Lien Appeals

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Lien Appeals

5.12.1 Lien Appeals

5.12.1.1 Appealing the Notice of Federal Tax Lien
5.12.1.2 Collection Due Process (CDP)
5.12.1.3 Collection Appeals
5.12.1.4 Taxpayer Advocate

5.12.1.1 (12-09-2003)
Appealing the Notice of Federal Tax Lien

Taxpayers may have two opportunities to appeal certain collection actions.
1. Collection Due Process Hearing, and the
2. Collection Appeals Program.
Taxpayers may also contact the Taxpayer Advocate's office for assistance. See IRM 5.12.1.4 and IRM 131.7.2.

5.12.1.2 (12-09-2003)
Collection Due Process (CDP)

Effective 1/19/1999, under IRC 6320, the Internal Revenue Service must notify taxpayers in writing of their right to a Collection Due Process (CDP) Hearing with the Office of Appeals following the filing of a Notice of Federal Tax Lien. When a timely request is received the taxpayer also establishes the right to a judicial review of the Appeals determination.
Taxpayers may be entitled to a due process hearing if a timely request for a hearing is received. See IRM 5.1.9.
Taxpayers are entitled to an equivalent hearing if the CDP hearing is not requested within 30 days. The taxpayer cannot file a judicial appeal of a decision from an equivalent hearing.
The CDP notice must be sent to the taxpayer within 5 business daysafter the NFTL is filed. The notice must be:
1. Given in person
2. Left at the residence or usual place of business, or
3. Sent by certified or registered mail to the taxpayer's last known address.
The notice will include:
1. The amount of unpaid tax.
2. The right to request a hearing during a 30 day period beginning the 5-day period described in (4) above.
3. Administrative appeals (i.e., meet with the employee's supervisor, a Collection Appeals Program, etc.) available to the taxpayer with respect to the lien and procedures relating to such appeals.
4. The provisions of IRC 6320 and 6330 that relates to a CDP hearing and the provisions of the Internal Revenue Code relating to release of liens. (These provisions are explained in Publication 1660).

5.12.1.2.1 (12-09-2003)
Hearing Issues

Certain issues and considerations must be undertaken during the hearing process. The taxpayer may raise any relevant issue relating to the unpaid tax including:
1. appropriate spousal defenses,
2. challenges to the appropriateness of the collection action,
3. collection alternatives including, installment agreement, offer-in-compromise, posting of a bond, etc.
4. challenges to the existence or amount of the underlying tax liability.
Note:

The taxpayer may raise the issue of underlying liability only if the person did not receive a statutory notice of deficiency for the tax liability or did not have any other opportunity to dispute the tax liability, i.e., a type of tax for which a statutory notice of deficiency was not sent and no appeal was offered.)
Certain issues may not be raised at the hearing:
1. The issue was raised and considered at a previous hearing about a notice of levy or seizure under IRC 6330 or in any other previous administrative or judicial proceeding, and
2. the person raising the issue participated meaningfully in the previous hearing or proceeding.

5.12.1.2.2 (12-09-2003)
Requirement of Investigation

The appeals officer at the hearing will obtain verification that the requirements of all applicable law or administrative procedures have been met. You may be asked to clarify certain issues. As a basis for the determination, the Appeals Officer must consider;
1. the verification presented by Compliance,
2. issues raised, and
3. whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concerns of the person that the collection action be no more intrusive than necessary.

5.12.1.2.3 (12-09-2003)
Judicial Review of Determination

The taxpayer has 30 days from the date of the determination by the Appeals Officer to appeal the determination. The determination may be appealed to the Tax Court or if the Tax Court does not have jurisdiction, to U.S. District Court.
If a court determines that the appeal was to the wrong court, the taxpayer has 30 days after the court determination of incorrect filing to file an appeal in the proper court.
The Office of Appeals retains jurisdiction with respect to any determination, including subsequent hearings requested by the person who requested the original hearing on issues regarding:
1. collection actions taken or proposed with respect to Appeals' determination, and,
2. changes in circumstances of the taxpayer that affect Appeals' determination after the person has exhausted all administrative remedies, i.e., CAP.

5.12.1.2.4 (12-09-2003)
Suspension of Collection and Statute of Limitation

If a hearing is timely requested, the running of the period of limitation will be suspended from the date of receipt of the request for the period during which the hearing and associated judicial appeals are pending. The suspension will end when the decision of the Appeals office becomes final, i.e., 30 days after issuance of the determination if it is not appealed to a court. If appealed to court, the suspension ends when the case become final. The period of limitation for collection will not expire before 90 days after a determination becomes final. See IRM 5.1.9 for procedures on suspending the statute.
Levy action under any circumstances will be suspended during the appeals process. Certain other collection actions such as offsets, summonses to collect information and suits to collect, may occur.
See IRM 5.1.9 for additional information.

5.12.1.2.5 (12-09-2003)
When is the CDP Notice (L3172) Generated

The CDP notice, L3172, Notice of Federal Tax Lien Filing and Your Rights to a Hearing Under IRC 6320, is generated:
1. when the original lien filing (after 1/18/1999) is requested;
2. only once if liens are filed in multiple jurisdictions for the same tax period;
3. only for the first NFTL filing after 1/18/1999 (even if a NFTL was previously filed for the same taxable period before the effective date).
4. when subsequent assessments are made and a lien is requested;
5. for individual taxpayers;
  
  Note:
  
  When there is a joint liability each spouse will be sent the same notice in a separate envelope addressed respectively to each spouse at their last known address.
6. for partnerships and corporations
The notice for a right to a hearing will not be generated for refiled or estate tax liens.
The L3172 can be printed three business days after the NFTL is printed. It must be mailed no later than two business days after it is available for printing.
TC 582 indicates that a lien was requested. When the NFTL is requested through ALS, it is also an indication that the L3172 generated. Check with the ALS Unit to determine when the notice was mailed.
Facsimile copies may be generated by revenue officers and other employees with access to ALS, as necessary.

5.12.1.2.6 (12-09-2003)
Issuing the CDP Notice

The Service is required to notify taxpayers after a NFTL has been filed. The Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (Letter 3172, Exhibit 5.12.1-1) must be mailed within 5 business days after the NFTL is filed.

Note:

The taxpayers 30 day period for requesting a hearing begins the day following the 5 business day period after the filing of the NFTL.

Note:

The taxpayer's copy of the NFTL will be mailed with the collection due process notice.
The notice must be sent certified mail.

Note:

Use registered mail only if the taxpayer resides outside the United States. There is no international certified mail.
CDP notices generated for liens filed out of the area will have the name and telephone number of the contact person for the originating area office.
In rare instances, it may be necessary to hand carry a NFTL to the recording office. Obtain a Serial Lien Identification (SLID) number from the Automated Lien System (ALS) Unit and provide the information necessary to complete the lien document, before recording the lien. Following this procedure ensures that the CDP notice is generated and mailed timely.
When a lien is filed in a different jurisdiction at a later date for a tax period that has previously received a right to a hearing. a L3171, Notice of Additional Federal Tax Lien Filing (Exhibit 5.12.1-2), is issued.

5.12.1.2.7 (12-09-2003)
CDP Notices Prepared Manually

The L3172 can be manually generated by ALS using the Notadd option. Co-obligor (spouse with a different address or individual partners) information must be entered into ALS before the notice is generated.

Note:

Remember to provide address information to the ALS Unit.

Note:

Each individual partner listed on the NFTL, spouse or ex-spouse must be sent a L3172 certified mail within 5 business days.

Note:

For a single member LLC (disregarded entity) the CDP notice is sent to the single member, not the LLC).
If the above method is not used to generate the L3172, it is the responsibility of the employee making the lien filing determination to ensure that the CDP notice is timely issued and mailed.
When mailing addresses are not available for the partners' residence and the place of employment is not the partnership, revenue officers will attempt to provide the L3172 in person.
Document each attempt in the case file.
When requested, the ALS Unit will fax copies of co-obligor liens to the appropriate employee for L3172 preparation and mailing.
ALS Units will create the L3172 if addresses are provided prior to the notice generating.
If the L3172 is prepared by the revenue officer when a new address is located in the case file or on master file,then the Revenue Officer should:
1. calculate the taxpayers 30 day response due period beginning the day after the date the L3172 is dated.
2. print or type 'substitute' across the top.
3. obtain a certified mail label from the post office.
4. document the case file
If the revenue officer elects to mail the L3172, when the taxpayer has not provided documentation to change the master file address, print or type 'duplicate'across the top.
Retain the date stamped receipted copy of the certified mail label in your case file.

Note:

The receipted copy must be retained for 10 years after the end of the processing year.

5.12.1.2.8 (12-09-2003)
Corrected NFTL Generates New L3172

The provisions of IRC 6320 requires that taxpayers be given one appeal per tax period per assessment.
ALS generates a new L3172 when the taxpayer's name or tax period is corrected on the NFTL. The notice will have a new 30 day response date for the taxpayer.

Note:

ALS will not generate a duplicate L3172.

Note:

A new L3172 will not be generated on a NFTL once it has been recorded.
The five business day certified mail rule applies.
A new L3172 must not be issued when the name is corrected to Limited Liability Companies (LLC) - notification on the LLC or the individual owner is sufficient.

5.12.1.2.9 (12-09-2003)
Undelivered L3172

The ALS Unit will return all undelivered L3172s issued by revenue officers.
Research the case file to determine if there is a new address.
1. If there is a new address (not on master file), note the information and return to the ALS Unit to have a new notice issued. Document the case file and retain returned envelope.
2. If there is not a new address, document the case file and retain the envelope.

5.12.1.2.10 (12-09-2003)
Providing the L3172 to the Taxpayer's Representative

Employees responsible for making lien filing determinations are also responsible for ensuring that the taxpayer's representative receives a copy of the L3172. While there is no five business day certified mail requirement, a copy should be mailed as soon as possible.
If the mailing address is available when a NFTL is requested and the taxpayer's representative is identified, you may mail the notice personally or fax the name and address to the ALS Unit.
The copy of the L3172 to the representative will be mailed the same day as the taxpayer's, if possible, but in no instance shall it be mailed later than five days after the taxpayer's.
When you notify the taxpayer's representative provide a copy of the L3172, attach Letter 3262 (Exhibit 5.12.1-5). This letter informs the representative of the lien filing and explains that the L3172 was mailed to the taxpayer.
When you notify the taxpayer's representative of an additional lien filing, attach Letter 3271 (Exhibit 5.12.1-6). This letter explains that a NFTL has been filed in a different jurisdiction and that the taxpayer is not entitled to additional appeal rights because the appeal rights were provided with the original NFTL filing.

5.12.1.2.11 (12-09-2003)
Nominee and Alter-Ego Situations

Persons Identified as nominees or alter-egos are not entitled to a Collection Due Process hearing.
Issue Letter 3177, Notice of Federal Tax Lien Filing - Nominee and Alter-Ego (Exhibit 5.12.1-3), when you mail the lien. There is no requirement to send this notice certified mail. Review IRC 6325(b)(4) provisions. See IRM 5.12.3
The person identified as the nominee or alter-ego is entitled to the appeal process under the Collection Appeals Program (CAP).
The taxpayer in this situation must receive the right to a hearing notice (L3172), if a notice has not already been issued for all periods on the lien. This notice will not be generated by ALS. Employees assigned the case must ensure that the response due date is calculated and that the notice is sent certified mail within the required five business day mailing period.
Forward the date stamped receipted copy of the certified mail label to the ALS Unit for retention. Note your case file.

5.12.1.2.12 (12-09-2003)
Child Support Obligations

There is no jurisdiction based on IRC 6305 to restrain or review the assessment and collection of Child Support Obligations balance dues. The Code states that the assessment and collection are not subject to review by the Secretary in any proceeding.
Accordingly, IRC 6320, Collection Due Process, does not apply to this type of liability. Do not issue a right to a hearing notice (L3172).
The taxpayer does not have the right to request an appeal under the Collection Appeals Program.
Issue Letter 3527, Notice of Federal Tax Lien Filing - Child Support Obligations (Exhibit 5.12.1-4), with a copy of the NFTL.

Note:

Do not include child support obligations on NFTLs with tax liabilities.
There is no certified mail requirement for this letter.
This notice will not be generated by ALS. Employees assigned the case must ensure that the response due date is calculated and that the notice is sent certified mail within the required five business day mailing period.

5.12.1.2.13 (12-09-2003)
Request for an Appeal

A taxpayer may appeal any action related to the filing of a NFTL (i.e., underlying liability (under certain circumstances), filing, withdrawal, discharge, etc.) Detailed Appeals procedures are contained in IRM 5.1.
Requests for appeal hearings will be mailed directly or faxed (if contact has been made with the taxpayer by phone or in person and the taxpayer history file is documented with the date of contact and the case file is documented that the taxpayer wishes to send the letter by fax) to the revenue officer. Employees may attempt to resolve issues with the taxpayer, however, this does not extend the 30 day period. If an agreement is reached, the request must still be sent to Appeals. If you are trying to resolve issues with the taxpayer before the taxpayer has filed a request for a hearing with Appeals, it is essential that you inform the taxpayer that their discussions do not extend the 30-day period in which the taxpayer may request a hearing.
Appeal rights related to dyed diesel fuel liens will be forwarded immediately to the Examination employee.
Requests for appeals based on ACS lien filings will be mailed to the ACS Support Unit at the ACS site identified in the L3172.
Prepare a case file for Appeals. It should contain:
1. a copy of the L3172.
2. a copy of the NFTL
3. a legible copy of the Form 3877, certified mail certificate
4. the original or fax copy of Form 12153, Request for Collection Due Process Hearing
5. the envelope in which the request was mailed, if available.
Forward envelopes received with Form 12153, Request for Collection Due Process Hearing, received after the 30-day response period has lapsed to the Office of Appeals with the Appeals case file. The envelope or a faxed Form 12153 is important when determining the actual date of mailing and may be the deciding factor as to whether the taxpayer is entitled to a collection due process or equivalent hearing.

5.12.1.2.14 (12-09-2003)
CDP Case Documentation and Case Review Requirements

The Service is required by law to notify a spouse/ex-spouse or business partner listed on the NFTL of their collection due process appeal rights.
The Service established a policy to provide the taxpayer's representative or attorney with a copy of the appeal rights.
Revenue officers will document case histories with spouse/ex-spouse, business partner and POA notification, i.e., 6/5/2000, requested ALS send CDP notice to POA and ex-spouse....provided new address for ex-spouse.
During the case review process, group managers will note the case file whether or not revenue officers are documenting, where appropriate, that CDP notification has taken place in the above referenced situations.
Check IDRS and ALS to ensure that the case can be closed. Case files should not be closed or archived during the period (45 days) in which the taxpayer has to respond. A copy of the case file must be forwarded to Appeals along with all documents as specified in this IRM and IRM 5.1.9.

5.12.1.2.15 (12-09-2003)
Rescinding the Collection Due Process Notice

In instances where the Service has filed a NFTL in error, we are able to correct the situation by withdrawing the NFTL. With the implementation of IRC 6320, we have the added responsibility of ensuring that taxpayers are made aware of their appeal rights and that those rights are protected when an error is made.
Refer to IRM 5.1.9.3.5.1 for detailed instructions.

5.12.1.2.16 (12-09-2003)
Lien Filing During Levy Appeal

A lien may be filed using standard lien filing criteria during the period prior to the taxpayer requesting a levy appeal.
When a levy appeal has been requested, a lien may not be filed unless the government's interest is at risk. The following are examples of when you may want to file a lien:
1. The taxpayer is an in-business corporation, pyramiding liabilities.
2. Individual or business assets are being liquidated, or
3. The taxpayer has threatened to file bankruptcy.

5.12.1.2.17 (12-09-2003)
Levy During Lien Appeal

If the notice requirements in 5.11.1 have been satisfied, Letter 3172 does not create a new waiting period before a Notice of Levy can be issued. However, once the taxpayer appeals the lien filing, generally, no Notice of Levy will be issued during the administrative or judicial appeal. See IRM 5.1.9.3.3, General Handbook, for a description of when property can be levied during the appeals process.

5.12.1.3 (12-09-2003)
Collection Appeals

The Collection Appeals Program (CAP) was implemented to provide taxpayers with an opportunity to have collection actions reviewed by an impartial party outside the Collection function. CAP appealable Collection actions are liens, levies, seizures, and installment agreement denials or terminations. In addition to NFTLs, appealable lien actions include the denial of a notice of withdrawal of NFTL and denials of discharge, subordination or nonattachment. An appeal to CAP is also allowed for taxpayers who want to dispute the decision on administrative appeal of liens. Refer to IRM 5.1.9.
Provide the taxpayer with a copy of Publication 1660, Collection Appeal Rights, if an appeal is requested.
Inform the taxpayer that your decision must be discussed with your immediate supervisor before beginning the Collection Appeals process.

5.12.1.4 (12-09-2003)
Taxpayer Advocate

Taxpayers often contact the Taxpayer Advocate's office when they are attempting to resolve collection issues.
Taxpayer Advocate cases and Applications for Taxpayer Assistance Orders may be initiated because of lien actions.
While this is not an appeal, the Taxpayer Advocate's office can reverse collection actions.
See IRM 5.1 for criteria and procedures.

Lien Appeals

5.12.1 Lien Appeals

5.12.1.1 (12-09-2003) Appealing the Notice of Federal Tax Lien

5.12.1.2 (12-09-2003) Collection Due Process (CDP)

5.12.1.2.1 (12-09-2003) Hearing Issues

Note:

5.12.1.2.2 (12-09-2003) Requirement of Investigation

5.12.1.2.3 (12-09-2003) Judicial Review of Determination

5.12.1.2.4 (12-09-2003) Suspension of Collection and Statute of Limitation

5.12.1.2.5 (12-09-2003) When is the CDP Notice (L3172) Generated

Note:

5.12.1.2.6 (12-09-2003) Issuing the CDP Notice

Note:

Note:

Note:

5.12.1.2.7 (12-09-2003) CDP Notices Prepared Manually

Note:

Note:

Note:

Note:

5.12.1.2.8 (12-09-2003) Corrected NFTL Generates New L3172

Note:

Note:

5.12.1.2.9 (12-09-2003) Undelivered L3172

5.12.1.2.10 (12-09-2003) Providing the L3172 to the Taxpayer's Representative

5.12.1.2.11 (12-09-2003) Nominee and Alter-Ego Situations

5.12.1.2.12 (12-09-2003) Child Support Obligations

Note:

5.12.1.2.13 (12-09-2003) Request for an Appeal

5.12.1.2.14 (12-09-2003) CDP Case Documentation and Case Review Requirements

5.12.1.2.15 (12-09-2003) Rescinding the Collection Due Process Notice

5.12.1.2.16 (12-09-2003) Lien Filing During Levy Appeal

5.12.1.2.17 (12-09-2003) Levy During Lien Appeal

5.12.1.3 (12-09-2003) Collection Appeals

5.12.1.4 (12-09-2003) Taxpayer Advocate

5.12.1.1 (12-09-2003)
Appealing the Notice of Federal Tax Lien

5.12.1.2 (12-09-2003)
Collection Due Process (CDP)

5.12.1.2.1 (12-09-2003)
Hearing Issues

5.12.1.2.2 (12-09-2003)
Requirement of Investigation

5.12.1.2.3 (12-09-2003)
Judicial Review of Determination

5.12.1.2.4 (12-09-2003)
Suspension of Collection and Statute of Limitation

5.12.1.2.5 (12-09-2003)
When is the CDP Notice (L3172) Generated

5.12.1.2.6 (12-09-2003)
Issuing the CDP Notice

5.12.1.2.7 (12-09-2003)
CDP Notices Prepared Manually

5.12.1.2.8 (12-09-2003)
Corrected NFTL Generates New L3172

5.12.1.2.9 (12-09-2003)
Undelivered L3172

5.12.1.2.10 (12-09-2003)
Providing the L3172 to the Taxpayer's Representative

5.12.1.2.11 (12-09-2003)
Nominee and Alter-Ego Situations

5.12.1.2.12 (12-09-2003)
Child Support Obligations

5.12.1.2.13 (12-09-2003)
Request for an Appeal

5.12.1.2.14 (12-09-2003)
CDP Case Documentation and Case Review Requirements

5.12.1.2.15 (12-09-2003)
Rescinding the Collection Due Process Notice

5.12.1.2.16 (12-09-2003)
Lien Filing During Levy Appeal

5.12.1.2.17 (12-09-2003)
Levy During Lien Appeal

5.12.1.3 (12-09-2003)
Collection Appeals

5.12.1.4 (12-09-2003)
Taxpayer Advocate