(1) An estimated 1,450 of 47,855 taxpayer cases may have incorrectly received a CDP hearing when they should have been granted an Equivalent Hearing (EH).
(2) In an estimated 10,151 of 47,855 taxpayer cases, the Collection Statute Expiration Date (CSED) was incorrectly calculated.
(3) In an estimated 7,251 of 47,855 taxpayer cases the hearing officers did not correctly document their impartiality as required.
(4) Taxpayer requests for CDP hearings are not consistently sent by the IRS's Collection office to Appeals in a timely manner.
Background Information
After assessing a tax liability, the IRS has 10 years to collect this liability from a taxpayer. When a case reaches its expiration date or CSED, the IRS may no longer collect and must write off the balance due.
The IRS begins the collections process by sending out a number of notices to the taxpayer. Over several months, these notices become progressively more threatening, urging the taxpayer to contact the IRS in order to resolve the liability. If these initial contacts are unsuccessful, the IRS issues a "Notice of Intent to Levy and Your Right to a Hearing". If a taxpayer does not respond to this notice, the IRS can begin active collections such as wage garnishments, bank levies, etc.
If a taxpayer responds to this notice within 30 days, he is allowed a CDP hearing with IRS Appeals. The 10 year statute of limitations is suspended while the taxpayer is in CDP status. If the taxpayer responds after the 30 day period has expired, the IRS may grant him an EH (during which the IRS can continue to collect from the taxpayer). At these hearings, Appeals may consider a number of alternatives to active collection, including, setting up an installment agreement, an Offer in Compromise, penalty abatement and the Innocent Spouse defense. If the taxpayer disagrees with the decision reached by Appeals at a CDP hearing, he can petition the U.S. Tax Court. A decision reached at an EH hearing may not be appealed.
Of the problems identified by TIGTA, the incorrect calculation of the CSED and the delays in forwarding CDP requests to appeals were found to most violate taxpayer rights.
Incorrect Computation of the CSED
Because the IRS ceases collections activity if a CDP hearing is granted, the CSED is temporarily suspended during a CDP hearing. TIGTA estimates that in almost a fifth of all CDP cases, the IRS suspended the collection statute for an incorrect period of time. In cases where the IRS suspended the CSED for longer than required, it violated the rights of the taxpayers since it allows the IRS more time to collect.
Delays in Referring Requests for CDP Hearings to Appeals
Currently, the IRS has a target time of 90 days to initially resolve or forward a taxpayer's request to Appeals. A large portion of the cases reviewed took more than 180 days to resolve or forward to Appeals. TIGTA noted that when the IRS takes too long to forward a case to Appeals, the CSED is suspended for this additional time and this increases the time that the IRS is allowed to collect.
In response, the IRS agreed that these oversights violate the rights of taxpayers and has begun to take steps to prevent future violations.
This content is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
