How to Use the Collection Appeals Program When You Disagree with IRS Collection Actions
If you have unpaid taxes, the IRS has the right to issue federal tax liens, seize your property, and levy your assets. You can appeal these actions if you disagree. There are strict timelines for appealing IRS collection actions.
This guide explains the Collection Appeals Program (CAP). It outlines when to use CAP, how to request a CAP hearing, and what to expect with the CAP process. Then, it briefly covers the difference between CAP and Collection Due Process (CDP) hearings.
When Can You Use the Collection Appeals Program (CAP)?
You can use the Collection Appeals Program to appeal various collection actions. If the IRS takes any of the following actions, you can appeal using CAP:
- Levies (seizes) or threatens to levy your property.
- Issues or plans to issue a notice of federal tax lien (NFTL).
- Files a lien against an alter ego or nominee’s property.
- Rejects, modifies, or terminates your installment agreement.
- Rejects your request to return levied property.
- Rejects your application for an Offer in Compromise.
- Proposes a Trust Fund Recovery Penalty against you.
- Denies your claim for a Trust Fund Recovery Penalty.
- Denies your request to abate penalties.
If you want to appeal any of these actions, you should first request a conference with the manager of the employee who has been handling your case. If the manager can’t resolve your issue, let them know that you plan to appeal within two business days. Then, postmark Form 9423 (Collection Appeal Request) within three business days of the meeting with the manager.
Note that if you request a conference with a manager and no one responds to you within two days, you can just move forward and file this form. In this situation, use box 15 of the form to note that you requested a managerial conference and didn’t get a response. If the manager makes a reasonable effort to reach you, but you ignore their calls, you may lose your chance for a CAP hearing.
What Is IRS Form 9423?
IRS Form 9423 is a form you use to request an appeal using the Collection Appeals Program. This one-page form requires your name, Social Security Number, phone number, address, the type of tax, tax period, and amount of tax due.
Then, you note the collection action you want to appeal. You can choose from federal tax lien, levy, seizure, rejection, termination, or modification of installment agreement. Finally, explain why you are appealing the collection action and describe your plans for resolving your tax problem.
How to File IRS Form 9423
You should send Form 9423 to the collection office that initiated the collection activity you want to appeal. The IRS is a massive organization, and you need to ensure you send the form to the right place. Mailing the form to the wrong office could lead to unnecessary delays.
Timeline for Appealing Collection Actions
There are different timelines for using the Collection Appeal Program. Here are the deadlines based on the type of collection action you’re appealing.
- Notice of levy — Before the IRS levies your wages, bank accounts, or property, you can appeal by the deadline on your notice. Typically, that’s 30 days.
- Seizure of property — You should contact the collection manager within 10 business days after you receive the notice of seizure.
- Rejections, modifications, and terminations of installment agreements — You must appeal within 30 calendar days.
- Request to return levied property or the value of the property — These requests must be made within two years of the date the IRS levies your wages or bank account.
Even understanding the IRS’s appeals timelines can be challenging. For instance, Publication 1660 says you can appeal any time before or after a seizure occurs. Another section says you must contact the collection manager within ten business days. A tax professional can help you understand these documents and ensure you file your appeal on time.
What to Expect After You File Form 9423
As long as you make your request on time, the IRS will pause collection actions on your account when you file Form 9423. In most cases, you handle the CAP process through correspondence or over the phone. In-person meetings are rare, but you can request one.
You can represent yourself during the CAP process, but dealing with the IRS appeals process can be complicated. For best results, you should work with a tax professional. The IRS lets attorneys, certified public accounts (CPAs), and enrolled agents (EA) represent taxpayers during appeals. If you’re having a third party represent you, you must submit Form 2848 (Power of Attorney and Declaration of Representative).
What Happens After the CAP Hearing?
The results of the CAP hearing are final. You cannot appeal the decision. That’s why it’s extremely important to navigate this process carefully and get help from a tax professional who understands the system.
In very rare situations, you may be able to get a judicial review of a CAP decision. For instance, a third party can contest a wrongful levy in district court. But most appeals handled through this program cannot be appealed a second time.
Collection Appeals Process (CAP) Vs. Collection Due Process (CDP)
Like the Collection Appeals Program, Collection Due Process (CDP) hearings also allow you to appeal IRS decisions. In some situations, you only have the right to a CAP hearing, but you can choose between these two options in other cases. To ensure you select the right option for your situation, you should consult with a tax professional.
A CAP allows you to appeal a broader range of collection actions than a CDP hearing. Additionally, the CAP process is usually faster and easier. However, you can’t appeal a CAP decision. You also cannot use CAP to appeal the amount of tax owed.
The IRS will send you a notice if you have a right to a CDP hearing. For instance, if you receive an IRS Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, you have the right to a CDP hearing. You must request the hearing within 30 days. Most of these notices say, “Right to a Hearing” or “Right to Appeal” in the notice title.
Again, if you disagree with the results of your CPD hearing, you have the right to appeal to the Tax Court. However, this doesn’t necessarily mean that you have a second chance. Generally, the Tax Court will only allow you to submit evidence or raise questions that you brought up during the original CDP hearing.
You can’t bring in new info. You just get a second set of eyes on your dispute. Because of this, it’s critical to ensure you present all of the supporting documents and evidence correctly the first time. To protect yourself, you should work with a tax professional.
Get Help with the Collection Appeals Program
You don’t have to deal with the IRS on your own. A tax professional can help you through the appeals process. Struggling with tax problems? Disagree with a decision made about your account or a collection action taken against you? Then, contact us at The W Tax Group and get help today.