE 17
G. PROHIBITION OF EX PARTE COMMUNICATIONS 19

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CHAPTER FIVE – ISSUES CONSIDERED AT THE CDP HEARING ............................................................. 21
A. SECTION 6330(C)(1) VERIFICATION 21
1. Computer transcripts
22
2. Verifying the proper issuance of notices of deficiency 23
a. Generally
23
b. Proving notice of deficiency was issued

24

B. RELEVANT ISSUES UNDER SECTION 6330(C)(2)(A)
1. Appropriate spousal defenses
26
2. Challenges to appropriateness of collection action

26
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a. Collection action not appropriate if levy causes economic hardship 27
b. Taxes discharged in bankruptcy
27
c. Criminal restitution cases 28

3. Collection alternatives generally
4. Offer-in-Compromise
31

28

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a. Doubt as to liability offer-in-compromise
32
b. Doubt as to collectability offer-in-compromise 32
c. Effective tax administration offer-in-compromise
d. Terminated offer-in-compromise
34

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C. SECTION 6330(C)(2)(B) LIABILITY CHALLENGES
35
1. Self-reported taxes
36
2. Taxpayer must raise issues at administrative hearing 37
3. Receipt of a statutory notice of deficiency 37
39
4. Other opportunity to dispute liability
a. Appeals hearing 39
40
b. Prior CDP Notice
c. Audit reconsideration
41
d. Waiver of receipt of notice of deficiency
e. Bankruptcy proceedings 41
41
f. District court cases
g. TEFRA proceedings
41

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D. THE BALANCING ANALYSIS OF SECTION 6330(C)(3)(C) 42
E. SECTION 6330(C)(4) 42
43
F. CONSIDERATION OF PRECLUDED ISSUES BY APPEALS
G. SEIZURE AND SALE ISSUE IN POST-LEVY CDP PROCEEDING

43

CHAPTER SIX – DETERMINATION BY APPEALS.......................................................................................... 44
A. NOTICE OF DETERMINATION 44
45
B. RETAINED JURISDICTION
CHAPTER SEVEN – JUDICIAL REVIEW........................................................................................................... 45
A. SUBJECT MATTER JURISDICTION
45
1. Overpayment jurisdiction 46
2 Jursidiction over non-CDP years
47
3. Jurisdiction over nominee and wrongful levy issues 48
4. Taxpayer precluded from raising issues not raised during CDP hearing 48
48
B. NOTICE OF DETERMINATION REQUIRED
C. TIMELY PETITION 49
50
D. STANDARD AND SCOPE OF REVIEW
1. Abuse of discretion standard of review
51
2. Abuse of discretion scope of review 53
3. De novo standard and scope of review
56
4. Standard of review for verification, statute of limitations and application of payment issues
5. Determinations under section 6015 57

56

CHAPTER EIGHT – EFFECT OF BANKRUPTCY ON CDP ............................................................................58
CHAPTER NINE – CDP LITIGATION IN TAX COURT ...................................................................................59
59
A. SMALL CASE STATUS
B. ISSUES CONSIDERED BY TAX COURT
62
C. DISMISSAL FOR MOOTNESS
62
D. DISMISSAL FOR LACK OF JURISDICTION 62
62
E. VOLUNTARY DISMISSALS
F. REMAND 62
64
G. SUMMARY JUDGMENT
64
H. SECTION 6673(A)(1) PENALTIES
CHAPTER 10 – APPELLATE LITIGATION ....................................................................................................... 64
A. VENUE FOR APPEAL 64
B. STANDARD OF REVIEW

65

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Chapter One – Introduction
A. Purpose
This deskbook provides a summary of Collection Due Process (CDP) law current
through July 31, 2014, as a research tool for Chief Counsel. This deskbook focuses on
the case law interpreting sections 6320 and 6330. It includes the positions of Chief
Counsel that are set forth in Actions on Decision and Chief Counsel Notices.
This deskbook is not binding legal authority and should not be used or cited as
precedent. It is not a statement of the position of the Office of Chief Counsel on
the statutes, regulations and cases cited therein. Procedural guidance for CDP
cases can be found in Part 35 of the CCDM and in the Chief Counsel Notices
accessible through the website of the Office of Chief Counsel. This deskbook
does not provide all relevant case citations for any particular point of law but is
intended to be a starting point for research. The attorneys in Branches 3 and 4 of
Procedure and Administration are available to assist you when questions arise in
particular cases.
B. Statutory Provisions
Sections 6320 and 6330 are a codification of section 3401, the Internal Revenue
Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L. No. 105-206, 112
Stat. 685 (1998). The CDP provisions became effective January 19, 1999. The
Congressional report explaining the final version of sections 6320 and 6330 is H.R. REP.
NO. 105-599, at 263-267 (1998) (Conf. Rep.).
On December 6, 2006, Congress passed the Tax Relief and Health Care Act of 2006
(TRHCA), Pub. L. 109-432, 120 Stat. 2922 (2006). Section 407 of TRHCA made
revisions to sections 6320, 6330 and 6702 to help the Service combat the problems
associated with the submission of frivolous documents. These provisions provide that
the Service may disregard frivolous CDP hearing requests and may impose a penalty
on such requests.
On May 25, 2007, Congress passed the Small Business and Work Opportunity Act of
2007, Pub. L. 110-28, Title VIII, 121 Stat. 200 (2007). Section 8243 of this act included
an amendment to section 6330(f). Generally, this amendment provides that the Service
may levy to collect certain employment taxes without providing pre-levy CDP rights, if
the taxpayer (or taxpayer’s predecessor) has requested a CDP levy hearing with
respect to unpaid employment taxes arising in the 2-year period before the beginning of
the taxable period with respect to which the levy is served. The taxpayer will instead
receive a post-levy CDP hearing. The amendment is effective with respect to levies
served on or after September 22, 2007.
On September 27, 2010, the Small Business Jobs Act of 2010 was enacted. Section
2104 of the Act amends section 6330(f) to provide that the Service may levy on a

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Federal contractor without providing pre-levy CDP rights. The Federal contractor will
instead receive a post-levy CDP hearing. This applies to levies issued after the date of
enactment.
C. Regulatory Provisions
Final regulations became effective January 18, 2002, and apply to notices of lien and
levies issued on or after January 19, 1999. The Treasury Regulations implementing
sections 6320 and 6330 are at Treas. Reg. §§ 301.6320-1 and 301.6330-1 (previously
issued by Treasury Decisions 8979 and 8980, respectively, on January 17, 2002). The
regulations are written primarily in a question and answer format. Amendments to the
final regulations became effective November 16, 2006, and apply to requests for CDP
or equivalent hearings made on or after November 16, 2006. See Treasury Decisions
9290 and 9291, published at 71 F.R. 60835 (Oct. 17, 2006) and 71 F.R. 60827 (Oct. 17,
2006).
The current regulations do not reflect the 2006, 2007 and 2010 amendments to sections
6320 and 6330.
D. Tax Court Rules
Rules 330 through 334 of Title XXXII of the Tax Court Rules of Practice and Procedure,
apply to petitions brought under sections 6320 and 6330.
E. Manual Provisions
The Internal Revenue Manual (IRM) provisions addressing sections 6320 and 6330 are
at IRM sections 5.1.9 (Collection Appeal Rights), 5.19.8 (same), and 8.22 (Collection
Due Process).
The Chief Counsel Directives Manual (CCDM) provisions addressing the litigation of
CDP cases are at:
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Issues requiring P&A review: Exhs. 31.1.1-1 and 35.11.1-1 (identical)
Small tax case procedures: 35.1.3.2.1
Initial review of CDP cases: 35.2.1.1.11
Answers in Collection Due Process (CDP) Cases under Sections 6320 and 6330:
35.2.2.13
Motions in Collection Due Process (CDP) Cases: 35.3.23
Discovery in Collection Due Process (CDP) Cases: 35.4.3.8
Closing Collection Due Process (CDP) cases: 35.9.3.6
Settlement of CDP case where DOJ jurisdiction over tax years: 35.5.3.5.2
Trial in Collection Due Process (CDP) Cases: 35.6.2.18
Stipulation of Facts and Submission of Administrative Record in Collection Due
Process (CDP) Cases: 35.4.7.9

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Stipulated Decision Documents in Collection Due Process (CDP) Cases:
35.8.6.4
Appeal bond: 36.2.6.2.1.2
Venue on Appeal: 36.2.5.8
Procedures for Getting CDP Cases Closed in the Office of Appeals After Tax
Court Decision is Final: 36.2.6.2.5.5

Sample Documents:
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Exhs. 35.11.1-214 through 220—stipulated decision documents in CDP
cases
Exh. 35.11.1-223—motion to dismiss for lack of jurisdiction in CDP cases
where there is no CDP notice of determination
Exh. 35.11.1-224—motion to dismiss for lack of jurisdiction in CDP cases
where the petition includes periods not on the CDP notice of determination
Exh. 35.11.1-225—motion to dismiss for lack of jurisdiction in CDP cases
where there was no valid CDP notice
Exh. 35.11.1-226—motion to dismiss for lack of jurisdiction in CDP cases
where the petition was late-filed
Exh. 35.11.1-222—motion to dismiss on grounds of mootness in CDP cases
Exh. 35.11.1-221—motion to change caption in CDP cases
Exh. 35.11.1-172—motion to remove small tax designation in CDP cases
Exh. 35.11.1-213—motion to remand in CDP cases
Exh. 35.11.1-227—remand memorandum to Appeals in CDP cases
Exh. 35.11.1-231—motion to permit levy in CDP cases
Exh. 35.11.1-229—motion for summary judgment on abuse of discretion
issues in CDP cases
Exh. 35.11.1-228—motion for summary judgment on liability issues in CDP
cases
Exh. 35.11.1-230—declaration used with motion for summary judgment in
CDP cases
Exh. 35.11.1-212—stipulation of facts attaching administrative record in CDP
cases
Exh. 35.11.1-232—motion in limine in CDP cases

Chapter Two – CDP Notices and the Right to a CDP Hearing
A. Notice of Federal Tax Lien Filing and Right to Hearing - Section 6320
Prior to January 19, 1999, there was no requirement in the Code that the Service notify
the taxpayer, or provide a hearing, when a Notice of Federal Tax Lien (NFTL) was filed
against that taxpayer’s property. RRA 1998, section 3401 added section 6320 to the
Code, which requires the Service to provide written notification (CDP notice) to the
taxpayer of the NFTL and of that taxpayer’s right to a CDP hearing not more than five
business days after the filing of the first NFTL for a specific tax period. The right

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provided by section 6320 is a right to notice and hearing after the NFTL is filed. In
practice, this notification is given by Letter 3172 - Notice of Federal Tax Lien Filing and
Your Right to a Hearing under I.R.C. § 6320.
B. Notice of Intent to Levy and Right to Hearing - Section 6330
Prior to January 19, 1999, taxpayers had a statutory right to a notice of intent to levy
prior to levy under section 6331(d) (requiring that the Service provide the taxpayer with
a notice of intent to levy 30 days before levy), but no statutory right to a hearing. RRA
1998, section 3401 added section 6330 to the Code, which requires the Service (except
in the case of jeopardy levies, levies on State income tax refunds, disqualified
employment tax levies, or levies on Federal contractors) to provide written notification
(CDP notice) of its intent to levy on any property or right to property of any taxpayer at
least 30 days prior to the levy and inform the taxpayer of the right to a CDP hearing. In
practice, this notification is given by either Letter 1058 - Final Notice, Notice of Intent to
Levy and Notice of Your Right to a Hearing, or LT 11 - Final Notice, Notice of Intent to
Levy and Notice of Your Right to a Hearing. The Letter 1058 is issued by field
collection, in cases assigned to a Revenue Officer. The LT-11 is the culminating notice
in a series of collection notices issued by the Automated Collection System (ACS).
Most delinquent tax accounts are handled by ACS. Cases meeting certain dollar criteria
are handled by field collection.
In enacting section 6330, Congress did not eliminate the section 6331(d) notice
requirement. A taxpayer may be given a non-CDP notice of intent to levy under section
6331(d) (referred to on literal transcripts or Forms 4340 as the “statutory” notice of intent
to levy) prior to being given a CDP notice of intent to levy and right to a hearing under
section 6330 (referred to as the “final” notice of intent to levy). Or the notices could be
combined. The section 6331(d) notice must be given prior to levies that qualify as
exceptions to the pre-levy hearing requirement under section 6330(f). However, the
section 6331(d) notice does not give the taxpayer a right to a CDP hearing.
The taxpayer has the right to no more than two CDP notices, and two hearings, for
every taxable period: a section 6320 notice and hearing after the filing of a NFTL, and a
section 6330 notice and hearing prior to levy (or after levy in the case of jeopardy levies,
levies on state tax refunds, disqualified employment tax levies, and levies on Federal
contractors). The Service may combine hearings for NFTLs and levies as appropriate.
C. Exceptions to Pre-Levy Notice and Opportunity for a Hearing
Section 6330(f) provides four exceptions to the requirement that the taxpayer be given
an opportunity for a hearing before levy: jeopardy levies, levies on state income tax
refunds, disqualified employment tax levies, and levies on Federal contractors. Instead,
the taxpayer shall be given the opportunity for a CDP hearing “within a reasonable
period of time after the levy.” Thus, if the taxpayer has not previously been given CDP
levy rights at the time of the levy, the taxpayer has a right to a hearing after the levy.
After Appeals issues a Notice of Determination in the post-levy hearing, the taxpayer

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may appeal that determination to the Tax Court. Bussell v. Commissioner, 130 T.C.
222 (2008); Clark v. Commissioner, 125 T.C. 108 (2005).
With respect to jeopardy levies, hearing rights may be available under section 7429, as
well as under section 6330(f), depending upon the timing of the jeopardy levy. A
jeopardy levy subject to section 7429 appeal rights includes a levy made in connection
with a jeopardy assessment, and also a levy made before the requirements of sections
6331(a) and (d) are satisfied (requiring ten days to pass after notice and demand, and
thirty days to pass after the giving of a notice of intent to levy). See Treas. Reg. §
301.7429-1. Hearing rights for such jeopardy levies are available under sections 7429
and 6330(f). Ang v. Commissioner, T.C. Memo. 2014-53 (rejecting the argument that
section 7429 precludes the Tax Court from reviewing the reasonableness of a jeopardy
levy, and stating that the court reviews appeals’ verification that the jeopardy levy was
reasonable for abuse of discretion). If the prerequisites for levy under section 6331
have been met, and levy is made either before the section 6330(a) CDP notice has
been issued, or before the 30-day period for requesting a CDP hearing has passed, no
review rights are available under section 7429. However, the taxpayer will be entitled to
a post-levy CDP notice and hearing.
The Small Business and Work Opportunity Act of 2007 amended section 6330(f) to
permit levy to collect employment taxes without first giving a taxpayer a pre-levy CDP
notice if the levy is a “disqualified employment tax levy.” I.R.C. § 6330(f)(3). The
amendment is effective for disqualified employment tax levies served on or after
September 22, 2007. This change was intended to limit opportunities for pre-levy CDP
hearings where taxpayers pyramid employment tax liabilities and use the CDP process
to delay collection.
A disqualified employment tax levy, as described in section 6330(h)(1), is a levy to
collect a taxpayer’s employment tax liability if that taxpayer or a predecessor requested
a CDP hearing under section 6330 for unpaid employment taxes arising in the two-year
period prior to the beginning of the taxable period for which the levy is served.
Section 6330(f) was amended on September 27, 2010, by section 2104 of the Small
Business Jobs Act of 2010, to except Federal contractor levies from pre-levy notice and
opportunity for a hearing. Section 2104 is titled “Application of Continuous Levy to Tax
Liabilities of Certain Federal Contractors.” “Federal contractor levy” is defined in section
6330(h)(2) as “any levy if the person whose property is subject to the levy (or any
predecessor thereof) is a Federal contractor.”
D. Notice Issuance
A CDP notice must be given in person, left at the taxpayer’s dwelling or usual place of
business, or delivered to the taxpayer’s last known address by certified or registered
mail. Minemyer v. Commisioner, T.C. Memo. 2012-325 (case dismissed for lack of
jurisdiction where CDP notice not mailed to taxpayer’s last known address); Buffano v.
Commissioner, T.C. Memo. 2007-32. The CDP levy notice (but not the CDP lien notice)

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must also be sent return receipt requested. If the CDP notice is not properly sent, and
the taxpayer fails to timely request a hearing, the taxpayer is entitled to a substitute
notice. Treas. Reg. §§ 301.6320-1(a)(2) Q&A-A12, 301.6330-1(a)(3) Q&A-A10.
Graham v. Commissioner, T.C. Memo. 2008-129. A CDP lien notice (Letter 3172) is
valid even if given before the NFTL is actually filed, and the validity of the section 6320
notice does not depend on the validity of the related NFTL. Id. A lien notice solely in
the name of a deceased taxpayer is valid if the lien against the taxpayer as an individual
is valid and if the notice was sent to the decedent’s last known address. Estate of
Brandon v. Commissioner, 133 T.C. 83 (2009).
E. Nominees and Other Third Parties
A CDP lien notice will only be given to the person described in section 6321 who is
named on the NFTL. Treas. Reg. § 301.6320-1(a)(2) Q&A-A1. A CDP levy notice will
only be given to the person described in section 6331(a). Treas. Reg. § 301.6330­
1(a)(3) Q&A-A1. CDP rights are only available to the taxpayer — the person liable to
pay the tax due after notice and demand who refuses or neglects to pay. A nominee of,
or person holding property of, the taxpayer is not entitled to CDP rights. Treas.
Reg. §§ 301.6320-1(a)(2) Q&A-A7, 301.6330-1(a)(3) Q&A-A2, 301.6320-1(b)(2) Q&A­
B5, 301.6330-1(b)(2) Q&A-B5; Kendricks v. Commissioner, 124 T.C. 69, 71 n.3 (2005);
Forman v. United States Dept. of Treasury, 2005-1 USTC ¶ 50,418 (N.D. Ill.). See also
Gillum v. Commissioner, 676 F.3d 633 (8th Cir. 2012) (Tax Court does not have
jurisdiction over alter-egos and nominees). Cf. Dalton v. Commissioner, 135 T.C. 393
(2010), rev’d on other grounds, 682 F.3d 149 (1st Cir. 2012) (Tax Court has jurisdiction
to decide nominee interest issue insofar as it pertains to Service’s rejection of an offerin-compromise on the basis that the offer did not include taxpayer’s nominee interest).
F. General Partners in Partnerships
Under state law, general partners in partnerships are liable for taxes assessed against
the partnership. The Supreme Court in United States v. Galletti, 541 U.S. 114 (2004),
held that the Service’s assessment against a partnership serves to make the general
partner liable for the tax. While the Supreme Court in Galletti did not address
administrative collection, Galletti is consistent with the Service’s long-standing legal
position that it can enforce a tax lien and take administrative levy action against a
general partner based on the assessment, notice and demand directed to the
partnership. See Chief Counsel Notice 2005-003, Administrative Collection of a
Partnership's Employment Taxes from the Partners.
After the Service files a NFTL identifying a general partner as being liable for a
partnership’s employment taxes, a CDP notice must be given to the partner. Section
6320(a)(1) requires that written notice of the right to a CDP hearing be given to the
person described in section 6321; that is, any person liable to pay the tax who is
described in the NFTL. Treas. Reg. § 301.6320-1(a)(2) Q&A-A1. Because general
partners are liable to pay the partnership tax liabilities, separate CDP notices should be
given to the partnership and to all general partners listed on the NFTL.

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A CDP levy notice must also be given to a general partner prior to levying on that
partner’s property or rights to property. Section 6330(a)(1) requires that written notice
of the right to a CDP hearing be given to a person liable to pay the tax prior to any levy
on the person’s property or rights to property. See Treas. Reg. § 301.6330-1(a)(3)
Q&A-A1. If the Service intends to levy on the property or rights to property of a general
partner, separate CDP notices should be given to the partnership and the general
partner whose property the Service intends to levy.
G. Owners of Single-Member LLCs
The court in Littriello v. United States, 484 F.3d 372 (6th Cir. 2007), upheld a proposed
levy against an owner of a single-member LLC for employment taxes with respect to
employees of the LLC where the owner was made liable for the taxes under the “check
the box” regulations disregarding the LLC. Accord McNamee v. Dept. of Treasury, 488
F.3d 100 (2d Cir. 2007); Kandi v. United States, 295 Fed. Appx. 873 (9th Cir. 2008);
L&L Holding Co., LLC, 2008 WL 1908840 (W.D. La. 2008); Medical Practice Solutions,
LLC. v. Commissioner, 132 T.C. 125 (2009), aff’d, 2010 WL 3565790 (1st Cir. 2010)
(unpublished per curiam), cert. denied 131 S.Ct. 2974 (2011). The “check the box”
regulations were amended on August 16, 2007, to make the disregarded entity liable for
employment taxes in these situations. For employment taxes on employees of
disregarded entities incurred after January 1, 2009, the default rule is that the owner is
no longer liable. Treas. Reg. § 301.7701-2(c)(iv).
Chapter Three – Requesting a CDP Hearing and the Effect of Requesting a
Hearing
A. Hearing Requests
1. One hearing opportunity per tax and period
Sections 6320(b)(2) and 6330(b)(2) each provide that a taxpayer is entitled to only one
CDP hearing before the Office of Appeals with respect to the tax and tax period(s)
covered by the CDP notice. This means that a taxpayer may have an opportunity for
one CDP lien hearing and one CDP levy hearing for each tax and tax period. See
Investment Research Associates, Inc. v. Commissioner, 126 T.C. 183 (2006) (upholds
regulations only allowing hearing from filing of first NFTL); Shirley v. Commissioner,
T.C. Memo. 2014-10 (appeals did not abuse discretion by refusing to consider years for
which petitioner received previous CDP hearings). Section 6320(b)(4) provides that, to
the extent practicable, CDP hearings with respect to liens shall be held in conjunction
with CDP hearings with respect to levies under section 6330. A taxpayer may receive
more than one CDP hearing with respect to the same tax and period when there has
been an additional assessment of tax (not including interest or penalty accruals) for that
period or an additional accuracy-related or filing-delinquency penalty has been
assessed. Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D1, 301.6330-1(d)(2) Q&A-D1; Freije
v. Commissioner, 131 T.C. 1 (2008).

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2. Procedures for requesting a CDP hearing
A Form 12153, Request for a Collection Due Process or Equivalent Hearing, is included
with the CDP notice sent to the taxpayer. Use of a Form 12153 to request a CDP
hearing is not required, but if the form is not used, the request must still be in writing
and include the taxpayer’s name, taxpayer identification number (e.g., SSN, ITIN or
EIN), address, and daytime telephone number, and be dated and signed by either the
taxpayer or the taxpayer’s authorized representative. The request must also specify the
type of tax and tax periods at issue, include a statement that the taxpayer requests a
hearing with Appeals with respect to the lien or proposed levy, and provide a reason or
reasons why the taxpayer disagrees with the notice of lien or proposed levy. Treas.
Reg. §§ 301.6320-1(c)(2) Q&A-C1, 301.6330-1(c)(2) Q&A-C1.
If a timely written request for a CDP hearing is submitted that does not contain all of the
required information, the IRS will make a reasonable attempt to contact the taxpayer
and request that the taxpayer comply with the unsatisfied requirements, within a
reasonable time period. Treas. Reg. §§ 301.6320-1(c)(2) Q&A-C1, 301.6330-1(c)(2)
Q&A-C1. A taxpayer may also affirm any timely written request that 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
by the IRS, a signed, written affirmation that the request was originally submitted on the
taxpayer’s behalf. Id.
The TRHCA amended sections 6320(b)(1) and 6330(b)(1) to provide that the CDP
hearing request must state the grounds for requesting the hearing. The TRHCA also
amended section 6330(g) to provide that the Service may disregard any portion of a
section 6320 or 6330 hearing request that is based upon a position identified as
frivolous by the IRS in a published list or that reflects a desire to delay or impede tax
administration. The disregarded portion will not be subject to any further administrative
or judicial review. The TRHCA also amended section 6702 to allow imposition of a
$5,000 penalty for specified frivolous submissions, including CDP hearing requests,
where any portion of the submission meets one or both of these criteria. The penalty
will be abated if the taxpayer withdraws the frivolous submission 30 days after being
notified by the Service that the submission is a specified frivolous submission. I.R.C.
§ 6702(b)(3). The current notice specifying frivolous positions under section 6702 is
Notice 2010-33, 2010 WL 1347082.
In Thornberry v. Commissioner, 136 T.C. 356 (2011), the Tax Court held that it has
jurisdiction to review the denial of a hearing under section 6330(g). In Chief Counsel
Notice CC-2012-003, Disregarding Frivolous CDP Hearing Requests under Section
6330, the Office of Chief Counsel announced that it disagrees with Thornberry and will
continue to argue that the Tax Court has no jurisdiction to review denials of hearings
under section 6330(g). See also CCDM 35.3.23.5.1.
The section 6320 hearing request must be submitted no later than 30 days after the
expiration of five business days after the date the NFTL is filed. Treas. Reg.

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§ 301.6320-1(b)(1). See Newsome v. Commissioner, T.C. Memo. 2007-111. The date
the NFTL is filed is the date the NFTL is received by the recording office to be added to
the public index, not the act of indexing it in the local records. See, e.g., Tracey v.
United States, 394 B.R. 635 (BAP 1st Cir. 2008). Because the Service does not
ordinarily obtain this date from the recording office, the Service uses an estimated filing
date on the Letter 3172 to provide the taxpayer with a “must file” date (the date by which
the section 6320 hearing request must be submitted). The estimated filing date is
calculated by adding 3 business days to the NFTL mailing date. In other words, the
Service assumes that the recording office will receive the NFTL 3 business days after it
is mailed. The “must file” date is then determined by adding 5 business days plus 30
calendar days to the estimated filing date.
The section 6330 hearing request must be submitted no later than 30 days from the
date of the CDP notice (provided the notice was mailed on or before that date). Treas.
Reg. § 301.6330-1(b)(1). Premature requests for a CDP hearing (e.g., requests made
before the Service has issued a CDP notice) are not valid. Andre v. Commissioner, 127
T.C. 68 (2006).
Any written request for a CDP hearing should be filed at the address indicated on the
notice. If an address does not appear on the CDP notice, the taxpayer can obtain the
address by calling, toll-free, 1-800-829-1040, and providing the taxpayer’s identification
number. Treas. Reg. §§ 301.6320-1(c)(2) Q&A-C6, 301.6330-1(c)(2) Q&A-C6. If this
address (or other address authorized in the regulations) is used and the written request
is postmarked within the applicable 30-day response period, then in accordance with
section 7502, the request will be considered timely even if it is not received until after
the 30-day period. Treas. Reg. §§ 301.6320-1(c)(2) Q&A-C4, 301.6330-1(c)(2) Q&A­
C4. Section 7503 extends the time for filing if the last day of the 30-day response
period falls on a weekend or legal holiday. Id. If the request is not sent to the correct
address it must be received by the correct office within the 30-day period in order to be
timely. I.R.C. § 7502(a)(2). On the other hand, a request that is hand-carried to a local
Taxpayer Assistance Center will be timely if delivered within the 30-day period pursuant
to Treas. Reg. § 301.6091-1(b)(1) and (2). The 30-day period is not extended for
taxpayers residing outside the United States. Treas. Reg. §§ 301.6320-1(c)(2) Q&A­
C5, 301.6330-1(c)(2) Q&A-C5; Sarrell v. Commissioner, 117 T.C. 122 (2001).
3. Equivalent hearing
The Treasury Regulations provide that a taxpayer whose hearing request is untimely is
not entitled to a CDP hearing under section 6320 or 6330, but may receive an
“equivalent hearing.” Treas. Reg. §§ 301.6320-1(i)(1), 301.6330-1(i)(1). A taxpayer
must make a written request for an equivalent hearing that contains all of the same
information required for a CDP hearing request. Treas. Reg. §§ 301.6320-1(i)(2) Q&A­
I1, 301.6330-1(i)(2) Q&A-I1. The same rules with respect to perfecting incomplete CDP
hearing requests, and affirming improperly signed CDP hearing requests, also apply to
equivalent hearing requests. Treas. Reg. §§ 301.6320-1(i)(2) Q&A-I1(iii) and (iv),
301.6330-1(i)(2) Q&A-I1(iii) and (iv). A taxpayer who submits an untimely written CDP

11

hearing request will be offered and may obtain an equivalent hearing without having to
submit an additional written request. Treas. Reg. §§ 301.6320-1(c)(2) Q&A-C7,
301.6330-1(c)(2) Q&A-C7.
A taxpayer must request an equivalent hearing within the one-year period commencing
after the date of a CDP levy notice or, with respect to a CDP lien notice, within the oneyear period commencing the day after the end of the five-business-day period following
the filing of the NFTL. Treas. Reg. §§ 301.6320-1(i)(2) Q&A-I7, 301.6330-1(i)(2) Q&A­
I7.
A taxpayer may not appeal to a court any decision (issued in the form of a decision
letter) made by an Appeals or settlement officer as a result of an equivalent hearing.
Treas. Reg. §§ 301.6320-1(i)(2) Q&A-I6, 301.6330-1(i)(2) Q&A-I6; Orum v.
Commissioner, 123 T.C. 1 (2004); Moorhous v. Commissioner, 116 T.C. 263 (2001);
Johnson v. Commissioner, 2000-2 USTC ¶ 50,591 (D. Ore. 2000). However if the
taxpayer files a timely hearing request but is nonetheless given an equivalent hearing
based on Appeal’s erroneous determination that the taxpayer’s CDP hearing request
was untimely, the Tax Court may treat the resulting decision letter as an appealable
CDP determination for purposes of section 6330(d)(1). Craig v. Commissioner, 119
T.C. 252 (2002). A certified mailing list (USPS Form 3877, or the equivalent form
prepared by the IRS) showing the date the CDP notice was sent establishes both the
fact and date of mailing of the notice of the CDP notice. See Walthers v.
Commissioner, T.C. Memo. 2009-139.
B. Effect of Requestion a CDP Hearing
1. Statute of limitations
The limitation periods under section 6502 (relating to collection after assessment),
section 6531 (relating to criminal prosecutions), and section 6532 (relating to other
suits) with respect to the taxes and periods listed on the CDP notice are suspended
beginning on the date the Service receives a timely hearing request. I.R.C.
§ 6330(e)(1); Treas. Reg. §§ 301.6320-1(g)(2) Q&A-G1, 301.6330-1(g)(2) Q&A-G1;
Boyd v. Commissioner, 117 T.C. 127 (2001). The suspension period ends either on the
date the Service receives a written withdrawal of the hearing request, when the
determination resulting from the CDP hearing becomes final by expiration of the time for
seeking review, or upon the exhaustion of any right of appeal. Id.
Section 6330(e)(1) further provides that in no event shall any of the limitation periods
expire before the 90th day after the day on which there is a final determination with
respect to such hearing. If there are fewer than 90 days left in any limitations period
after the suspension ends, the remaining limitations period will be 90 days. Treas. Reg.
§§ 301.6320-1(g)(3), 301.6330-1(g)(3). This means that if less than 90 days remain on
the limitations period after the suspension ends, the difference between the number of
remaining days and 90 days will be added to the limitations period. There is no
automatic 90-day addition to the period.

12

2. Levy action and injunctive relief
A timely CDP levy hearing request generally suspends any levy action to collect
liabilities listed on the CDP notice for the period during which the hearing and appeals
therein are pending. I.R.C. § 6330(e)(1). There are no restrictions on filing a NFTL,
however, under either section 6320 or 6330. Treas. Reg. §§ 301.6320-1(g)(2) Q&A-G3,
301.6330-1(g)(2) Q&A-G3. For good cause shown, a levy will not be suspended while
an appeal is pending before the Tax Court or Court of Appeals if the underlying tax
liability is not at issue. I.R.C. § 6330(e)(2). The Service must file a motion and the court
must make a good cause determination before the Service may proceed with the levy.
See CCDM 35.3.23.9. The Tax Court grants motions to permit levy in CDP cases
involving taxpayers who raise solely frivolous arguments. See Burke v. United States,
124 T.C. 189 (2005); Howard v. United States, T.C. Memo. 2005-100.
The Anti-injunction Act, section 7421, generally prohibits suits to restrain the
assessment and collection of any tax. The beginning of a levy or proceeding, however,
may be enjoined by the proper court, including the Tax Court, during the time the
suspension under section 6330(e)(1) is in force. The Tax Court cannot enjoin any
action or proceeding unless a timely appeal of a notice of determination has been filed
with the Tax Court and then only with respect to the unpaid tax subject to proposed
levy. I.R.C. § 6330(e)(1); Davis v. Commissioner, T.C. Memo. 2008-238. As a result,
only district courts have jurisdiction over injunction suits for tax years that are not
properly before the Tax Court in a levy review case.
3. Permitted collection actions
Section 6330(e)(1) only prohibits levy if a proposed levy is the basis of the CDP hearing.
Therefore, the Service may levy for taxes covered by a CDP lien notice if the section
6330 notice requirement for those taxes and periods has been satisfied. Treas. Reg.
§§ 301.6320-1(g)(2) Q&A-G3, 301.6330-1(g)(2) Q&A-G3. In addition, nothing in section
6320 or 6330 prohibits the filing of a NFTL. See Beery v. Commissioner, 122 T.C. 184
(2004). If a taxpayer requests a CDP hearing under section 6320 or 6330, the Service
may file a NFTL for the same tax and periods at another recording office or a NFTL for
tax periods or taxes not covered by the CDP notice. Other permitted nonlevy collection
actions include accepting voluntary payments of the tax, initiating judicial proceedings,
offsetting overpayments from other periods, Boyd v. Commissioner, 451 F.3d 8 (1st Cir.
2006), aff’g 124 T.C. 296 (2005), and issuing a “lock-in” letter instructing taxpayer’s
employer to adjust taxpayer’s withholding. Cleveland v. Commissioner, 600 F.3d 739
(7th Cir. 2010); Davis v. Commissioner, T.C. Memo. 2008-238.
Chapter Four – The CDP Hearing
A. CDP Hearings Are Informal

13

A CDP hearing is informal and the formal hearing requirements of the Administrative
Procedure Act (APA), 5 U.S.C. § 551 et seq., do not apply. Treas. Reg. §§ 301.6320­
1(d)(2) Q&A-D6, 301.6330-1(d)(2) Q&A-D6. See also Dalton v. Commissioner, 682
F.3d 149, 155 (1st Cir. 2012); Robinette v. Commissioner, 439 F.3d 455 (8th Cir. 2006);
Living Care Alternatives of Utica, Inc. v. United States, 411 F.3d 621 (6th Cir. 2005);
Davis v. Commissioner, 115 T.C. 35 (2000). Accordingly, recordings of telephone or
face-to-face conferences are not required. Living Care Alternatives, 411 F.3d at 625;
Rennie v. Internal Revenue Service, 216 F. Supp. 2d 1078, 1079 n.1 (E.D. Cal. 2002).
Contra Mesa Oil, Inc. v. United States, 2001-1 USTC ¶ 50,130 (D. Colo. 2000) ( CDP
hearings must be recorded verbatim), nonacq., AOD 2001-5 (nonacquiescence on this
point). While recording of all CDP conferences is not required, the taxpayer does have
the right to record a face-to-face CDP conference in accordance with section
7521(a)(1). Keene v. Commissioner, 121 T.C. 8 (2003).
Taxpayers do not have the right to subpoena and examine witnesses at the hearing.
Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D6, 301.6330-1(d)(2) Q&A-D6; Robinette v.
Commissioner, 123 T.C. 85, 98 (2004), rev’d on other grounds, 439 F.3d 455 (8th Cir.
2006). The Appeals officer is not required to give the taxpayer a set of procedures
governing the hearing. Lindsay v. Commissioner, T.C. Memo. 2001-285. Taxpayers do
not have the right to subpoena documents, Barnhill v. Commissioner, T.C. Memo. 2002­
116, or examine them. Watson v. Commissioner, T.C. Memo. 2001-213. Section
6330(c)(1) does not require the Appeals officer to provide the taxpayer with copies of
the documents the Appeals officer obtains to verify that the requirements of any
applicable law or administrative procedure were met. Robinette; Nestor v.
Commissioner, 118 T.C. 162 (2002). Despite the informality of the hearing and the lack
of a transcript, there must be a sufficient explanation of the Appeals officer’s findings
and rationale to permit review for abuse of discretion. The notice of determination must
discuss all issues raised and should state why arguments and collection alternatives
raised by the taxpayer were rejected. See Robinette, 439 F.3d at 461-62; Living Care
Alternatives, 411 F.3d at 629; Cavanaugh v. United States, 93 AFTR 2d 1522 (D.N.J.
2004); Cox v. Commissioner, 126 T.C. 237 (2006), rev’d on other grounds, 514 F.3d
1119 (10th Cir. 2008). There must be sufficient documentation in the record to show
what happened at the administrative hearing. Cox, 126 T.C. at 247 (the administrative
file “provides a singularly clear portrayal of administrative developments as they
occurred”). If the record is insufficient to permit abuse of discretion review, the case
may need to be remanded to Appeals.
B. Concluding the Hearing and Submission Deadlines
While there is no period of time in which Appeals must conduct the hearing or issue the
Notice of Determination, Appeals will attempt to conduct the hearing and issue the
determination as expeditiously as possible under the circumstances. Treas. Reg. §§
301.6320-1(e)(3) Q&A-E9, 301.6330-1(e)(3) Q&A-E9. In Murphy v. Commissioner, 125
T.C. 301 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006), the Tax Court held that the Appeals
officer did not prematurely conclude the CDP hearing when the determination was
made eight months after the hearing commenced. When an Appeals officer gives a

14

taxpayer an adequate timeframe to submit requested items, it is not an abuse of
discretion to move ahead if the taxpayer fails to submit the items within that timeframe.
Glossop v. Commissioner, T.C. Memo. 2013-208. See also Dinino v. Commissioner,
T.C. Memo. 2009-284 (Appeals officer did not abuse discretion by declining to give
taxpayer additional time to submit information); Pisetzner v. Commissioner, T.C. Memo.
2012-64 (taxpayer failed to timely reschedule a telephone conference; section 6330
only requires that a taxpayer be given a reasonable chance to be heard prior to
issuance of a notice of determination). Cf. Szekely v. Commissioner, T.C. Memo. 2013­
227 (Appeals abused discretion in closing case and sustaining NFTL where OIC was
received shortly after the deadline set by Appeals); Industrial Investors v Commissioner,
T.C. Memo. 2007-93 (Appeals officer abused his discretion by allowing petitioner only
18 business days to assemble documentation required in support of offer-in­
compromise, during part of which time petitioner’s representative was under subpoena
to appear in court); Judge v. Commissioner, T.C. Memo. 2009-135 (settlement officer
abused discretion in failing to grant brief extension of time to submit financial
information). Appeals is not required to consider new information submitted after the
Notice of Determination is issued. Trainor v. Commissioner, T.C. Memo. 2013-14.
C. Face-to-Face Conference Not Required
The regulations provide that a CDP hearing may consist of a face-to-face meeting, one
or more written or oral communications, or some combination thereof. A face-to-face
meeting is not required. Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D6, 301.6330-1(d)(2)
Q&A-D6; Williams v. Commissioner, 718 F.3d 89 (2d Cir. 2013). See Katz v.
Commissioner, 115 T.C. 329 (2000) (combination of telephone calls and written letters);
Radeke v. Commissioner, T.C. Memo. 2012-319 (“An informal telephone conference
which gives the taxpayer the opportunity to discuss the merits of the case, settlement
alternatives, and other issues related to the proposed levy is a proper hearing.”)
Therefore, all communications between the taxpayer and the Appeals officer between
the time of the request for the hearing and the issuance of the notice of determination
are part of the CDP hearing. See TTK Management v. United States, 2001-1 USTC
¶ 50,185 (C.D. Cal. 2000).
A taxpayer who presents in the CDP hearing request relevant, non-frivolous reasons for
disagreement with the proposed levy or lien will ordinarily be offered an opportunity for a
face-to-face conference at the Appeals office closest to the taxpayer’s residence or, if
the taxpayer is a corporation, at the Appeals office closest to its principal place of
business. Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D7, 301.6330-1(d)(2) Q&A-D7. See
Parker v. Commissioner, T.C. Memo. 2004-226 (court remanded for new Appeals
hearing when CDP hearing was scheduled at Appeals office 180 miles from taxpayer’s
residence, and there was a closer Appeals office).
If a taxpayer fails to participate in an offered face-to-face or telephone conference,
Appeals’ determination can be made on the basis of Appeals’ review of the case file.
Maxton v. Commissioner, T.C. Memo. 2007-95. But cf. Cox v. United States, 345 F.
Supp. 2d 1218 (W.D. Okla. 2004) (hearing inadequate when taxpayer was not provided

15

with notice that the telephone conference with Appeals constituted the CDP
conference); Cavanaugh v. United States, 93 AFTR 2d 1522 (D.N.J. 2004) (court
remanded to Appeals for new face-to-face CDP conference when taxpayer had
requested a face-to-face conference and it was unclear whether taxpayer was advised
that the telephone conference received instead constituted the CDP conference).
D. When Face-to-Face Conference Is Not Offered
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 to raise only irrelevant or frivolous issues concerning that liability.
Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D8, 301.6330-1(d)(2) Q&A-D8. See Williams v.
Commissioner, 718 F.3d 89 (2d Cir. 2013).
The TRHCA amended sections 6320(b)(1) and 6330(b)(1) to provide that a taxpayer
must provide reasons for the hearing request, and the Service may disregard any
portion of a hearing request that is based upon a position identified as frivolous by the
IRS in a published list or reflects a desire to delay or impede tax administration. I.R.C.
§ 6330(g). Accordingly, a taxpayer raising no issues or only frivolous issues may not
only be ineligible for a face-to-face conference but may be denied a CDP hearing.
A face-to-face CDP conference concerning a collection alternative, such as an
installment agreement or offer-in-compromise, will not be granted unless other
taxpayers would be eligible for the alternative under similar circumstances. Treas. Reg.
§§ 301.6320-1(d)(2) Q&A-D8, 301.6330-1(d)(2) Q&A-D8. For example, a taxpayer who
proposes an offer-in-compromise as the only issue to be addressed at the hearing, who
has failed to file all required returns and is, therefore, ineligible for an offer-in­
compromise, will not be granted a face-to-face CDP conference. See Stockton v.
Commissioner, T.C. Memo. 2009-186 (denial of face-to-face CDP conference not an
abuse of discretion where petitioner made only a blanket request for collection
alternatives, did not explain why he qualified for a specific collection alternative, and had
not timely filed all required returns).
Appeals may, however, in its discretion, grant a face-to-face conference if it is
appropriate to explain the requirements to become eligible for a collection alternative.
The taxpayer will have the opportunity to demonstrate eligibility for a collection
alternative, or become eligible for a collection alternative, in order to obtain a face-to­
face conference. Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D8, 301.6330-1(d)(2) Q&A-D8.
If the taxpayer is not offered a face-to-face conference, the taxpayer will receive a
hearing by telephone, correspondence, or some combination thereof (except as noted
above, where the TRHCA amendments preclude the taxpayer from receiving any CDP
hearing).
When a taxpayer raising only frivolous issues contests being denied a face-to-face
conference, such denial is not an abuse of discretion because it would not be necessary

16

or productive to remand the case to an Appeals office for a new face-to-face hearing.
Williamson v. Commissioner, T.C. Memo. 2009-188; Stockton v. Commissioner, T.C.
Memo. 2009-186; Clough v. Commissioner, T.C. Memo. 2007-106. There is no abuse
of discretion in the refusal of a face-to-face hearing when a taxpayer refuses to present
nonfrivolous arguments, file past-due returns, and submit financial information. Toth v.
Commissioner, T.C. Memo. 2010-227.
The regulations further provide that, if a taxpayer would ordinarily be offered a face-to­
face conference with Appeals, but all of the Appeals officers at the location where that
conference would normally be held have had prior involvement with respect to the
unpaid tax and tax period involved in the hearing, the taxpayer will be offered a face-to­
face conference at another Appeals office. Treas. Reg. §§ 301.6320-1(d)(2) Q&A-D8,
301.6330-1(d)(2) Q&A-D8. The face-to-face meeting may be held at the normal
location if the taxpayer waives the requirement that the hearing be conducted by an
Appeals officer without prior involvement. Id.
E. Recording of CDP Hearings Under Section 7521(a)(1)
The Tax Court has held that if a taxpayer is offered a face-to-face conference and
requests to record the face-to-face CDP conference, in accordance with section
7521(a)(1), such recording must be allowed. Keene v. Commissioner, 121 T.C. 8
(2003). However, when a taxpayer is improperly denied the right to record, the court
need not remand to Appeals for a new recorded hearing if such a remand would be
unnecessary or unproductive. Carrillo v. Commissioner, T.C. Memo. 2005-290.
In Calafati v. Commissioner, 127 T.C. 219 (2006), the Tax Court held that the taxpayer
had no right to record a telephone CDP conference, as section 7521 only applied to “in­
person interviews,” meaning face-to-face meetings between the interviewer and
interviewee.
F. Impartial Appeals Officer or Employee
Sections 6320(b)(3) and 6330(b)(3) require that the hearing be conducted by an officer
or employee in the Internal Revenue Service Office of Appeals who has had no prior
involvement with respect to the same unpaid tax. The statute does not specify that any
particular category or officer conduct the hearing; “an ‘appeals officer’ is any ‘officer or
employee’ in the IRS Office of Appeals to whom is assigned the task of conducting a
CDP hearing under section 6330(b)(3).” Tucker v. Commissioner, 135 T.C.114, 155
(2010), aff’d, 676 F.3d 1129 ( 2012), cert. denied, 133 S.Ct. 646 (2012). In Tucker, the
D.C. Circuit affirmed the Tax Court’s holding that such officers or employees are not
inferior officers for purposes of the Appointments clause of the United States
Constitution, and so are properly hired by the Commissioner of the Internal Revenue
pursuant to section 7804(a). The D.C. Circuit held that Appeals employees are not
inferior officers because they do not exercise sufficient authority over liability and
collection matters; their discretion is constrained by the IRM and other guidelines, by
requirements that they consult with counsel, and by supervision.

17

Prior involvement includes participation or involvement in a matter (other than a prior
CDP hearing) that the taxpayer may have with respect to the tax and tax period shown
on the CDP notice. Prior involvement exists only when the taxpayer, the tax and the tax
period at issue in the CDP hearing also were at issue in the prior non-CDP matter, and
the Appeals officer or employee actually participated in the prior matter. Treas. Reg.
§§ 301.6320-1(d)(2) Q&A-D4, 301.6330-1(d)(2) Q&A-D4. Thus, where separate CDP
hearings were conducted for the lien and levy for the same tax period, prior involvement
does not include the prior CDP hearing.
Prior involvement includes participation in examination and collection activities (other
than CDP Appeals hearings) with respect to the same taxpayer, type of tax, and tax
period. For example, an Appeals officer has prior involvement under sections
6320(b)(3) and 6330(b)(3) if he served as a mediator during the examination of the
same tax liability or was the revenue officer assigned to collect the same tax liability
subject to the CDP hearing. See also Baber v. Commissioner, T.C. Memo. 2009-30
(settlement officer had prior involvement due to activities relating to his work as an offerin-compromise specialist). The court has also held that prohibited prior involvement
occurs where the appeals officer considered taxpayer’s appeal from a rejection of an
OIC. Moosally v. Commissioner, 142 T.C. No. 10 (2014). In Moosally, the taxpayer
requested a CDP hearing while the OIC appeal was still pending. The court held that
Appeals could not assign the CDP hearing to the appeals officer handling the pre-CDP
appeal, even though the reason for the assignment was so the pre-CDP appeal and the
CDP hearing could be combined.
In Cox v. Commissioner, 514 F.3d 1119 (10th Cir. 2008), rev’g 126 T.C. 237 (2006),
nonacq., AOD 2009-01, 2009-22 I.R.B. 1, the Tenth Circuit held that prior involvement
includes conducting a CDP hearing involving an earlier tax period where the existence
of the tax liability for the later years was a material factor in the decision involving the
earlier year. Thus, where an officer conducted a CDP hearing for the 2000 income tax
liability, and considered the taxpayer’s noncompliance for 2001 and 2002 incomes taxes
at that hearing, he was precluded from conducting a subsequent CDP hearing for 2001
and 2002. The court reversed the opinion of the Tax Court that merely reviewing the
compliance history of the 2001 and 2002 years in a CDP proceeding involving 2000 is
not disqualifying prior involvement. In AOD 2009-01, the IRS announced that it does
not acquiesce in this decision and will not follow it outside the Tenth Circuit.
In MRCA Information Services, Inc. v. United States, 145 F. Supp. 2d 194 (D. Conn.
2000), the court held that an Appeals officer who was assigned to hear a CDP case
involving a corporation’s employment tax liability was not impartial because he had
presided at a hearing involving the section 6672 penalty assessed against the sole
shareholder of that corporation for the same tax periods. To the contrary, example 4 in
Treas. Reg. §§ 301.6320-1(d)(3) and 301.6330-1(d)(3) indicates that this situation
would not constitute prior involvement because the employment tax and the section
6672 assessments involve different taxes.

18

In Harrell v. Commissioner, T.C. Memo. 2003-271, the Tax Court held that an Appeals
officer is not rendered impartial for purposes of section 6330(b)(3) just because another
employee in the same Appeals office was involved with the same taxpayer, type of tax,
and tax years at issue in CDP.
There is no prohibition on the same Appeals personnel who worked on the original CDP
hearing working on the supplemental hearing on remand. Medical Practice Solutions,
LLC v. Commissioner, T.C. Memo. 2010-98. The hearing on remand is treated as a
continuation of the original hearing.
G. Prohibition of Ex Parte Communications
RRA 1998, section 1001(a) directed the Service to develop a plan to prohibit ex parte
communications between Appeals employees and other employees of the Service. To
ensure an independent Appeals function, ex parte communications between Appeals
employees and other IRS employees are prohibited to the extent that such
communications appear to compromise the independence of the Appeals officers. In
accordance with this directive, the Service has issued Revenue Procedure 2012-18,
2012-10 I.R.B. 455. This revenue procedure is effective for communications between
Appeals employees and other IRS employees, including Counsel, that take place after
May 15, 2012. Rev. Proc. 2012-18 replaces Rev. Proc. 2000-43, which was issued in
October 2000. The term “ex parte communications” is defined in Rev. Proc. 2012-18 as
any communication that takes place between any Appeals employee and employees of
other IRS functions, without the taxpayer/representative being given an opportunity to
participate in the communication. Section 2.02(1). Not all communications between
Appeals employees and other personnel are prohibited; for example, communications
regarding ministerial, administrative or procedural matters are permissible. Section
2.02(5).
Specific instructions are provided in Section 2.02(10) on CDP cases. Communications
to verify compliance with legal and administrative procedures, and to verify
assets/liabilities involving collection alternatives, fall within the ministerial, administrative
or procedural matters exception. Section 2.02(10)(b). When a CDP case is remanded
by the Tax Court, the counsel attorney should prepare a remand memo to Appeals
explaining the reasons for the remand and any special requirements in the order, but
the memorandum should not discuss the credibility of the taxpayer or the accuracy of
facts presented by the taxpayer. A copy of this memorandum is provided to the
taxpayer/representative. Section 2.02(10)(c)(i)(A). The counsel attorney handling the
Tax Court case may provide legal advice to Appeals on remand, and such attorney
should review the supplemental notice of determination before it is issued to the
taxpayer for the limited purpose of ensuring compliance with the court’s order. Section
2.02(10)(c)(ii), (iii). See also Chief Counsel Notice CC-2012-10, Update of Rules
Governing Ex Parte Communications Between Chief Counsel Attorneys and Employees
of Appeals.

19

Applying guidelines issued under the now superseded revenue procedure on remands,
Rev. Proc. 2000-43, 2000-43 I.R.B. 404, the court in Hoyle v. Commissioner, 136 T.C.
463 (2011), held that communications between the Chief Counsel attorney and the
settlement officer concerning a remanded CDP case were permissible communications
because they were solely procedural, ministerial, or administrative in nature. The court
also held that it was permissible for counsel to provide legal advice to the settlement
officer on remand, and it was also permissible for counsel to locate a certified mailing
list and provide it to the settlement officer for inclusion in the administrative record on
remand. See also Planes v. United States, 98 A.F.T.R. 2d 2006-7044 (M.D. Fla. 2006)
(settlement officer’s communications with IRS counsel about the scope of his authority
to reinstate an offer-in-compromise were not prohibited ex parte communications).
In Hinerfeld v. Commissioner, 139 T.C. 277 (2012), the Tax Court held that IRS
counsel’s recommendation that an OIC be rejected was not a prohibited ex parte
communication because the communication was in accordance with the mandate of
I.R.C. § 7122(b) requiring counsel review. See also Isley v. Commisiioner, 141 T. C.
No. 11 (2013) (communications between IRS counsel and collection employees relating
to counsel’s review of OIC not prohibited ex parte communication because prohibition
only extends to discussions between appeals and other Service functions).
Obtaining IRS transcripts from IRS employees to aid in verification is a permissible
communication. Medical Practice Solutions, L.L.C. v. Commissioner, T.C. Memo. 2010­
98.
In Drake v. Commissioner, 125 T.C. 201 (2005), the Tax Court ordered a remand to
Appeals for a new CDP hearing when an ex parte communication occurred between an
Appeals employee and an IRS bankruptcy advisor that was not shared with the
taxpayer, in violation of Rev. Proc. 2000-43. The subject communication was a
memorandum from the bankruptcy advisor that questioned the credibility and motives of
the taxpayer’s counsel in a prior bankruptcy proceeding. Cf. Hotchkiss v.
Commissioner, T.C. Memo. 2010-32 (communications between Appeals officer and
special agent not prohibited where they did not address the substance of the issues in
the case but were merely administrative and procedural).
In Moore v. Commissioner, T.C. Memo. 2006-171, nonacq., AOD 2007-02, the Tax
Court held that improper ex parte communications among an Appeals officer, offer
specialist, and revenue officers previously involved in collection of the tax at issue could
not be remedied by sharing the contents of the communications with the taxpayer and
allowing the taxpayer an opportunity to respond. The court ordered a remand to
Appeals for the purpose of identifying an appropriate remedy to avoid prejudicing the
taxpayer as a result of the ex parte communications. The court further ordered that, if
the appropriate remedy was a new CDP hearing before a new Appeals officer, all
references to the prohibited ex parte communications and any copy of the opinion
should be deleted from the administrative file.

20

As explained in AOD 2007-02, the IRS disagrees that the violations in Moore warranted
a remand to Appeals and the deletions from the administrative record. According to the
AOD, the court should have invoked the harmless error rule and found that the Appeals
officer did not abuse her discretion. Even though the information was received through
prohibited ex parte communications, the Appeals officer cured the violations of the ex
parte communications by disclosing the information to the taxpayer and giving the
taxpayer adequate opportunity to respond during the hearing. The violation of the ex
parte communications rules, therefore, constituted harmless error and a remand to
Appeals was unnecessary.
In Industrial Investors v. Commissioner, T.C. Memo. 2007-93, the court held that a
cover memo from a revenue officer with the file submitted to Appeals putting the
revenue officer’s “spin” on the case and advocating a decision adverse to the taxpayer
was a prohibited ex parte communication.
Chapter Five – Issues Considered at the CDP Hearing
A. Section 6330(c)(1) Verification
Sections 6320(c) and 6330(c)(1) require the Appeals officer to obtain verification from
the Secretary that the requirements of any applicable law or administrative procedure
have been met. Verification can be obtained at any time prior to the issuance of the
determination by Appeals. Treas. Reg. §§ 301.6320-1(e)(1), 301.6330-1(e)(1). The
requirements the Appeals officer are verifying are those things that the Code, Treasury
Regulations, and the IRM require the Service to do before collection can take place.
Conway v. Commissioner, 137 T.C. 209 (2011) (verifying issuance of notice and
demand); McCall v. Commissioner, T.C. Memo. 2009-75 (where “quick” assessments
were mislabeled on the transcripts as jeopardy assessments, no abuse of discretion
because all procedures were followed to make quick assessments). The basic
requirements that must be verified are the IRS’s proper assessment of the liability, the
taxpayer’s failure to pay after notice and demand, and the IRS’s giving of a CDP notice.
Dinino v. Commissioner, T.C. Memo. 2009-284. The Notice of Determination must
expressly state that Appeals verified the timeliness of assessments and other matters,
specify what transcripts and transcript information Appeals relied upon, and include
those transcripts in the administrative record. Medical Practice Solutions, LLC v.
Commissioner, T.C. Memo. 2009-214 (remand where copies of transcripts not in the
record).
If a tax can be assessed without the issuance of a notice of deficiency, Appeals must
verify that a valid assessment was made, that notice and demand was issued, that the
liability was not paid, and (in the case of a CDP levy hearing) that a CDP levy notice
was properly issued to the taxpayer. Ron Lykins, Inc. v. Commissioner, 133 T.C. 87
(2009). Where assessment of the tax requires issuance of a notice of deficiency,
Appeals must also obtain verification that either valid notices of deficiency were sent to
the taxpayer at his or her last known address, or that an appropriate waiver was signed.

21

Hoyle v. Commissioner, 131 T.C. 197 (2008) (verifying that the assessment was
preceded by a properly mailed notice of deficiency); Marlow v. Commissioner, T.C.
Memo. 2010-113 (verifying that consent to assessment was signed by taxpayers);
Ulrich v. Commissioner, 585 F.3d 1235 (9th Cir. 2009) (taxpayers signed consent to
assessment and so waived their right to notices of deficiency). Appeals must similarly
verify that the required preassessment notice (letter 1153) was properly sent to the
taxpayer prior to assessment of the section 6672 trust fund recovery penalty. Mason v.
Commissioner, 132 T.C. 301 (2009).
If a penalty is subject to the preassessment written management approval provision of
section 6751(b)(1), appeals should address that as part of verification. See generally
Chief Counsel Notice CC-2011-004, Written Management Approval Required to Assess
the Section 6702 Penalty for Frivolous Tax Submissions (November 1, 2010)
(concluding that section 6702 penalties for frivolous tax submissions are subject to
managerial approval requirement) and Chief Counsel Notice CC-2014-004, Written
Supervisory Approval Not Required to Assess Certain Section 6702 Penalties (May 20,
2014).
Appeals’ verification duty arises regardless of whether the taxpayer raises any issues at
the hearing. Hoyle, 131 T.C. at 202-203.
In Conway v. Commissioner, 137 T.C. 209 (2011), the court, relying on Treas. Reg. §
301.6303-1(a), which provides that failure to provide notice and demand within 60 days
does not invalidate the notice, held the CDP levy notice sent to the taxpayer Nakano
was a valid notice and demand under section 6303. However, the court held that the
CDP lien notice sent to taxpayer Conway was not a valid notice and demand under
section 6303, in part because the same notice cannot serve as both a section 6303
notice and demand and a post-lien notice under section 6320(a)(1). See also Harris v.
Commissioner, T.C. Memo. 2012-275 (notice and demand requirement is satisfied by
receipt of notices of balance due and the final levy notice).
1. Computer transcripts
Section 6330(c)(1) does not require the Appeals officer to rely on any particular
document for verification. Craig v. Commissioner, 119 T.C. 252, 261-262 (2002); Best
v. Commissioner, T.C. Memo. 2014-12. Verification of many procedures and legal
requirements can be obtained by the Appeals officer from the Service through its
computer records and paper administrative files.
The Form 4340 is a computer-generated list of assessments, payments, and other
activity on a taxpayer’s account that appears in the official records of the IRS. Oropeza
v. Commissioner, T.C. Memo. 2009-244. A presumption of official regularity attaches to
the Forms 4340 because they are official, certified records of account activity. It is not
an abuse of discretion for an Appeals officer to rely on a Form 4340 to verify that legal
and administrative requirements have been satisfied. Craig v. Commissioner, 119 T.C.
252, 261-263 (2002); Battle v. Commissioner, T.C. Memo. 2009-171 (verifying notice

22

and demand). “Form 4340 ‘is generally regarded as being sufficient proof, in the
absence of evidence to the contrary, of the adequacy and propriety of notices and
assessments that have been made.’” Orum v. Commissioner, 123 T.C. 1, 9 (2004)
(quoting Gentry v. United States, 962 F.2d 555, 557 (6th Cir. 1992)). An Appeals officer
may rely on a Form 4340 to verify the validity of an assessment, and to verify the
taxpayer’s outstanding liability, unless the taxpayer can identify an irregularity in the
assessment procedure or other irregularity. McLaine v. Commissioner, 138 T.C. 10
(2012); Roberts v. Commissioner, 118 T.C. 365 (2002). See generally R.H. Stearns Co.
v. United States, 291 U.S. 54, 63 (1934) (official acts are entitled to a presumption of
regularity that all required prerequisites have been complied with and official duties
have been properly discharged); United States v. Chemical Found., Inc., 272 U.S. 1, 14­
15 (1926) (presumption is that public officials discharged their official duties properly,
absent clear evidence to the contrary). But “if the taxpayer alleges that he did not
receive a notice of deficiency and/or denies that he waived the restrictions on
assessment, the Appeals officer will be required to do more than consult the
computerized records; he must ‘examine underlying documents.’” Marlow v.
Commissioner, T.C. Memo. 2010-113, slip. op. at 21 (citing Hoyle v. Commissioner, 131
T.C. 197, 205 n.7 (2008); Meyer v. Commissioner, T.C. Memo. 2013-268 (where
taxpayer alleges no notice of deficiency was mailed, he has identified an irregularity,
thereby requiring Appeals to do more than consult computerized records).
If the taxpayer asks Appeals for a copy of the record of assessment pursuant to section
6303, Appeals meets its obligation by giving the taxpayer a Form 4340 that reports the
information described in Treas. Reg. § 301.6203-1. Best v. Commissioner, T.C. Memo.
2014-12.
Similarly, it is not an abuse of discretion for an Appeals officer to rely on computer
transcripts other than the Form 4340 for verification, unless the taxpayer can identify an
irregularity in the assessment or other procedures. Clayton v. Commissioner, T.C.
Memo. 2009-114; Cipolla v. Commissioner, T.C. Memo. 2004-6. The Appeals officer
may rely on computer transcripts to verify the validity of an assessment as long as the
transcript relied upon contains the information required in Treas. Reg. § 301.6203-1.
Meeh v. Commissioner, T.C. Memo. 2008-282; Williams v. Commissioner, T.C. Memo.
2005-94. An Appeals officer may rely on a computer transcript to verify that a notice
and demand for payment has been sent to the taxpayer in accordance with section
6303. Kun v. Commissioner, T.C. Memo. 2004-273.
2. Verifying the proper issuance of notices of deficiency
a. Generally
Sections 6320(c) and 6330(c)(1) require that the Appeals officer determine whether the
assessment was properly made. If the tax liability was incorrectly assessed under the
math error procedures, the resulting tax assessment is invalid and must be abated. See
I.R.C. § 6213(b)(1). Similarly, if the statutory notice of deficiency was not sent to the
taxpayer’s last known address, the resulting assessment may be invalid. See Hoyle v.

23

Commissioner, 131 T.C. 197 (2008) (remanding to Appeals to clarify the record as to
what it relied upon in determining that the notice of deficiency was properly sent);
Blocker v. Commissioner, T.C. Memo. 2005-279 (assessment following return of
undelivered notice of deficiency valid because sent to last known address). Verification
requires independent confirmation of the validity of assessments, including determining
whether the notice of deficiency was properly issued, even if the taxpayer does not raise
the validity of the assessment as an issue. Hoyle, 131 T.C. at 202-203.
b. Proving notice of deficiency was issued
When the existence of a notice of deficiency is not in dispute, an Appeals officer may
rely on a properly completed certified mailing list (Form 3877) to verify proper mailing.
Meyer v. Commissioner, T.C. Memo. 2013-268. However if the form was not properly
completed or there are other “red flags”, it is not an abuse of discretion for Appeals to
find that the notice was properly issued if the administrative record shows that Appeals
relied on other evidence, or explains the defects. Id. (remand where Appeals failed to
inquire into and explain irregularities on the Form 3877, including whether the
rectangular “IRS Ogden” stamp is an official USPS postmark).
When the Service shows that a notice of deficiency exists and produces a properly
completed certified mailing list or its equivalent, it is entitled to a presumption of mailing.
Crain v. Commissioner, T.C. Memo. 2012-97. This shifts the burden of going forward to
the taxpayer and if the taxpayer fails to meet the burden, then the Service has
successfully shown mailing. O’Rourke v. United States, 587 F.3d 537 (2d Cir. 2009). A
postmarked certified mailing list that is missing some required information does not
create a presumption of mailing. However, if the missing information is minor and there
is evidence that the notice of deficiency existed, this imperfect certified mailing list may
provide sufficient evidence of mailing. O’Rourke, supra (distinguishing the Third
Circuit’s opinion in Pietanza v. Commissioner, 92 T.C. 729 (1989), aff’d without
published opinion, 935 F.2d 1282 (3d Cir. 1991), because in Pietanza the Service failed
to establish that a valid final notice of deficiency was ever prepared). When, however, a
Form 3877 contains defects that are serious on their face, the “IRS would be well
advised to submit additional evidence of mailing” such as habit testimony, supporting
documents, or certified mail receipts. O’Rourke, 587 F.3d at 542. See, e.g., White v.
Commissioner, T.C. Summ. Op. 2012-53 (where Form 3877 is incomplete, Service
attempts to introduce printouts from United States Postal Service’s (USPS) “Track and
Confirm” system; the printouts are inadmissible because Service failed to provide notice
before trial that it intended to seek admission of the printouts as self-authenticating
documents pursuant to rule 902(11) of the Federal Rules of Evidence).
In Butti v. Commissioner, T.C. Memo. 2008-82 (Butti I), the court held that collection
could not proceed because respondent failed to prove that a notice of deficiency was
issued to the taxpayer prior to the assessment. Even though respondent introduced a
certified mailing list showing that the notice of deficiency was properly mailed, a copy of
the notice of deficiency was missing and so could not be introduced into evidence. The
court held, in reliance on Pietenza v. Commissioner, 92 T.C. 729 (1989), aff’d without
published opinion, 935 F.2d 1282 (3d Cir. 1991), that where a taxpayer challenges the
24

existence of the notice of deficiency, the certified mailing list will not by itself establish
the existence of the notice of deficiency. See AOD 1992-05 (nonacquiescence in Tax
Court’s holding in Pietenza, stating that a presumption of regularity should be given to a
certified mailing list despite the absence of a copy of the notice of deficiency). See also
Clayton v. Commissioner, T.C. Memo. 2009-114 (distinguishing Butti I on the grounds
that the taxpayer was given multiple opportunities to challenge the existence of the
notice of deficiency and failed to take advantage of them). Cf. Butti v. Commissioner,
T.C. Memo. 2009-198 (Butti II) (distinguishing Butti I and sustaining collection for
subsequent tax years where a copy of the notice of deficiency was introduced); Casey
v. Commissioner, T.C. Memo. 2009-131 (distinguishing Butti I where the Appeals officer
documented in her case notes that she examined the notice of deficiency, which was
later lost).
In Rivas v. Commissioner, T.C. Memo. 2012-20, the court held that the Service
established a presumption of mailing in the absence of a certified mailing list, by
introducing copies of the notices of deficiency and the returned envelopes containing
the notices, and testimony from a USPS employee about USPS procedures for certified
mail and explaining the stamps and marks on the envelopes.
Where the notice of deficiency is missing, the certified mailing list with other
corroborating evidence may prove that the notice was properly issued. See United
States v. Ahrens, 530 F.2d 781 (8th Cir. 1976) (relying on the presumption of official
regularity, applicable to the official acts of public officers; “in the absence of clear
evidence to the contrary, courts presume that they have properly discharged their
official duties”); United States v. Zolla, 724 F.2d 808 (9th Cir. 1984); Follum v.
Commissioner, 128 F.3d 118, 121 (2d Cir. 1997). See also Haag v. United States, 485
F.3d 1 (1st Cir. 2007) (finding that CDP notice was sent based on computer records and
a copy of taxpayer’s signed certified mail receipt). The Eleventh Circuit has applied the
presumption of official regularity to the Service’s mailing of a notice of deficiency, even
where the government could not produce any record of the mailing. United States v.
Dixon, 672 F. Supp. 503 (M.D. Ala. 1987), aff’d, 849 F. 2d 1478 (11th Cir. 1988). See
also United States v. Chila, 871 F.2d 1015, 1018 (11th Cir. 1989) (recognizing Dixon as
binding precedent). But see Bonaventura v. United States, 428 Fed. Appx. 916 (11th
Cir. 2011) (where records are missing, affirming district court’s finding that Form 1153
was not sent).
If the existence of the deficiency notice itself is not disputed, and absent evidence to the
contrary, the Form 3877 or certified mail list by itself is sufficient to establish that the
deficiency notice was properly mailed to the taxpayer. See Coleman v. Commissioner,
94 T.C. 82, 90-91 (1990); Figler v. Commissioner, T.C. Memo. 2005-230; Virgin v.
Commissioner, T.C. Memo. 1991-63 (certified mail list performs same function as USPS
Form 3877). A properly prepared USPS Form 3877 or the equivalent IRS certified mail
list bearing a USPS date stamp or the initials of a postal employee is proof of
compliance with the Service’s established procedures for mailing deficiency notices and
constitutes direct documentary evidence of the date and fact of mailing. Barnes v.
Commissioner, T.C. Memo. 2010-30.

25

In Magazine v. Commissioner, 89 T.C. 321, 324-26 (1987), nonacq., 1988-1 C.B. 1, the
Tax Court held that respondent could not prove mailing a notice of deficiency based
solely on evidence of respondent’s mailing customs and practices. The court concluded
that while “habit evidence” was admissible, respondent also had to present direct
testimony or documentary evidence of mailing to show that the notice was in fact
mailed. Id. at 326. It further noted that Form 3877 is often the only direct evidence of
the mailing of a notice of deficiency. Id. at 327, n.8. See also Webb v. Commissioner,
T.C. Memo. 1996-449 (production of certified mailing list with some corroborating
evidence, such as testimony from Service employee on procedures surrounding
preparation and mailing of the notices of deficiency was sufficient to prove existence of
notice of deficiency). Cf. Marlow v. Commissioner, T.C. Memo. 2010-113 (where the
Forms 4549 consents to assessment are lost, respondent may use secondary evidence
such as computer records and testimony of IRS employees to prove the contents of the
forms).
The Service’s failure to strictly comply with its mailing procedures is not fatal if the
record contains evidence otherwise sufficient to prove proper mailing of the deficiency
notice. See, e.g., Massie v. Commissioner, T.C. Memo. 1995-173 (postal clerk did not
initial certified mail list but respondent submitted credible evidence in the form of a
manager’s testimony regarding respondent’s mailing procedures); Bobbs v.
Commissioner, T.C. Memo. 2005-272 (USPS clerk did not initial certified mail list but
address reflected on the list was taxpayer’s undisputed last known address and
taxpayer did not argue respondent failed to follow his established mailing procedures).
The same evidence that establishes that the Commissioner mailed a notice of
deficiency to a taxpayer’s last known address is sufficient to establish that the
Commissioner properly sent a notice of a proposed TFRP assessment under section
6672(b)(1). Orian v. Commissioner, T.C. Memo. 2010-234.
B. Relevant Issues Under Section 6330(c)(2)(A)
Sections 6320(c) and 6330(c)(2)(A) provide that the taxpayer may raise during the
hearing any relevant issue relating to the unpaid tax. Taxpayers will be expected to
provide any relevant information requested by Appeals, such as financial statements,
for its consideration of the facts and issues involved in the hearing. Treas. Reg. §§
301.6320-1(e)(1), 301.6330-1(e)(1). Relevant issues include the following:
1. Appropriate spousal defenses
A taxpayer may raise any appropriate spousal defense during a CDP hearing. I.R.C.
§ 6330(c)(2)(A)(i). A taxpayer is precluded from requesting relief under sections 66 and
6015 if the Commissioner has already made a final determination as to spousal
defenses in a statutory notice of deficiency or final determination letter. Treas. Reg.
§§ 301.6320-1(e)(2), 301.6330-1(e)(2); Treas. Reg. §§ 301.6320-1(e)(3) Q&A-E4,
301.6330-1(e)(3) Q&A-E4. If the taxpayer had raised a spousal defense under section
66 or 6015 and meaningfully participated in a prior administrative or judicial proceeding
that has become final, section 6330(c)(4) prevents the taxpayer from raising the
defense in a subsequent CDP hearing or judicial review proceeding. Treas. Reg.

26

§§ 301.6320-1(e)(3) Q&A-E5, 301.6330-1(e)(3) Q&A-E5. Further, section 6015(g)(2)
bars a taxpayer who meaningfully participated in a judicial proceeding from raising relief
under section 6015 for any tax year for which the court has rendered a final decision on
the taxpayer’s tax liability if section 6015 relief was available at the time of the decision.
The taxpayer also may not raise any factual issues decided by the court that are
relevant to relief under section 6015. Treas. Reg. § 1.6015-1(e).
2. Challenges to appropriateness of collection action
Pursuant to section 6330(c)(2)(A)(ii), a taxpayer may challenge whether the collection
action is appropriate.
a. Collection action not appropriate if levy causes economic hardship
In Vinatieri v. Commissioner, 133 T.C. 392 (2009), the Tax Court ruled that upholding a
proposed levy that would prevent the taxpayer from meeting her living expenses was an
abuse of discretion. The court reasoned that proceeding with the proposed levy would
have been unreasonable because section 6343(a)(1)(D) would have required its
immediate release given that the Appeals officer determined that the levy would cause
an economic hardship due to the financial condition of the taxpayer. As stated in Chief
Counsel Notice CC-2011-005, Considering Economic Hardship in Determining the
Appropriateness of a Levy, Chief Counsel’s position is that the Tax Court correctly held
that Appeals abused its discretion, since if a levy will create an economic hardship
under section 6343(a)(1)(D), it is not appropriate to levy. See also Lantz v.
Commissioner, 607 F.3d 479 (7th Cir. 2010) (in dicta, court states that where levy would
cause taxpayer to be unable to pay his or her reasonable basic living expenses, taxes
must be declared as currently not collectible and levy should not proceed); Antico v.
Commissioner, T.C. Memo. 2013-35 (remand because Appeals failed to consider
economic hardship). See also Waldeigh v. Commissioner, 134 T.C. 280 (2010)
(remand to clarify record as to whether levy on retirement income would cause
economic hardship) But cf. Kyereme v. Commissioner, T.C. Memo. 2012-174 (no
abuse of discretion in sustaining filing of NFTL notwithstanding taxpayer’s currently not
collectible status and claim that the NFTL would force him to rely on public assistance).
b. Taxes discharged in bankruptcy
If a taxpayer has received a bankruptcy discharge and that taxpayer’s tax liabilities are
dischargeable, the taxpayer is no longer personally liable for the taxes and the Service
is enjoined from collecting the liability from the taxpayer personally. See 11 U.S.C. §
524(a); see also In re Rivera Torres, 309 B.R. 643, 647 (1st Cir. B.A.P. 2004). If,
however, the Service filed a NFTL before the bankruptcy petition date, the lien
continues to attach to prepetition property of the taxpayer that was exempt or
abandoned from the estate once the bankruptcy is discharged. 11 U.S.C. §
522(c)(2)(B); Waldeigh v. Commissioner, 134 T.C. 280 (2010). A lien remains attached
to property excluded from the estate, such as an ERISA-qualified pension plan, even if

27

a NFTL was not filed before the petition date. United States v. Rogers, 558 F. Supp. 2d
774 (N.D. Ohio 2008).

c. Criminal restitution cases
An award of criminal restitution does not bar the Service from assessing and collecting
a civil tax liability from the taxpayer. Gillum v. Commissioner, T.C. Memo. 2010-280,
aff’d, 676 F.3d 633 (8th Cir. 2012).
In Creel v. Commissioner, 419 F.3d 1135 (11th Cir. 2005), the Eleventh Circuit affirmed
the Tax Court’s unpublished Order and Decision holding that it was inappropriate to
proceed with collection because the tax liability was satisfied by criminal restitution
payments. The Eleventh Circuit recognized the general rule that the government can
seek restitution through criminal proceedings and pursue recovery of excess civil tax
liability in subsequent civil proceedings. The court, nevertheless, found based on the
unique facts of this case that the restitution payments satisfied the civil tax liability. In
Chief Counsel Notice CC-2007-008, Litigating Cases Involving Criminal Restitution
(February 27, 2007), the Office of Chief Counsel concluded that Creel was wrongly
decided. See also Chief Counsel Notice CC-2013-012, Deficiency and Litigation Issues
Concerning Tax Periods For Which Criminal Restitution Has Been Ordered (July 31,
2013) (addressing the issues that arise when litigating Tax Court cases that include tax
periods covered by a restitution order) and Chief Counsel Notice CC-2011-018, The
Assessment and Collection of Criminal Restitution (August 26, 2011) (addressing the
Service’s authority to assess criminal restitution for failure to pay any tax under section
6201(a)(4)).
3. Collection alternatives generally
The taxpayer is allowed to raise collection alternatives as part of the CDP hearing.
I.R.C. § 6330(c)(2)(A)(iii). Section 6330(c)(2)(A)(iii) and Treas. Reg. §§ 301.6320­
1(e)(3) Q&A-E6 and 301.6330-1(e)(3) Q&A-E6 list the following as examples of
collection alternatives:






posting of a bond;
substitution of other assets;
an installment agreement;
an offer-in-compromise; and
withholding collection action to facilitate future payment.

In addition, Treas. Reg. § 301.6320-1(e)(3) Q&A-E6 provides that collection
alternatives in lien cases include a proposal to withdraw the NFTL to facilitate the
collection of the tax liability, subordination of the NFTL, and discharge of specific
property from the NFTL. See Alessio Azzari, Inc. v. Commissioner, 136 T.C. 178 (2011)
(Appeals erred in concluding that NFTL could not be subordinated). See also Sullivan
v. Commissioner, T.C. Memo. 2012-337, n. 8 (treating Currently Not Collectible Status
28

as a collection alternative). Acceptance of an installment agreement does not
necessarily preclude the filing of a NFTL. Karakaedos v. Commissioner, T.C. Memo.
2012-53.
The two most common statutorily authorized collection alternatives at issue in CDP
cases are OICs pursuant to section 7122, and installment agreements authorized
pursuant to 6159. The most common type of OIC is one based on doubt as to
collectability premised on the taxpayer’s inability to pay the tax liability in full. The most
common type of IA is one that fully pays the tax in installments over an agreed period of
time. Prior to 2004, an installment agreement had to provide for full payment of the tax
liability, including interest and penalties. In 2004, Congress amended section 6159 to
authorize the IRS to enter installment agreements that do not provide for full payment;
such agreements are referred to as partial payment installments. Watchman v.
Commissioner, T.C. Memo. 2012-113 (rejecting taxpayers’ argument that their full
payment installment agreement waived interest and penalties).
In determining whether to accept an offer-in-compromise or installment agreement,
Appeals must determine the taxpayer’s reasonable collection potential (RCP), which will
establish the taxpayer’s ability to pay the tax either in full at the present in time, or in
installments over a period of time. The Service will not accept a compromise that is less
than the RCP, absent a showing of special circumstances. Johnson v. Commissioner,
136 T.C. 475, 486 (2011), aff’d, 502 Fed. Appx. 1 (D.C. Cir. 2013). The Service may
reject an offer-in-compromise because the taxpayer’s ability to pay is greater than the
amount he proposes to pay under the compromise proposal. Id. When Appeals
determines that a taxpayer has dissipated assets in disregard of the taxpayer’s
outstanding tax liability, the dissipated assets may be included in the minimum amount
that is to be paid under an acceptable offer-in-compromise. Id. Where a taxpayer’s
offer was substantially lower than the RCP, appeals did not abuse its discretion in failing
to give the taxpayer an opportunity to amend the offer prior to rejection. Brombach v.
Commissioner, T.C. Memo. 2012-265 (also holding that taxpayer failed to show special
circumstances).
The Service relies on standardized guidelines to determine a taxpayer’s RCP in order to
evaluate collection alternatives. Section 7122(d)(2) requires the Service “to develop
and publish schedules of national and local allowances designed to provide that
taxpayers entering into a compromise have an adequate means to provide for basic
living expenses.” See also Treas. Reg. § 301.7122-1(c)(2)(i). National standards are
used to determine a taxpayer’s food, clothing, health care, personal care, and
miscellaneous expenses. Local standards are used to determine a taxpayer’s housing,
utilities, and transportation expenses. See IRM 5.15.1.8 and 5.15.1.9. The Tax Court
has sustained the Commissioner’s use of the IRS’s national and local allowances as
guidelines for basic living expenses in evaluating the adequacy of proposed installment
agreements and offer-in-compromises. Beeler v. Commissioner, T.C. Memo. 2009-266.
See Bromback v. Commissioner, T.C. Memo. 2012-265 (appeals does not abuse its
discretion by using local housing allowances lower than a taxpayer's actual housing
expenses if the taxpayer has not shown that he will be harmed by having to live on the
lesser amount); Aldridge v. Commissioner, T.C. Memo. 2009-276 (taxpayer has the

29

burden of providing information to Appeals to justify a departure from the local
standards); Gregg v. Commissioner, T.C. Memo. 2009-19 (“Petitioner did not provide
evidence demonstrating that she would not have adequate means to provide for her
basic living expenses if the national standards were used. And where a taxpayer does
not present this evidence, we have held that use of the national standards is not an
abuse of discretion by the Commissioner.”); Fernandez v. Commissioner, T.C. Memo.
2008-210 (no abuse of discretion where the Appeals officer used the standard
allowance instead of the taxpayer's actual housing and utilities expense). Where
Appeals has followed the Commissioner's guidelines to ascertain a taxpayer's RCP and
rejected the taxpayer's collection alternative on that basis, the Tax Court has found no
abuse of discretion. McClanahan v. Commissioner, T.C. Memo. 2008-161. The Tax
Court does not independently review whether an offer-in-compromise or other collection
alternative is acceptable. Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d,
469 F.3d 27 (1st Cir. 2006). The Tax Court’s review is limited to whether the Appeals
officer’s rejection of the offer was arbitrary, capricious, or without sound basis in fact or
law. Id.
In rejecting a proposed collection alternative, Appeals must consider all relevant
evidence provided by the taxpayer, give the taxpayer reasonable time to submit
requested documentation, follow statutory and regulatory requirements, and explain in
detail in the notice of determination why collection alternatives offered by the taxpayer
were rejected. See, e.g., Lites v. Commissioner, T.C. Memo. 2005-206 (abuse of
discretion when Appeals officer, in rejecting installment agreement, found without
explanation taxpayers’ disposable income to be higher than the financial information
submitted by the taxpayers). See also Samuel v. Commissioner, T.C. Memo. 2007-312
(Appeals erred in not giving taxpayer opportunity to revise offer-in-compromise);
Fairlamb v. Commissioner, T.C. Memo. 2010-22 (remand because Appeals’ rationale
for rejecting the offer is unclear).
Acceptance of collection alternatives is generally within the discretion of the Service and
Appeals acts within its discretion when it follows guidelines in the Treasury Regulations
and IRM in evaluating the collection alternative. For example, IRM guidelines provide
that an offer-in-compromise will be returned as not processable if all tax returns for
which the taxpayer has a filing requirement are not filed within the time required by the
Service. It is accordingly not an abuse of discretion for Appeals to determine that the
taxpayer is ineligible for an offer if the taxpayer has not filed all required tax returns or is
otherwise not in compliance with the tax laws. Balsamo v. Commissioner, T.C. Memo.
2012-109; Huntress v. Commissioner, T.C. Memo. 2009-161; Treas. Reg. §§ 6320­
1(d)(2) Q&A-D8, 6330-1(d)(2) Q&A-D8. The failure to be current on payment of
estimated taxes is a reasonable basis for rejecting an offer. Christopher Cross, Inc. v.
United States, 461 F.3d 610 (5th Cir. 2006). See also Keller v. Commissioner, 568 F.3d
710 (9th Cir. 2009) (Appeals did not err when it looked at the facts and circumstances of
each case and rejected the offers based on IRM guidelines); Salazar v. Commissioner,
T.C. Memo. 2008-38 (Appeals did not abuse discretion in rejecting an offer-in­
compromise that would risk collecting from a distribution in the taxpayer’s bankruptcy
case). On the other hand, the IRM does not have the force of law and does not confer

30

enforceable rights on taxpayers. Fargo v. Commissioner, 447 F.3d 706, 713 (9th Cir.
2006); Reed v. Commissioner, T.C. Memo. 2014-41.
In Alessio Azzari, Inc. v. Commissioner, 136 T.C. 178 (2011), the court held that it was
an abuse of discretion for Appeals to reject an installment agreement because the
taxpayer was not current with employment tax deposits, where Appeals’ erroneous
refusal to consider subordination of the NFTL contributed to petitioner’s falling behind
on its tax deposits.
The taxpayer is required to submit financial information for consideration of a collection
alternative. It is not an abuse of discretion for Appeals to reject a collection alternative
because the taxpayer failed to submit requested financial information. Tucker v.
Commissioner, T.C. Memo. 2014-103; Huntress v. Commissioner, T.C. Memo. 2009­
161; Ranuio v. Commissioner, T.C. Memo. 2010-178 (Appeals may request financial
information pertaining to the taxpayer’s nonliable spouse in a community property
state); TGI Enterprises, Inc. v. Commissioner, T.C. Memo. 2009-123; Olsen v. United
States, 414 F.3d 144, 154 (1st Cir. 2005); Kindred v. Commissioner, 454 F.3d 688, 696
(7th Cir. 2006); Orum v. Commissioner, 412 F.3d 819, 820 (7th Cir. 2005). See also
Treas. Reg. §§ 301.6320-1(e)(1), 301.6330-1(e)(1) (“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.”) See also Hartman v.
Commissioner, 638 F.3d 248 (3d Cir. 2011) (“[W]e agree with the Tax Court that the
IRS did not abuse its discretion in sustaining the proposed levy where Hartmann failed
to comply with the requirements for filing a proposed collection alternative.”). Further,
the taxpayer is expected to meet reasonable deadlines set by Appeals to submit
requested information, and it is not an abuse of discretion to issue the determination if
the taxpayer fails to submit the requested items within the reasonable timeframe given
by Appeals. Pough v. Commissioner, 135 T.C. 344 (2010). The collection of
information during a CDP hearing is not subject to the Paperwork Reduction Act, and so
the lack of a control number on a Form 433A (Collection Information Statement) does
not relieve the taxpayer of the consequences of failing to submit the form to Appeals.
Pitts v. Commissioner, T.C. Memo. 2010-101.
In the absence of the taxpayer proving eligibility for a formal statutory collection
alternative such as an OIC or IA, the taxpayer may be eligible for Currently Not
Collectible (CNC) status, which is a non-statutory, reversible, administrative designation
where the Service determines that collection will not proceed because the tax is
currently not collectible or because of economic hardship. See generally IRM 5.16.1.
4. Offer-in-Compromise
Section 7122(a) authorizes the Secretary of the Treasury to compromise any civil or
criminal case arising under the internal revenue laws before the case is referred to the
Department of Justice. See also Treas. Reg. § 301.7122-1. This is the statutory
authority for the Service’s offer-in-compromise program. Section 7122(c) also sets out
the requirements for making a partial payment or periodic payments along with the
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offer-in-compromise. See Tucker v. Commissioner, T.C. Memo. 2014-103 (Appeals did
not abuse its discretion in rejecting an OIC for failure to make required periodic
payments). Where the OIC is properly processed and rejected in part based on
collectability grounds, Appeals did not abuse its discretion in retaining the section
7122(c) partial payment in conjunction with its rejection of the OIC. Isley v.
Commissioner, 141 T.C. No. 11 (2013). In Isley, the Tax Court held that where the
taxes at issue in a CDP hearing were the subject of a referral to the Department of
Justice, section 7122(a) requires that an appeals officer at a CDP hearing obtain prior
approval by the Department of Justice of a proposed compromise. The court
nonetheless held that section 7122(a) is not an absolute bar to appeals consideration of
the OIC during the CDP hearing, but the OIC must be approved by Justice.
The regulations under section 7122 set forth three grounds for the compromise of a tax
liability: doubt as to liability, doubt as to collectability, or promotion of effective tax
administration. Treas. Reg. § 301.7122-1(b); Moore v. Commissioner, T.C. Memo.
2013-278.
a. Doubt as to liability offer-in-compromise
When a taxpayer files an offer-in-compromise based on doubt as to liability, the
taxpayer challenges the existence or amount of the underlying liability. Therefore,
under section 6330(c)(2)(B), the taxpayer does not have the legal right to consideration
of a doubt as to liability offer submitted in a CDP administrative hearing if the taxpayer
previously received a notice of deficiency or otherwise had an opportunity to dispute the
liability. Kindred v. Commissioner, 454 F.3d 688, 699-700 (7th Cir. 2006); Baltic v.
Commissioner, 129 T.C. 178 (2007). Contra Siquieros v. United States, 2005-1 USTC
¶ 50,244 (W.D.Tex. 2004) (finding that the taxpayer’s offer based on doubt as to liability
was not synonymous with a challenge to the underlying liability).
b. Doubt as to collectability offer-in-compromise
Doubt as to collectability exists in any case where the taxpayer’s assets and income are
less than the full amount of the assessed liability. Treas. Reg. § 301.7122-1(b)(2). A
doubt as to collectability offer-in-compromise must generally offer an amount equal to
the taxpayer’s reasonable collection potential, absent a showing of special
circumstances. Murphy v. Commissioner, 125 T.C. 301 (2005), aff’d, 469 F.3d 27 (1st
Cir. 2006) (no abuse of discretion where Appeals officer rejected offer-in-compromise
that was substantially less than reasonable collection potential); Estate of Mangiardi v.
Commissioner, T.C. Memo. 2011-24 (in evaluating an offer-in-compromise for estate
tax, the estate’s reasonable collection potential includes the amount the Service may
collect under section 6324(a)(2) from a beneficiary who had received nonprobate
distributions). Appeals doesn't abuse its discretion by rejecting an offer-in-compromise
that falls short of a taxpayer's RCP. Bromback v. Commissioner, T.C. Memo. 2012-265.
The Commissioner may accept an OIC based on doubt as to collectability that is less
than the reasonable collection potential if special circumstances are present. Anderson
v. Commissioner, T.C. Memo. 2013-261 (remand to consider petitioner’s health
32

problems); Antico v. Commissioner, T.C. Memo. 2013-35 (remand because Appeals did
not make findings as to special circumstances). See generally Keller v. Commissioner,
568 F.3d 710, 719 (9th Cir. 2009), aff’g in part and vacating in part Ertz v.
Commissioner, T.C. Memo. 2007-15 (no abuse of discretion where Appeals officer
rejected offer-in-compromise based on speculative future medical expenses); Moore v.
Commissioner, T.C. Memo. 2013-278 (petitioner failed to show special circumstances).
The taxpayer is required to submit a written offer-in-compromise for consideration of the
offer. Appeals does not abuse its discretion in failing to consider an offer that petitioner
never made. O’Neil v. Commissioner, T.C. Memo. 2009-183 (taxpayer discussed an
offer-in-compromise with Appeals officer on multiple occasions but failed to submit one
in writing); Huntress v. Commissioner, T.C. Memo. 2009-161; Kindred v. Commissioner,
454 F.3d 688, 696 (7th Cir. 2006) (“Without an actual offer in compromise to consider, it
would be most difficult for either the Tax Court or this court to conclude that the Appeals
officer might have abused his discretion; for the Appeals officer could not mistakenly
reject something which has not been presented to him.”).
In Tucker v. Commissioner, 676 F.3d 1129 (D.C. Cir. 2012), cert. denied, 133 S. Ct. 646
( 2012), the District of Columbia Circuit Court of Appeals affirmed the Tax Court’s
holding that it was not an abuse of discretion for Appeals to include funds that the
taxpayer had lost while “day trading” stock in the taxpayer’s reasonable collection
potential as dissipated assets. It was also not an abuse of discretion for Appeals to
reject the taxpayer’s deferred payment offer-in-compromise and to instead insist on a
partial payment installment agreement where Appeals believed that the liability could be
paid in full.
In Dalton v. Commissioner, 682 F.3d 149 (1st Cir. 2012), rev’g 135 T.C. 393 (2010), the
First Circuit held that it was not an abuse of discretion to reject an offer-in-compromise
on the ground that it did not include the value of a third-party’s property, concluding that
the IRS’s determination that the taxpayer held an interest in the property under federal
nominee law was reasonable.
In Murphy v. Commissioner, 125 T.C. 301 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006), the
Tax Court rejected the taxpayer’s argument that section 7122 requires the Service to
provide administrative appeal rights within a CDP hearing from the rejection of an offerin-compromise. The court noted that there was administrative review as part of the
CDP process and that the taxpayer had the right to appeal the CDP determination by
seeking judicial review.
In Reed v. Commissioner, 141 T.C. No. 7 (2013), reconsideration denied, T.C. Memo.
2014-41, the Tax Court held that the Service cannot be required to reopen an OIC that
was returned as nonprocessible a few years before the CDP hearing, since the old OIC
would be based on outdated financial data, and the statutory scheme does not permit
review of the Service’s return of an OIC. In denying reconsideration, the court also held
that it is not an abuse of discretion to return an OIC because of a taxpayer’s failure to
meet current tax obligations.

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c. Effective tax administration offer-in-compromise
The Service has the authority to enter into an offer-in-compromise based on effective
tax administration where the taxpayer can demonstrate that full collection would cause
the taxpayer economic hardship, or if there are compelling public policy or equity
considerations. Anderson v. Commissioner, T.C. Memo. 2013-261; Treas. Reg. §
301.7122-1(b)(3). The Service may not enter into a compromise to promote effective
tax administration where doing so would undermine compliance with the tax laws. Id.
The ability to make full payment is a prerequisite to an effective tax administration offerin-compromise. Treas. Reg. § 301.7122-1(b)(3)(ii). Compromise based on compelling
public policy or equity considerations is established when exceptional circumstances
exist such that collection of the full liability would undermine public confidence that the
tax laws are being administered in a fair and equitable manner. Treas. Reg. §
301.7122-1(b)(3)(ii). See Pomeroy v. Commissioner, T.C. Memo. 2013-26 (factors to
be considered include a taxpayer’s long-term illness or medical condition that prevents
him from earning a living and that will exhaust his financial resources); Bogart v.
Commissioner, T.C. Memo. 2014-46 (remand to consider compromise based on public
policy or equity circumstances where petitoners’ bookkeeper embezzled funds from
their S-corporation). This basis is not established by vague assertions that the
imposition of the tax is unfair. See generally Keller v. Commissioner, 568 F.3d 710, 719
(9th Cir. 2009), aff’g in part and vacating in part Ertz v. Commissioner, T.C. Memo.
2007-15 (no abuse in discretion in rejecting offers based on taxpayers’ argument that
they were victimized by a tax shelter promoter). Cf. Service Employees International
Union, 100 v. United States, 598 F.3d 1110 (9th Cir. 2010) (district court did not have
discretion to reduce penalties for failure to timely file information returns).
In Fargo v. Commissioner, 447 F.3d 706 (9th Cir. 2006), the court held that it was not
an abuse of discretion to reject an offer based on “effective tax administration” grounds.
The court stated that “[t]axpayers' hardship claim is particularly weak given that the
relevant inquiry is only whether the Commissioner abused his discretion. Although one
might find some ground upon which to quibble with the Commissioner's decision, it is
impossible to hold that the Commissioner employed an erroneous view of the law or a
clearly erroneous assessment of the facts.” See also Speltz v. Commissioner, 454 F.3d
782 (8th Cir. 2006) (also affirming rejection of effective tax administration offer).
d. Terminated offer-in-compromise
In Robinette v. Commissioner, 439 F.3d 455 (8th Cir. 2006), rev’g 123 T.C. 85 (2004),
the Eighth Circuit held that the failure to file one return (even a refund return) during the
5-year compliance period after an offer-in-compromise is accepted provides a legal
basis for terminating the offer. The Eighth Circuit held that the Tax Court erred in
reaching the question of “materiality” of breach, as the taxpayer’s failure to file a timely
income tax return was a breach of an express condition of the offer. Pursuant to the
Eighth Circuit’s decision, the taxpayer must strictly comply with the terms and conditions
of the offer-in-compromise. In Trout v. Commissioner, 131 T.C. 239 (2008), the Tax
Court adopted the express conditions analysis of the Eighth Circuit, holding that the IRS

34

did not abuse its discretion by terminating an offer after the taxpayer failed to file his
returns and the IRS sent warning letters to him.
C. Section 6330(c)(2)(B) Liability Challenges
Under section 6330(c)(2)(B), a taxpayer may challenge the existence or amount of the
underlying tax liability in a CDP hearing if the taxpayer did not receive a statutory notice
of deficiency for the tax liability or did not otherwise have an opportunity to dispute the
tax liability. See Callahan v. Commissioner, 130 T.C. 44 (2008) (taxpayer may
challenge frivolous return penalty under section 6702 because no notice of deficiency
was issued and no Appeals conference was offered); Alexander v. Commissioner, T.C.
Memo. 2012-75 (rejecting taxpayer’s challenge to the section 6702 penalty on the
merits). See also Kuretski v. Commissioner, - F.3d - (D.C. Cir. June 20, 2014)
(taxpayers barred from arguing reasonable cause in defense of section 6651(a)(2)
addition to tax where they failed to file a written statement explaining why they had
reasonable cause for nonpayment); Springer v. Commissioner, 580 F.3d 1142 (10th Cir.
2009) (section 6330(c)(2)(B) does not bar taxpayer from challenging penalties that did
not exist and thus were not at issue in the prior deficiency proceedings); Brennan v.
Commissioner, T.C. Memo. 2013-123 (taxpayer cannot challenge additions to tax that
were included on notice of deficiency, but could raise computational errors on an
assessment made after issuance of the notice of deficiency).
Underlying tax liability means the tax imposed by the Internal Revenue Code.
“Underlying tax liability” has also been defined by the court as “the tax on which the
Commissioner based his assessment.” Robinette v. Commissioner, 123 T.C. 85, 93
(2004), rev’d, 439 F.3d 455 (8th Cir. 2006). The term “underlying tax liability” includes
the total amount of tax (including interest and penalties) assessed for a particular tax
period, including tax assessed under the deficiency procedures, tax reported on a tax
return, or a combination of both. Callahan v. Commissioner, 130 T.C. 44, 49-50 (2008);
Montgomery v. Commissioner, 122 T.C. 1, 7-8 (2004). See also Gray v. Commissioner,
138 T.C. 295 (2012) (court’s jurisdiction includes jurisdiction to review determination to
abate a penalty where the penalty forms part of the underlying tax liability); Farhoumand
v. Commissioner, T.C. Memo. 2012-131 (underlying liability includes all amounts
assessed for the tax period for which the CDP notice was issued, even if not asserted
on the notice; taxpayer can raise merits of section 6654(a) addition to tax that is not
listed on the notice).
Whether or not issues concerning the validity of assessments and application of credits
and payments are treated as liability or nonliability issues, will determine whether their
consideration will be barred under section 6330(c)(2)(B). See, e.g., Olender v.
Commissioner, T.C. Memo. 2008-205 (argument that assessment is invalid because it
was made after the expiration of the statute of limitations on assessment is an
underlying liability issue that is barred). Chief Counsel Notice CC-2014-002, Proper
Standard of Review for Collection Due Process Determinations, states the Office of
Chief Counsel’s longstanding position that issues involving whether the Service has
complied with all applicable legal and administrative procedural requirements involve
nonliability issues that are not subject to preclusion under section 6330(c)(2)(B).
35

Nonliability issues include whether the assessment is valid (e.g., whether a notice of
deficiency or letter 1153 was properly issued) and whether the assessment and
collection statute of limitations were complied with. The notice similarly states the
position that issues involving the amount of payments and overpayment credits the
taxpayer has made and their proper application, are nonliability issues that are not
subject to preclusion under section 6330(c)(2)(B). See discussion at Chapter 7, Section
D.4 (Standard of review for verification, statute of limitation and application of payment
issues).
Section 6330(c)(2)(B) does not preclude claims for spousal relief under sections 66 or
6015 because these claims do not dispute the existence of the liability but rather seek
relief from the liability. Treas. Reg. §§ 301.6320-1(e)(3) Q&A-E3, 301.6330-1(e)(3)
Q&A-E3. Claims for interest abatement under section 6404 are also not disputes about
the existence of liability, because they seek relief from liability for interest.
If a taxpayer is barred from challenging the existence or amount of the underlying tax
liability in a CDP hearing, the taxpayer is also precluded from raising the validity of the
liability as an issue in a judicial review proceeding under section 6330(d). Goza v.
Commissioner, 114 T.C. 176 (2000).
Section 6330(c)(2)(B) does not displace the doctrine of res judicata as to liability
determinations. See Goodman v. Commissioner, T.C. Memo. 2006-220 (res judicata
and section 6330(c)(2)(B) both apply to preclude relitigation of liability determined in
prior stipulated tax court decision); Golden v. Commissioner, 548 F.3d 487 (6th Cir.
2008) (res judicata precludes raising statute of limitation on assessment for tax agreed
to in stipulated decision). But see Lykins, Inc. v. Commissioner, 133 T.C. 87 (2009)
(res judicata does not bar taxpayer from claiming net operating loss carrybacks and
does not bar respondent from recapturing tentative refunds).
Section 6330(c)(2)(B) also does not displace other provisions in the Internal Revenue
Code that preclude challenging the underlying liability in any proceeding. See, e.g.,
I.R.C. § 6201(a)(4)(C) (assessment of criminal restitution may not be challenged on the
basis of the existence or amount of the underlying tax liability in any proceeding).
1. Self-reported taxes
In Montgomery v. Commissioner, 122 T.C. 1 (2004), acq., AOD. 2005-03, 2005 WL
3451063, the Tax Court construed the term “underlying tax liability” under section
6330(c)(2)(B) to encompass the tax reported due on a self-filed tax return. The court
accordingly held that the taxpayers could challenge the amount of the tax reported on
their 2000 return in the CDP proceeding.
Even under Montgomery, a taxpayer may not challenge the existence or amount of selfreported tax liability for a taxable year if the taxpayer received a notice of deficiency with
respect to that year or had some other prior opportunity to dispute the tax liability. The
fact that the taxpayer disputes items on the return that were not adjusted by the Service

36

in the notice of deficiency is immaterial. Of course, if the Tax Court entered a decision
involving the same tax liability in a deficiency proceeding, the doctrine of res judicata
would preclude the taxpayer from disputing that liability in the CDP proceeding. See
Chief Counsel Notice CC-2006-05, Change in Litigating Position Regarding Challenges
to Self-Reported Liability in Collection Due Process Cases; Goodman v. Commissioner,
T.C. Memo. 2006-220 (prior tax court stipulated decision is res judicata precluding
taxpayer from disputing liability in CDP); Golden v. Commissioner, 548 F.3d 487 (6th
Cir. 2008).
The Tax Court held in Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), that section
6330 does not give the court jurisdiction to determine an overpayment or order a refund
or credit of taxes paid. Therefore, the court cannot order a credit or refund if the court
determines an amount of underlying tax liability for a taxable year that is less than the
taxpayer’s withholding, estimated tax, and other tax payments paid or credited for that
year. A judicial determination of the amount of the underlying tax liability in a CDP case
may, however, estop both parties from contesting the amount of that same liability in a
subsequent refund action (subject to section 6511 limitations on filing refund claims).
2. Taxpayer must raise issues at administrative hearing
A taxpayer is precluded from disputing the underlying tax liability in a CDP judicial
review proceeding if the taxpayer failed to properly raise the merits of the underlying tax
liability as an issue during the CDP hearing. Giamelli v. Commissioner, 129 T.C. 107
(2007). The merits are not properly raised if the taxpayer challenges the underlying tax
liability, but fails to present Appeals with any evidence with respect to that liability after
being given a reasonable opportunity to present such evidence. Treas. Reg. §§
301.6320-1(f)(2) Q&A-F3, 301.6330-1(f)(2) Q&A-F3. See Pough v. Commissioner, 135
T.C. 344 (2010) (petitioner did not file amended tax returns during the hearing). A
taxpayer would be precluded from challenging a self-reported tax liability when, prior to
issuing the notice of determination, the Appeals officer gave the taxpayer a reasonable
opportunity to file an amended return or provide requested information substantiating
his liability challenge but the taxpayer failed to do so. See Montgomery v.
Commissioner, 122 T.C. 1, 19-20 (2004) (Marvel, J. and Goeke, J., concurring);
Newstat v. Commissioner, T.C. Memo. 2005-262. Taxpayers are not precluded from
raising liability because they did not raise the issue in the Form 12153 hearing request;
liability is properly raised if the taxpayers raise it at any time during the CDP hearing.
Fielder v. Commissioner, T.C. Memo. 2012-284.
3. Receipt of a statutory notice of deficiency
If the taxpayer contests receipt of the notice of deficiency, respondent must introduce
evidence of actual mailing. Rivas v. Commissioner, T.C. Memo. 2012-20. However,
respondent must show that the notice of deficiency was received, not merely issued, in
order to establish that taxpayer is precluded from raising liability. If respondent shows
that the notice of deficiency was properly issued, then respondent has established that

37

the assessment was properly made. However respondent must go one step further to
prove receipt in order to establish that the taxpayer cannot raise liability.
Receipt of a statutory notice of deficiency under section 6330(c)(2)(B) means receipt in
time to petition the Tax Court for a redetermination of the deficiency. Treas. Reg. §§
301.6320-1(e)(3) Q&A-E2, 301.6330-1(e)(3) Q&A-E2; Butti v. Commissioner, T.C.
Memo. 2009-198; Kuykendall v. Commissioner, 129 T.C. 77 (2007) (receipt within 12
days of filing date insufficient time to petition court). Respondent has the burden of
proving by a preponderance of the evidence that the receipt requirement has been
satisfied. Sego v. Commissioner, 114 T.C. 604 (2000).
Absent direct evidence that the taxpayer actually received the notice of deficiency or
refused its delivery, respondent can rely on the presumptions of official regularity and
delivery to meet his burden of proof. Sego v. Commissioner, 114 T.C. 604, 610 (2000)
(holding that presumptions of official regularity and of delivery justify the conclusion that
the statutory notice was sent and that attempts to deliver were made in the manner
contended by respondent); Bailey v. Commissioner, T.C. Memo. 2005-241 (there is a
strong presumption in the law that a properly addressed letter will be delivered, or
offered for delivery, to the addressee).
The presumptions of regularity and delivery arise if the record reflects that the notice of
deficiency was properly mailed to the taxpayer. Sego, supra; Bailey v. Commissioner,
T.C. Memo. 2005-241. A properly completed Form 3877 (certified mailing list) reflecting
the timely mailing of a notice of deficiency to a taxpayer’s correct address, absent
evidence to the contrary, establishes that the notice was properly mailed to the
taxpayer. Diamond v. Commissioner, T.C. Memo. 2012-90. But see JAG Brokerage,
Inc. v. Commissioner, T.C. Memo. 2012-315 (if taxpayer is a corporation, receipt by an
individual authorized to act for the corporation would seem to be required).
If the presumptions of official regularity and delivery arise, then the burden shifts to the
taxpayer to rebut the presumptions. See Conn v. Commissioner, T.C. Memo. 2008-186
(taxpayer rebutted presumption of receipt by establishing that he was in prison when
statutory notice of deficiency was mailed to his last known address). The presumptions
of official regularity and delivery may be rebutted if the notice of deficiency is returned to
the Service marked “undeliverable.” Cf. Lehmann v. Commissioner, T.C. Memo. 2005­
90 (liability challenge precluded where taxpayer deliberately provided bad address to
prevent delivery of IRS correspondence). If the notice is returned unclaimed, the
presumptions may be rebutted by credible testimony denying receipt. Tatum v.
Commissioner, T.C. Memo. 2003-115. In Tatum, a denial of receipt of USPS Form
3849 (Notice of Attempted Delivery), combined with evidence that the Postal Service
returned the notice of deficiency after only one attempt at delivery, was sufficient to
rebut the presumptions.
If the notice of deficiency is returned to the Service unclaimed, the presumptions are not
rebutted by testimony denying receipt if sufficient contrary evidence exists that the
taxpayer refused to accept delivery or took deliberate steps to thwart delivery of the
deficiency notice. Sego v. Commissioner, 114 T.C. 604 (2000); Lehmann v.

38

Commissioner, T.C. Memo. 2005-90. The taxpayer may not decline to retrieve his mail
when he was able to do so, and successfully deny receipt for purposes of prior
opportunity. Onyango v. Commissioner, 142 T.C. No. 24 (2014).
If the notice of deficiency is not returned to the Service, the presumptions generally are
not rebutted if the taxpayer fails to deny receipt of the deficiency notice and there is no
other evidence indicating nonreceipt. Bailey v. Commissioner, T.C. Memo. 2005-241
(finding presumption of delivery not rebutted when only evidence to rebut presumption
was taxpayer’s testimony that he did not recall receiving notice of deficiency but
taxpayer admitted he received other mail at address on the notice). Even when the
taxpayer denies receipt of the notice of deficiency, the denial alone may not be sufficient
to rebut the presumptions if the record contains evidence impairing the taxpayer’s
credibility. Rivas v. Commissioner, T.C. M

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ae1cb2dbd1ddbc21b. Public record. Not legal advice.