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Notice of Levy and Right to Hearing: Synopsis - Collection Due Process Hearing Notice and opportunity for Collection Due Process hearing prior to levy

The IRS is required to notify a taxpayer in writing, at least 30 days prior to a proposed levy, that the taxpayer may request a hearing before the IRS Office of Appeals to challenge the levy action (Code Sec. 6330(a)). The written notification is referred to as a pre-levy Collection Due Process Hearing Notice (CDP Notice). The hearing before Appeals is referred to as a pre-levy Collection Due Process hearing (CDP hearing). The determination of the IRS hearing officer is subject to judicial appeal. If the taxpayer requests the hearing, the IRS may not levy on the taxpayer's property while the hearing is pending. If the underlying tax liability is at issue, collection activity is also suspended while a judicial appeal of the determination is pending (Code Sec. 6330(e)).

A pre-levy CDP Notice is not required if the collection of tax is in jeopardy or the IRS is levying on a state tax refund (Code Sec. 6330(f)). If a taxpayer has not received a pre-levy CDP Notice and the IRS levies on a state tax refund or issues a jeopardy levy on or after January 19, 1999, the IRS will provide a post-levy CDP Notice to the taxpayer within a reasonable time after that levy. These taxpayers are entitled to a post-levy CDP hearing, which is also subject to judicial appeal (Reg. §301.6330-1(a)(3), Q&A-A5).

The IRS will provide a pre-levy or post-levy notification to a taxpayer for the first levy it intends to issue or has issued on or after January 19, 1999, with respect to a tax and a tax period even though it has issued a levy with respect to that same tax and tax period prior to January 19, 1999 (Reg. §301.6330-1(a)(3), Q&A-A4). Beginning on January 19, 1999, a pre-levy CDP Notice will be provided at least 30 days prior to a levy with respect to a tax and tax period (Reg. §301.6330-1(a)(3), Q&A-A5).

A related provision included in the IRS Restructuring and Reform Act of 1998 (P.L. 105-206) entitles a taxpayer to a CDP Notice within five business days after the IRS files a notice of lien (Code Sec. 6320). A Code Sec. 6320 CDP Notice explains that a taxpayer may challenge the lien in a hearing with the IRS Office of Appeals. A hearing officer's determination under Code Sec. 6320 is also appealable before the appropriate court. As noted below, hearings under Code Sec. 6320 and Code Sec. 6330 are combined to the extent practicable when they cover the same tax and tax periods.

Code Sec. 6330 and Code Sec. 6320 in many respects formalize IRS administrative appeal procedures contained in the Internal Revenue Manual (IRS Internal Revenue Manual IRM 8.7.1.1.9.1, 4-6-99, with the important exception that taxpayers previously could not appeal the results of an IRS administrative hearing to a court. In addition, these IRS appeal procedures were not mandated by statute and, therefore, were not applied uniformly to all taxpayers.

Impact of Code Sec. 6330 on existing statutory levy procedures. Code Sec. 6330 does not replace existing statutory requirements that are imposed on the IRS before it may levy (seize) a taxpayer's property. Thus, the IRS will continue to issue a written Notice and Demand for payment of the tax within 10 days as the first step in the levy process. In addition, as in the past, the property of a taxpayer who does not pay the tax within 10 days following the Notice and Demand, will generally be seized no sooner than 30 days after the IRS sends a Final Notice of Intent to Levy which contains all of the information required by Code Sec. 6331(d). The IRS has indicated that it will continue its past practice of sending interim Notices of Intent to Levy to a taxpayer before delivery of the Final Notice of Intent to Levy. However, the information required by Code Sec. 6331(d) and typically contained in the Final Notice of Intent to Levy, may now be sent to the taxpayer in a document entitled "Urgent Notice." An Urgent Notice will inform the taxpayer that the IRS may levy upon a taxpayer's state tax refund after 30 days from the date of the Urgent Notice (T.D. 8809, 1999-1 CB 478).

As in the case of the Final Notice of Intent to Levy, the Urgent Notice will begin the ten-day period leading to an increase in the failure to pay penalty prescribed by Code Sec. 6551(d).

The pre-levy CDP Notice contains much of same information that is included in a Final Notice of Intent to Levy but also informs the taxpayer of the right to request of pre-levy hearing before the IRS Office of Appeals within 30 days after the date on the pre-levy CDP Notice.

State tax refunds. Code Sec. 6330 does not require the IRS to issue a CDP Notice prior to seizing a state tax refund to satisfy a Federal tax liability. The taxpayer, however, is entitled to a post-seizure hearing. The IRS must provide the taxpayer with a post-levy CDP Notice within a reasonable time after the levy has occurred which informs the taxpayer of the right to, and the opportunity for, a CDP hearing with Appeals (Code Sec. 6330(f)(2); Reg. §301.6330-1(a)(2)(i)).

The IRS, however, may not seize a state tax refund until 30 days after sending a taxpayer a Notice of Intent to Levy (or Urgent Notice) unless the collection of the tax is in jeopardy (Code Sec. 6331(d)).

Seizures where tax is in jeopardy. In general, the IRS is permitted to seize a taxpayer's property immediately following the issuance of a Notice and Demand for payment under Code Sec. 6331 if the collection of tax is in jeopardy (Code Sec. 6331(a)).

A pre-levy CDP Notice is not required prior to seizure of a taxpayer's property if the IRS has made a determination that payment of the tax is in jeopardy. As in the case of the seizure of a state tax refund, the IRS must provide the taxpayer with a post-levy CDP Notice within a reasonable time after the levy (Code Sec. 6330(f)(1); Reg. §301.6330-1(a)(2)(ii)).

CDP hearing request procedures. The taxpayer (whether residing inside or outside of the U.S.) must request the pre-levy CDP hearing within a 30-day period that starts on the day after the date on the pre-levy CDP Notice (Code Sec. 6330(a)(3)(B); Reg. §301.6330-1(b)(1)). The request must be in writing and include the reason or reasons why the taxpayer disagrees with the proposed collection action (Reg. §301.6330-1(c)(2), Q&A-C1). Form 12153, Request for a Collection Due Process Hearing, is provided with the CDP Notice and may be used for this purpose. Form 12153 may also be obtained by calling the IRS, toll free, at 1-800-829-3676. Generally, the CDP hearing request is filed with the IRS office that issued the CDP Notice. If that office is unknown, the request is sent to the compliance area director serving the compliance area in which the taxpayer resides or has its principal place of business. Taxpayers without a residence or principal place of business in the U.S. must send the request to the compliance director, Philadelphia Submission Processing Center (Reg. §301.6330-1(c)(2), Q&A-C6).

The timeliness of a CDP hearing request is determined under the timely mailing rules of Code Sec. 7502 and the weekend and holiday rules of Code Sec. 7503 (Reg. §301.6330-1(c)(2), Q&A-C4).

Issues that may be raised at CDP hearing. In general, the taxpayer may raise any relevant issue related to the unpaid tax at the CDP hearing. For example, the taxpayer may assert innocent spouse status, challenge the appropriateness of the collection action, and request collection alternatives, such as installment payments and offers in compromise. The existence or amount of the tax liability, however, may only be challenged if the taxpayer did not receive a timely statutory notice of deficiency or otherwise have the opportunity to dispute the tax liability.

The CDP hearing must be conducted by an impartial IRS officer (Code Sec. 6330(b)(3).

Judicial review of hearing results. The determination of the Appeals Office (which is referred to as a Notice of Determination) is subject to judicial review if the taxpayer files a timely appeal (Code Sec. 6330(d)).

Suspension of certain limitation periods. The periods of limitation relating to collection after assessment (Code Sec. 6502), criminal prosecutions (Code Sec. 6531), and suits (Code Sec. 6532) are suspended until the determination of the Appeals Office becomes final by expiration of the time for seeking review or reconsideration before the appropriate court. These limitation periods are suspended only upon timely receipt of taxpayer's written request for a CDP hearing, and apply only with respect to the unpaid tax or proposed levy to which the appeal relates (Code Sec. 6330(e); Reg. §301.6330-1(c)(2), Q&A-C2).

Equivalent hearing. If the request for a CDP hearing is not timely filed the taxpayer may request an "equivalent hearing." Although the Appeals Office will consider the same issues that may be raised in a CDP hearing, important advantages of a CDP hearing are lost. Specifically, limitation periods are not suspended, collection action is not necessarily suspended, and the decision of Appeals is not subject to court review (Reg. §301.6330-1(c)(2), Q&A-C7)..

Taxpayer alternatives to CDP hearing. A taxpayer may attempt to resolve concerns regarding a proposed levy before or after requesting a CDP hearing. The taxpayer should contact the office that is collecting the tax. If the situation is resolved after filing a request for a CDP hearing the taxpayer may withdraw the request for the hearing (such a request must be in writing). The 30-day period in which a taxpayer may file a request for a CDP hearing is not suspended while a taxpayer is engaged in an informal attempt to settle the dispute (Reg. §301.6330-1(c)(2), Q&A-C9).

Coordination with Code Sec. 6320 CDP hearings. To the extent practicable, a CDP hearing requested under Code Sec. 6330 will be held in conjunction with any CDP hearing that the taxpayer requests under Code Sec. 6320.. Code Sec. 6320 provides procedural rules that apply when the IRS places a lien on taxpayer's property or property rights, including a right to a hearing before Appeals and judicial review of the hearing determination.

A taxpayer may raise issues regarding spousal defenses, collection alternatives, and challenge the appropriateness of the proposed levy at a Code Sec. 6330 CDP hearing even though the taxpayer did not take advantage of a prior opportunity to request a Code Sec. 6320 CDP hearing that would have covered the same tax and tax period. However, the taxpayer may not challenge the tax liability under this circumstance (Reg. §301.6330-1(e)(3), Q&A-E7).

The IRS is required to provide a Collection Due Process Hearing Notice (CDP Notice) to any person whose property or property rights the IRS intends to levy on or after January 19, 1999 (Reg. §301.6330-1(a)(3), Q&A-A1). Unless the collection of tax is in jeopardy, the IRS may not levy on property (other than a state tax refund) unless the CDP Notice has first been provided (Code Sec. 6330(a)(1)).

Notice of Levy and Right to Hearing: Collection Due Process Notice

The Collection Due Process (CDP) Notice must be given in person, left at the taxpayer's dwelling or usual place of business, or sent to the taxpayer's last known address by certified or registered mail, return receipt requested, not less than 30 days before the day of the levy (Code Sec. 6330(a)(2); Reg. §301.6330-1(a)(1); Reg. §301.6330-1(a)(3), Q&A-A8). As explained below, the CDP Notice informs a person of the right to request a pre-levy Collection Due Process hearing (CDP hearing) with the Internal Revenue Service Office of Appeals within 30 days following the date of the CDP Notice for the purpose of challenging the levy.

Actual receipt is not a prerequisite to the validity of the CDP Notice. If the taxpayer does not receive or accept a properly transmitted notification, the 30-day period in which to request a CDP hearing is not suspended (Reg. §301.6330-1(a)(3), Q&A-A9). However, if a taxpayer does not receive a CDP Notice because of an improper IRS delivery, it must promptly provide a taxpayer with a substitute CDP Notice and an opportunity to request a CDP hearing within a 30-day period starting the day after the date of the substitute CDP Notice (Reg. §301.6330-1(a)(3), Q&A-A10; Reg. §301.6330-1(c)(2), Q&A-C8). The taxpayer who receives a substitute CDP Notice is entitled to a hearing before the Appeals Office and may seek judicial review of the hearing officer's determination (Reg. §301.6330-1(b)(2), Q&A-B3).

Exceptions for state tax refunds and jeopardy collections. Although the IRS is not required to provide a CDP Notice prior to levy if it determines that the collection of tax is in jeopardy or if the levy has been served upon a state with respect to a taxpayer's state tax refund, the CDP Notice must be provided within a reasonable period of time after the levy has occurred. Such a CDP Notice is referred to as a post-levy CDP Notice (Code Sec. 6330(f); Reg. §301.6330-1(a)(2)).

A taxpayer is entitled to a CDP hearing where a levy for a state tax refund is served on or after January 19, 1999, even though the IRS had previously served other levies prior to January 19, 1999, seeking to collect the taxes owed for the same period (Reg. §301.6330-1(b)(2), Q&A-B1).

CDP Notice provided to taxpayer owing tax. The CDP Notice is provided to the person whose property or right to property will be levied upon (or was levied upon in the case of a post-levy CDP Notice sent with respect to a jeopardy collection or levy on a state tax refund). This is the person (taxpayer) who is liable to pay the tax due after Notice and Demand and who fails to pay the tax (Reg. §301.6330-1(a)(3), Q&A-A1).

Nominees of a person holding property of a taxpayer or persons who hold a lien on a taxpayer's property will not receive a CDP Notice (Reg. §301.6330-1(a)(3), Q&A-A2). These persons, however, may seek reconsideration by the IRS office collecting the tax, assistance from the National Taxpayer Advocate, or an administrative hearing before Appeals under its Collection Appeals Program. In contrast to the results of a CDP hearing, the results of an administrative hearing held at the request of a nominee or lien holder is not subject to judicial review (Reg. §301.6330-1(b)(2), Q&A-B5).

Contents of pre-levy CDP Notice. A CDP pre-levy Notice must state in simple and nontechnical terms:

(1) the amount of unpaid tax;

(2) the right to request a CDP pre-levy hearing with the IRS Appeals Office within 30 days commencing the day after the date of the CDP Notice;

(3) that the IRS intends to levy; and

(4) the taxpayer's rights with respect to the levy action, including a brief statement that sets forth: (a) the statutory provisions relating to the levy and sale of property; (b) the procedures applicable to the levy and sale of property; (c) the administrative appeals available to the taxpayer with respect to levy and sale and the procedures relating to such appeals (including installment payments); (d) the alternatives available to a taxpayer that could prevent levy on the property (including installment agreements); and (e) the statutory provisions relating to the redemption of property and the release of liens on property (Reg. §301.6330-1(a)(3), Q&A-A6).

Form 12153, Request for a Collection Due Process Hearing, will be included with the CDP Notice (Reg. §301.6330-1(a)(3), Q&A-A8).

Contents of post-levy CDP Notice. Where the IRS has levied on a state Tax Refund or in a jeopardy situation, the CDP post-levy Notice will contain the same information as a pre-levy CDP Notice, except that, with respect to item (3), above, it will indicate that the IRS has levied on the taxpayer's state tax refund or made a jeopardy levy and, with respect to item (4)(d), above, the alternatives that can prevent any additional levies will be described (Reg. §301.6330-1(a)(3), Q&A-A7).

Notice of Levy and Right to Hearing: Collection Due Process hearing procedures

A Collection Due Process hearing (CDP hearing) is held by the IRS Office of Appeals (Appeals) (Code Sec. 6330(b)(1)). The hearing must be conducted by an impartial employee or officer who has no prior involvement with the unpaid tax unless the taxpayer waives this requirement in writing (Code Sec. 6330(b)(3); Reg. §301.6330-1(d)(1)). Prior involvement includes participation in an Appeals hearing (other than a Code Sec. 6320 CDP hearing or Code Sec. 6330 CDP hearing) that the taxpayer may have had with respect to the tax and tax period shown on the Collection Due Process Hearing Notice (CDP Notice) (Reg. §301.6330-1(d)(2), Q&A-D4).

One CDP hearing permitted. A taxpayer is entitled to only one CDP hearing for the tax and tax periods shown on the CDP Notice even though a second CDP Notice (or an additional Notice of Intent to Levy (Code Sec. 6331) or similar reminder notice) is sent for the same tax and tax periods (Reg. §301.6330-1(d)(1); Reg. §301.6330-1(b)(2), Q&A-B2 and Q&A-B4). A taxpayer, however, may be entitled to more than one CDP hearing with respect to a tax period if different types of taxes are involved (for example, an income tax liability and an employment tax liability). A second CDP hearing for the same tax period may also be allowed where the amount of tax has changed as a result of an additional assessment or an additional accuracy-related or filing delinquency penalty has been assessed. The taxpayer is not entitled to another CDP hearing if the additional assessment represents accruals of interest or accruals of penalties (Reg. §301.6330-1(d)(2), Q&A-D1).

To the extent practicable, a CDP pre-levy hearing requested under Code Sec. 6330 will be held at the same time as a CDP hearing requested under Code Sec. 6320 with respect to the filing of a notice of lien (Reg. §301.6330-1(d)(1); Reg. §301.6330-1(d)(2), Q&A-D3).

A CDP Notice may relate to several different tax periods. To the extent practicable, a hearing with respect to one tax period shown on the CDP Notice will be combined with other periods shown on the CDP Notice (Reg. §301.6330-1(d)(2), Q&A-D2).

Location of hearings. The regulations state that the taxpayer must be offered an opportunity for a hearing at the Appeals office closest to the taxpayer's residence or, in the case of a business taxpayer, the taxpayer's principal place of business. Alternatively, if the taxpayer prefers, the hearing can be conducted through correspondence or by telephone (Reg. §301.6330-1(d)(2), Q&A-D7).

Informality of hearings. CDP hearings are conducted informally and are not required to be held face-to-face. The taxpayer has no right to subpoena and examine witnesses, and no transcripts or recordings of any meeting or conversation between an Appeals officer or employee and the taxpayer or the taxpayer's representative is required (Reg. §301.6330-1(d)(2), Q&A-D6). However, prior to the issuance of the final regulations, at least one District Court had held that informality did not completely obviate the need for the appeals officer to compile a hearing record of some sort (Mesa Oil, Inc., DC Colo., 2001-1 USTC ¶50,130 (Nonacq.)).

Matters considered at CDP pre-levy or post-levy hearing. Appeals will consider the following matters at a CDP pre-levy hearing:

(1) the validity, sufficiency, and timeliness of the CDP Notice and of the request of the CDP hearing made by the taxpayer;

(2) any relevant issue relating to the unpaid tax raised by the taxpayer at the hearing;

(3) appropriate spousal defenses raised by the taxpayer at the hearing;

(4) challenges by the taxpayer to the appropriateness of the collection action;

(5) any offers for collection alternatives made by the taxpayer; and

(6) whether the proposed collection action balances the need for the efficient collection of taxes and the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary (Code Sec. 6330(c)(2)(A); Reg. §301.6330-1(e)(1); Reg. §301.6330-1(e)(3), Q&A-E1).

Prior to issuing its determination, the hearing officer is required to obtain verification from the IRS office collecting the tax that the requirements of any applicable law or administrative procedure have been met (Reg. §301.6330-1(e)(1)). Presumably, the hearing officer would be required under this provision to consider whether the requirements of Code Sec. 6331, including those relating to the issuance of a Notice and Demand and Notice of Intent to Levy, have been satisfied.

Taxpayer must provide requested information. A taxpayer is expected to provide all relevant information, including financial statements, requested by Appeals as necessary to make its decision (Reg. §301.6330-1(e)(1)).

Challenges to tax liability. Generally, a taxpayer may challenge the existence or amount of the tax liability specified in the CDP Notice only if the taxpayer (a) did not receive a statutory notice of deficiency or did not receive the notice in time to petition the Tax Court for a redetermination of the deficiency or (b) did not otherwise have an opportunity to dispute the tax liability (Reg. §301.6330-1(e)(3), Q&A-E2).

A taxpayer has had the opportunity to dispute the tax liability if previously offered a conference with Appeals either before or after the assessment of the liability (Code Sec. 6330(c)(2)(B); Reg. §301.6330-1(e)(3), Q&A-E2). A taxpayer who previously received a Code Sec. 6320 CDP Notice covering the same tax and tax period and did not request a CDP hearing has had the opportunity to dispute the existence or amount of the tax liability and may not raise that issue at a later Code Sec. 6330 CDP levy hearing (Reg. §301.6330-1(e)(3), Q&A-E7).

Example:

The IRS properly assesses a trust fund recovery penalty against Bill Brown. If Brown is offered and declines the opportunity for a conference at which the liability may be disputed, he may not challenge the existence or amount of the tax at a subsequent CDP hearing (Reg. §301.6330-1(e)(4), Example 3).

The existence and amount of the underlying tax liability, as well as other precluded issues, can be considered as part of the CDP hearing at the Appeals officer's sole discretion. However, any determination of such issues is not considered to be part of the Notice of Determination and is not reviewable by a district court or the Tax Court (Reg. §301.6330-1(e)(2), Q&A-E11).

However, the Tax Court has allowed taxpayers to challenge the existence or amount of a tax liability reported on their original tax return where they did not receive a notice of deficiency and did not otherwise have an opportunity to dispute the tax liability in question (N. Montgomery, 122 TC 1, Dec. 55,501).

Spousal defenses. Spousal defenses may be raised in a CDP hearing provided that the defense was not raised and considered in a prior administrative or judicial proceeding that has become final (Reg. §301.6330-1(e)(3), Q&A-E4 and Q&A-E5). The taxpayer must raise spousal defenses under Code Sec. 66 and Code Sec. 6015 in writing. Such spousal defenses are governed by the terms, regulations and procedures of Code Sec. 66 and Code Sec. 6015 (Reg. §301.6330-1(e)(2)).

The limitations imposed on a taxpayer's right to challenge the tax liability at a CDP levy hearing do not apply to spousal defenses raised under Code Sec. 66 or Code Sec. 6015 (Reg. §301.6330-1(e)(3), Q&A-E3).

Collection alternatives. The hearing officer will consider collection alternatives offered by the taxpayer in making the CDP hearing determination. Any proposal that would facilitate the collection of the tax will be considered, including an installment agreement, an offer-in-compromise, the posting of a bond, or the substitution of other assets for the property to be levied (Reg. §301.6330-1(e)(3), Q&A-E6).

Notice of Levy and Right to Hearing: Notice of Determination

The IRS Office of Appeals will issue its findings and decisions with respect to a Code Sec. 6330 Collection Due Process (CDP) hearing in a dated Notice of Determination sent by certified or registered mail to the taxpayer (Reg. §301.6330-1(e)(3), Q&A-E8). There is no deadline for issuing the Notice of Determination. The regulations, however, require the hearing officer to conduct the hearing as expeditiously as possible under the circumstances (Reg. §301.6330-1(e)(3), Q&A-E9). A taxpayer has 30 days after the date the Notice of Determination is issued in which to seek judicial review from a court that has jurisdiction over the type of tax involved (Reg. §301.6330-1(f)(2), Q&A-F1). For income taxes, this is the Tax Court.

Contents of Notice of Determination. The dated Notice of Determination is required to:

(1) state whether the IRS met the requirements of any applicable law or administrative procedure;

(2) decide any allowable issue raised by the taxpayer at the hearing (for example, challenges to the tax liability, spousal defenses, the appropriateness of the collection action, and collection alternatives);

(3) decide whether levy is required for the efficient collection of taxes in light of a taxpayer's legitimate concern that the collection action be no more intrusive than necessary;

(4) set forth any agreements reached with the taxpayer, any relief given to the taxpayer, and any actions that the taxpayer or IRS are required to take; and

(5) advise the taxpayer that judicial review to the Tax Court or a U.S. district court must be sought within 30 days of the date of the Notice of Determination (Reg. §301.6330-1(e)(3), Q&A-E8).

Notice of Levy and Right to Hearing: Judicial review of Notice of Determination

A taxpayer may seek judicial review of a finding contained in a Notice of Determination issued by the IRS Appeals Office pursuant to Code Sec. 6330. The appeal must be filed within 30 days after the date appearing on the Notice of Determination (Reg. §301.6330-1(f)(1)). However, if the taxpayer is only appealing the denial of innocent spouse relief under Code Sec. 6015, the appeal may be filed with the Tax Court within 90 days of the determination as provided by Code Sec. 6015(e). Other issues may not be considered when an appeal is not filed within the 30-day period (Reg. §301.6330-1(f)(2), Q&A-F2).

The regulations provide that a taxpayer may only seek review of an issue that was raised in the Code Sec. 6330 CDP hearing (Reg. §301.6330-1(f)(2), Q&A-F5).

Court to which appeal filed. The appeal of a determination is filed with the Tax Court if the Tax Court has jurisdiction over the type of tax specified in the Collection Due Process Hearing Notice (CDP Notice) (for example, income, estate, and excise taxes). The Tax Court also has jurisdiction over innocent spouse relief (except in the context of a refund suit) (Code Sec. 6015(e)). Otherwise, the appeal is filed with the appropriate U.S. district court (for example, where employment taxes are at issue) (Reg. §301.6330-1(f)(2), Q&A-F3). Nothing in the Internal Revenue Code or regulations prohibits an appeal of a Tax Court or district court decision to a U.S. Appellate Court.

Appeal filed in wrong court. If the appeal is filed with the wrong court, the taxpayer has an additional 30 days after that court's determination to file with the proper court. The regulations provide for the additional 30 days regardless of the reason that the court initially chosen is incorrect. For example, if the case is dismissed for lack of jurisdiction or venue, the taxpayer may file with the proper court within 30 days (Reg. §301.6330-1(f)(2), Q&A-F4).

Review standard applied by court. The regulations do not address the standard to be applied by a court in reviewing the findings of a Notice of Determination. However, the Conference Agreement to the IRS Restructuring and Reform Act of 1998 (P.L. 105-206;) addresses this issue. Specifically, the Conference Agreement provides for a de novo review where the amount of the taxpayer's tax liability is at issue. All other issues are reviewed using an abuse of discretion standard (see AJP Management, DC Calif., at ¶38,184.13).

Suspension of levy while appeal is pending. Although collection action is suspended while a CDP hearing is pending, the IRS may levy on a taxpayer's property while a judicial appeal is pending if (1) the underlying tax liability is not at issue and (2) the IRS shows good cause for not suspending the levy (Code Sec. 6330(e)).

Notice of Levy and Right to Hearing: Tolling of limitation periods and levy actions during Collection Due Process hearing and appeals

The following periods of limitation are suspended for the period during which the Collection Due Process (CDP) hearing and any timely filed judicial appeal are pending:

(1) Code Sec. 6502 (relating to the 10-year period following assessment during which the IRS may collect unpaid taxes);

(2) Code Sec. 6531 (relating to the three- and six-year limitations period on the institution of a criminal prosecution under an internal revenue law); and

(3) Code Sec. 6532 (relating to two-year limitations period for taxpayer refund suits) (Code Sec. 6330(e); Reg. §301.6330-1(g)(1)).

Levy actions are also suspended during the CDP hearing and while timely filed appeals are pending (Code Sec. 6330(e)(1)). The authority of the Tax Court (or appropriate District Court) to enjoin any collection action or proceeding extends only to that portion of the unpaid tax or proposed levy to which the determination being appealed relates (Reg. §301.6330-1(g)(2), Q&A-G3). Moreover, the IRS may levy while an appeal is pending if the underlying tax liability is not at issue in the appeal and the court determines that the IRS has shown good cause not to suspend the levy (Code Sec. 6330(e)(2)).

The regulations provide that the suspension of the limitation periods begins on the date that the IRS receives the taxpayer's written request for a CDP hearing and continues until the IRS receives a written withdrawal of the request for the CDP hearing or the determination of the CDP hearing becomes final by reason of the expiration of the time for seeking judicial review or reconsideration (Reg. §301.6330-1(g)(1); Reg. §301.6330-1(g)(2), Q&A-G1).

The suspended periods of limitation will not expire before the 90th day after the date on which the IRS receives the taxpayer's written withdrawal of the request for a CDP hearing or the determination with respect to the hearing becomes final by reason of expiration of the time for seeking judicial review or reconsideration (Code Sec. 6330(e); Reg. §301.6330-1(g)(1; Reg. §301.6330-1(g)(2)&A-G1).

The time for seeking judicial review generally expires 30 days after the date of the Notice of Determination..

Example (1):

The IRS assessed a tax liability against John James in 1996. Assume that the 10-year limitation period on the collection of James' tax liability (Code Sec. 6502) is scheduled to expire after August 1, 2006. The IRS sends a Code Sec. 6330 Collection Due Process Hearing Notice (CDP Notice) to James on May 1, 2005. The IRS receives a request to conduct a CDP hearing from James on May 15, 2005. The hearing is conducted and the Hearing Determination Letter is dated June 15, 2005. Assuming that James does not request judicial review within 30 days after the June 15, 2005, Determination Letter date, the Code Sec. 6502 statute of limitations is suspended from May 15, 2005, (the date of IRS's receipt of the hearing request) until July 15, 2005 (expiration of time for seeking judicial review). The August 1, 2006, expiration date is extended an additional 60 days (i.e., the period from May 15, 2005, through July 15, 2005) and will expire after September 30, 2006.

Example (2):

Assume the same facts as in Example (1), above, except that the limitation period is scheduled to expire after August 1, 2005. The statute of limitations would normally be extended 60 days (as illustrated in the previous example) through September 30, 2005. However, the limitation period may not expire before the 90th day after the date of the final determination with respect to the CDP hearing. The final determination date is July 15 --the date that the time for seeking judicial review expires. The limitation period is therefore extended through October 13, 2005 (90 days after July 15, 2005).

The suspension of the limitation periods only apply to the taxes and the tax period or periods to which the CDP Notice relates. Additionally, the IRS may file notice of federal tax liens (NFTLs) for tax periods or taxes not covered by the CDP Notice, may file at other recording offices NFTLs for the same tax and tax period stated in the CDP Notice, and may take other non-levy collection actions (Reg. §301.6330-1(g)(2), Q&A-G3).

These periods of limitation are not suspended if a taxpayer fails to file a timely CDP hearing. Although the IRS will conduct an equivalent hearing in such a case, the equivalent hearing does not toll these periods of limitation..

Notice of Levy and Right to Hearing: Jurisdiction of Appeals Office retained following Notice of Determination

The IRS Appeals Office (Appeals) retains jurisdiction over its Collection Due Process hearing (CDP hearing) determination, including any additional administrative hearing requested by a taxpayer regarding levies and any collection actions taken or proposed with respect to the determination (Code Sec. 6330(d)(2); Reg. §301.6330-1(h)(1)).

The decisions of the Notice of Determination may be changed by Appeals if there is a change in the taxpayer's circumstances. Once a taxpayer has exhausted all other remedies, Appeals retains jurisdiction to consider whether the taxpayer's change in circumstances warrants a change in its earlier determination (Code Sec. 6320(d)(2); Reg. §301.6330-1(h)(1)).

No limitation periods are suspended while Appeals considers any matters raised by the taxpayer pursuant to its retained jurisdiction (Reg. §301.6330-1(h)(2), Q&A-H1). Decisions made pursuant to retained jurisdiction are not appealable to the Tax Court or a U.S. District Court (Reg. §301.6330-1(h)(2), Q&A-H2).

Notice of Levy and Right to Hearing: Equivalent hearings if Collection Due Process hearing not timely requested

A taxpayer who fails to request a Collection Due Process hearing (CDP hearing) within 30 days after receiving a Collection Due Process Hearing Notice (CDP Notice) is not entitled to a CDP hearing. However, the taxpayer may request an administrative hearing with Appeals referred to as an "equivalent hearing." Appeals will consider the same issues that it would have considered at a CDP hearing and follow the same procedures in arriving at its decision (Reg. §301.6330-1(i)(1)). The decision of Appeals in an equivalent hearing is issued in the form of a Decision Letter. The written decision in a CDP hearing is referred to as a Notice of Determination (Reg. §301.6330-1(i)).

A Decision Letter will generally contain the same information as a Notice of Determination (Reg. §301.6330-1(i)(2), Q&A-I4).

Although the same issues are considered at an equivalent hearing, an equivalent hearing has some significant disadvantages when compared to a CDP hearing.

Specifically, limitations periods are not suspended during the equivalent hearing and the Decision Letter is not appealable to the Tax Court or a U.S. District Court. However, if the decision relates to the denial of innocent spouse relief under Code Sec. 6015, review may be sought in the Tax Court within 90 days of the determination of Appeals, as provided by Code Sec. 6015(e) (Reg. §301.6330-1(i), Q&A-I5).

Finally, collection action is not automatically suspended during the period of the equivalent hearing. Appeals may request the IRS office responsible for collecting the taxes to suspend some or all collection action if appropriate or necessary under the circumstances (Reg. §301.6320-1(i), Q&A-I3).

Section 6330 of the Internal Revenue Code is as follows:

6330(a) REQUIREMENT OF NOTICE BEFORE LEVY. --

6330(a)(1) IN GENERAL. --No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates.

6330(a)(2) TIME AND METHOD FOR NOTICE. --The notice required under paragraph (1) shall be --

6330(a)(2)(A) given in person;

6330(a)(2)(B) left at the dwelling or usual place of business of such person; or

6330(a)(2)(C) sent by certified or registered mail, return receipt requested, to such person's last known address,

not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period.

6330(a)(3) INFORMATION INCLUDED WITH NOTICE. --The notice required under paragraph (1) shall include in simple and nontechnical terms --

6330(a)(3)(A) the amount of unpaid tax;

6330(a)(3)(B) the right of the person to request a hearing during the 30-day period under paragraph (2); and

6330(a)(3)(C) the proposed action by the Secretary and the rights of the person with respect to such action, including a brief statement which sets forth --

6330(a)(3)(C)(i) the provisions of this title relating to levy and sale of property;

6330(a)(3)(C)(ii) the procedures applicable to the levy and sale of property under this title;

6330(a)(3)(C)(iii) the administrative appeals available to the taxpayer with respect to such levy and sale and the procedures relating to such appeals;

6330(a)(3)(C)(iv) the alternatives available to taxpayers which could prevent levy on property (including installment agreements under section 6159); and

6330(a)(3)(C)(v) the provisions of this title and procedures relating to redemption of property and release of liens on property.

6330(b) RIGHT TO FAIR HEARING. --

6330(b)(1) IN GENERAL. --If the person requests a hearing under subsection (a)(3)(B), such hearing shall be held by the Internal Revenue Service Office of Appeals.

6330(b)(2) ONE HEARING PER PERIOD. --A person shall be entitled to only one hearing under this section with respect to the taxable period to which the unpaid tax specified in subsection (a)(3)(A) relates.

6330(b)(3) IMPARTIAL OFFICER. --The hearing under this subsection shall be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax specified in subsection (a)(3)(A) before the first hearing under this section or section 6320. A taxpayer may waive the requirement of this paragraph.

6330(c) MATTERS CONSIDERED AT HEARING. --In the case of any hearing conducted under this section --

6330(c)(1) REQUIREMENT OF INVESTIGATION. --The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.

6330(c)(2) ISSUES AT HEARING. --

6330(c)(2)(A) IN GENERAL. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

6330(c)(2)(A)(i) appropriate spousal defenses;

6330(c)(2)(A)(ii) challenges to the appropriateness of collection actions; and

6330(c)(2)(A)(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

6330(c)(2)(B) UNDERLYING LIABILITY. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

6330(c)(3) BASIS FOR THE DETERMINATION. --The determination by an appeals officer under this subsection shall take into consideration --

6330(c)(3)(A) the verification presented under paragraph (1);

6330(c)(3)(B) the issues raised under paragraph (2); and

6330(c)(3)(C) whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.

6330(c)(4) CERTAIN ISSUES PRECLUDED. --An issue may not be raised at the hearing if --

6330(c)(4)(A) the issue was raised and considered at a previous hearing under section 6320 or in any other previous administrative or judicial proceeding; and

6330(c)(4)(B) the person seeking to raise the issue participated meaningfully in such hearing or proceeding.

This paragraph shall not apply to any issue with respect to which subsection (d)(2)(B) applies.

6330(d) PROCEEDING AFTER HEARING. --

6330(d)(1) JUDICIAL REVIEW OF DETERMINATION. --The person may, within 30 days of a determination under this section, appeal such determination --

6330(d)(1)(A) to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter); or

6330(d)(1)(B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States.

If a court determines that the appeal was to an incorrect court, a person shall have 30 days after the court determination to file such appeal with the correct court.

6330(d)(2) JURISDICTION RETAINED AT IRS OFFICE OF APPEALS. --The Internal Revenue Service Office of Appeals shall retain jurisdiction with respect to any determination made under this section, including subsequent hearings requested by the person who requested the original hearing on issues regarding --

6330(d)(2)(A) collection actions taken or proposed with respect to such determination; and

6330(d)(2)(B) after the person has exhausted all administrative remedies, a change in circumstances with respect to such person which affects such determination.

6330(e) SUSPENSION OF COLLECTIONS AND STATUTE OF LIMITATIONS. --

6330(e)(1) IN GENERAL. --Except as provided in paragraph (2), if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing and the running of any period of limitations under section 6502 (relating to collection after assessment), section 6531 (relating to criminal prosecutions), or section 6532 (relating to other suits) shall be suspended for the period during which such hearing, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such hearing. Notwithstanding the provisions of section 7421(a), the beginning of a levy or proceeding during the time the suspension under this paragraph is in force may be enjoined by a proceeding in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1) and then only in respect of the unpaid tax or proposed levy to which the determination being appealed relates.

6330(e)(2) LEVY UPON APPEAL. --Paragraph (1) shall not apply to a levy action while an appeal is pending if the underlying tax liability is not at issue in the appeal and the court determines that the Secretary has shown good cause not to suspend the levy.

6330(f) JEOPARDY AND STATE REFUND COLLECTION. --If --

6330(f)(1) the Secretary has made a finding under the last sentence of section 6331(a) that the collection of tax is in jeopardy; or

6330(f)(2) the Secretary has served a levy on a State to collect a Federal tax liability from a State tax refund,

this section shall not apply, except that the taxpayer shall be given the opportunity for the hearing described in this section within a reasonable period of time after the levy.

.01 Added by P.L. 105-206. Amended by P.L. 106-554 (technical corrections).

THE REGULATIONS UNDER SECTION 6330

§301.6330-1., Notice and opportunity for hearing prior to levy

(a) Notification

(1) In general. --Except as specified in paragraph (a)(2) of this section, the Commissioner, or his or her delegate (the Commissioner), will prescribe procedures to provide persons upon whose property or rights to property the IRS intends to levy (hereinafter referred to as the taxpayer) on or after January 19, 1999, notice of that intention and to give them the right to, and the opportunity for, a pre-levy Collection Due Process (CDP) hearing with the Internal Revenue Service (IRS) Office of Appeals (Appeals). This pre-levy Collection Due Process Hearing Notice (CDP Notice) must be given in person, left at the dwelling or usual place of business of the taxpayer, or sent by certified or registered mail, return receipt requested, to the taxpayer's last known address. For further guidance regarding the definition of last known address, see §301.6212-2.

(2) Exceptions

(i) state tax refunds. --Section 6330(f) does not require the Commissioner to provide the taxpayer with notification of the taxpayer's right to a CDP hearing prior to issuing a levy to collect state tax refunds owing to the taxpayer. However, the Commissioner will prescribe procedures to give the taxpayer notice of the right to, and the opportunity for, a CDP hearing with Appeals with respect to any such levy issued on or after January 19, 1999, within a reasonable time after the levy has occurred. The notification required to be given following a levy on a state tax refund is referred to as a post-levy CDP Notice.

(ii) Jeopardy. --Section 6330(f) does not require the Commissioner to provide the taxpayer with notification of the taxpayer's right to a CDP hearing prior to a levy when there has been a determination that collection of the tax is in jeopardy. However, the Commissioner will prescribe procedures to provide notice of the right to, and the opportunity for, a CDP hearing with Appeals to the taxpayer with respect to any such levy issued on or after January 19, 1999, within a reasonable time after the levy has occurred. The notification required to be given following a jeopardy levy also is referred to as post-levy CDP Notice.

(3) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (a) as follows:

Q-A1. Who is the person to be notified under section 6330?

A-A1. Under section 6330(a)(1), a pre-levy or post-levy CDP Notice is required to be given only to the person whose property or right to property is intended to be levied upon, or, in the case of a levy made on a state tax refund or a jeopardy levy, the person whose property or right to property was levied upon. The person described in section 6330(a)(1) is the same person described in section 6331(a) --i.e., the person liable to pay the tax due after notice and demand who refuses or neglects to pay (referred to here as the taxpayer). A pre-levy or post-levy CDP Notice therefore will be given only to the taxpayer.

Q-A2. Will the IRS give notification to a known nominee of, a person holding property of, or a person who holds property subject to a lien with respect to, the taxpayer of the IRS' intention to issue a levy?

A-A2. No. Such a person is not the person described in section 6331(a)(1), but such persons have other remedies. See A-B5 of paragraph (b)(2) of this section.

Q-A3. Will the IRS give notification for each tax and tax period it intends to include or has included in a levy issued on or after January 19, 1999?

A-A3. Yes. The notification of an intent to levy or of the issuance of a jeopardy or state tax refund levy will specify each tax and tax period that will be or was included in the levy.

Q-A4. Will the IRS give notification to a taxpayer with respect to levies for a tax and tax period issued on or after January 19, 1999, even though the IRS had issued a levy prior to January 19, 1999, with respect to the same tax and tax period?

A-A4. Yes. The IRS will provide appropriate pre-levy or post-levy notification to a taxpayer regarding the first levy it intends to issue or has issued on or after January 19, 1999, with respect to a tax and tax period, even though it had issued a levy with respect to that same tax and tax period prior to January 19, 1999.

Q-A5. When will the IRS provide this notice?

A-A5. Beginning on January 19, 1999, the IRS will give a pre-levy CDP Notice to the taxpayer of the IRS' intent to levy on property or rights to property, other than in state tax refund and jeopardy levy situations, at least 30 days prior to the first such levy with respect to a tax and tax period. If the taxpayer has not received a pre-levy CDP Notice and the IRS levies on a state tax refund or issues a jeopardy levy on or after January 19, 1999, the IRS will provide a post-levy CDP Notice to the taxpayer within a reasonable time after that levy.

Q-A6. What must a pre-levy CDP Notice include?

A-A6. Pursuant to section 6330(a)(3), a pre-levy CDP Notice must include, in simple and nontechnical terms:

(i) The amount of the unpaid tax.

(ii) Notification of the right to request a CDP hearing.

(iii) A statement that the IRS intends to levy.

(iv) The taxpayer's rights with respect to the levy action, including a brief statement that sets forth --

(A) The statutory provisions relating to the levy and sale of property;

(B) The procedures applicable to the levy and sale of property;

(C) The administrative appeals available to the taxpayer with respect to the levy and sale and the procedures relating to those appeals;

(D) The alternatives available to taxpayers that could prevent levy on the property (including installment agreements); and

(E) The statutory provisions and the procedures relating to the redemption of property and the release of liens on property.

Q-A7. What must a post-levy CDP Notice include?

A-A7. A post-levy CDP Notice must include, in simple and nontechnical terms:

(i) The amount of the unpaid tax.

(ii) Notification of the right to request a CDP hearing.

(iii) A statement that the IRS has levied upon the taxpayer's state tax refund or has made a jeopardy levy on property or rights to property of the taxpayer, as appropriate.

(iv) The taxpayer's rights with respect to the levy action, including a brief statement that sets forth --

(A) The statutory provisions relating to the levy and sale of property;

(B) The procedures applicable to the levy and sale of property;

(C) The administrative appeals available to the taxpayer with respect to the levy and sale and the procedures relating to those appeals;

(D) The alternatives available to taxpayers that could prevent any further levies on the taxpayer's property (including installment agreements); and

(E) The statutory provisions and the procedures relating to the redemption of property and the release of liens on property.

Q-A8. How will this pre-levy or post-levy notification under section 6330 be accomplished?

A-A8. The IRS will notify the taxpayer by means of a pre-levy CDP Notice or a post-levy CDP Notice, as appropriate. The additional information the IRS is required to provide, together with Form 12153, Request for a Collection Due Process Hearing, will be included with the CDP Notice.

(i) The IRS may effect delivery of a pre-levy CDP Notice (and accompanying materials) in one of three ways:

(A) By delivering the notice personally to the taxpayer.

(B) By leaving the notice at the taxpayer's dwelling or usual place of business.

(C) By mailing the notice to the taxpayer at the taxpayer's last known address by certified or registered mail, return receipt requested.

(ii) The IRS may effect delivery of a post-levy CDP Notice (and accompanying materials) in one of three ways:

(A) By delivering the notice personally to the taxpayer.

(B) By leaving the notice at the taxpayer's dwelling or usual place of business.

Q-A9. What are the consequences if the taxpayer does not receive or accept the notification which was properly left at the taxpayer's dwelling or usual place of business, or properly sent by certified or registered mail, return receipt requested, to the taxpayer's last known address?

A-A9. Notification properly sent to the taxpayer's last known address or left at the taxpayer's dwelling or usual place of business is sufficient to start the 30-day period within which the taxpayer may request a CDP hearing. See paragraph (c) of this section for when a request for a CDP hearing must be filed. Actual receipt is not a prerequisite to the validity of the CDP Notice.

Q-A10. What if the taxpayer does not receive the CDP Notice because the IRS did not send that notice by certified or registered mail to the taxpayer's last known address, or failed to leave it at the dwelling or usual place of business of the taxpayer, and the taxpayer fails to request a CDP hearing with Appeals within the 30-day period commencing the day after the date of the CDP Notice?

A-A10. When the IRS determines that it failed properly to provide a taxpayer with a CDP Notice, it will promptly provide the taxpayer with a substitute CDP Notice and provide the taxpayer with an opportunity to request a CDP hearing. Substitute CDP Notices are discussed in Q&A-B3 of paragraph (b) (2) and Q&A-C8 of paragraph (c) (2) of this section.

(4) Examples. --The following examples illustrate the principles of this paragraph (a):

Example 1. Prior to January 19, 1999, the IRS issues a continuous levy on a taxpayer's wages and a levy on that taxpayer's fixed right to future payments. The IRS is not required to release either levy on or after January 19, 1999, until the requirements of section 6343(a)(1) are met. The taxpayer is not entitled to a CDP Notice or a CDP hearing under section 6330 with respect to either levy because both levy actions were initiated prior to January 19, 1999.

Example 2. The same facts as in Example 1, except the IRS intends to levy upon a taxpayer's bank account on or after January 19, 1999. The taxpayer is entitled to a pre-levy CDP Notice with respect to this proposed new levy.

(b) Entitlement to a CDP hearing

(1) In general. --A taxpayer is entitled to one CDP hearing with respect to the unpaid tax and tax periods covered by the pre-levy or post-levy CDP Notice provided to the taxpayer. The taxpayer must request the CDP hearing within the 30-day period commencing on the day after the date of the CDP Notice.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (b) as follows:

Q-B1. Is the taxpayer entitled to a CDP hearing where a levy for state tax refunds is issued on or after January 19, 1999, even though the IRS had previously issued other levies prior to January 19, 1999, seeking to collect the taxes owed for the same period?

A-B1. Yes. The taxpayer is entitled to a CDP hearing under section 6330 for the type of tax and tax periods set forth in the state tax refund levy issued on or after January 19, 1999.

Q-B2. Is the taxpayer entitled to a CDP hearing when the IRS, more than 30 days after issuance of a CDP Notice under section 6330 with respect to the unpaid tax and periods, provides subsequent notice to that taxpayer that the IRS intends to levy on property or rights to property of the taxpayer for the same tax and tax periods shown on the CDP Notice?

A-B2. No. Under section 6330, only the first pre-levy or post-levy CDP Notice with respect to the unpaid tax and tax periods entitles the taxpayer to request a CDP hearing. If the taxpayer does not timely request a CDP hearing with Appeals following that first notification, the taxpayer foregoes the right to a CDP hearing with Appeals and judicial review of Appeals' determination with respect to levies relating to that tax and tax period. The IRS generally provides additional notices or reminders (reminder notifications) to the taxpayer of its intent to levy when no collection action has occurred within 180 days of a proposed levy. Under such circumstances, a taxpayer may request an equivalent hearing as described in paragraph (i) of this section.

Q-B3. When the IRS provides a taxpayer with a substitute CDP Notice and the taxpayer timely requests a CDP hearing, is the taxpayer entitled to a CDP Hearing before Appeals?

A-B3. Yes. Unless the taxpayer provides the IRS a written withdrawal of the request that Appeals conduct a CDP hearing, the taxpayer is entitled to a CDP hearing before Appeals. Following the hearing, Appeals will issue a Notice of Determination, and the taxpayer is entitled to seek judicial review of that Notice of Determination.

Q-B4. If the IRS sends a second CDP Notice under section 6330 (other than a substitute CDP Notice) for a tax period and with respect to an unpaid tax for which a CDP Notice under section 6330 was previously sent, is the taxpayer entitled to a section 6330 CDP hearing based on the second CDP Notice?

A-B4. No. The taxpayer is entitled to only one CDP hearing under section 6330 with respect to the tax and tax period. The taxpayer must request the CDP hearing within 30 days of the date of the first CDP Notice provided for that tax and tax period.

Q-B5. Will the IRS give pre-levy or post-levy CDP Notices to known nominees of, persons holding property of, or persons holding property subject to a lien with respect to the taxpayer?

A-B5. No. Such person is not the person described in section 6331(a) and is, therefore, not entitled to a CDP hearing or an equivalent hearing (as discussed in paragraph (i) of this section). Such person, however, may seek reconsideration by the IRS office collecting the tax, assistance from the National Taxpayer Advocate, or an administrative hearing before Appeals under its Collection Appeals Program. However, any such administrative hearing would not be a CDP hearing under section 6330 and any determination or decision resulting from the hearing would not be subject to judicial review.

(3) Example. --The following example illustrates the principles of this paragraph (b):

Example. Federal income tax liability for 1997 is assessed against individual D. D buys an asset and puts it in individual E's name. The IRS gives D a CDP Notice of intent to levy with respect to the 1997 tax liability. The IRS will not notify E of its intent to levy. The IRS is not required to notify E of its intent to levy although E holds property of individual D. E is not the taxpayer.

(1) In general. --When a taxpayer is entitled to a CDP hearing under section 6330, the CDP hearing must be requested during the 30-day period that commences the day after the date of the CDP Notice.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (c) as follows:

Q-C1. What must a taxpayer do to obtain a CDP hearing?

A-C1. (i) The taxpayer must make a request in writing for a CDP hearing. A written request in any form which requests a CDP hearing will be acceptable. The request must include the taxpayer's name, address, and daytime telephone number, and must be signed by the taxpayer or the taxpayer's authorized representative and dated. The CDP Notice should include, when appropriate, a Form 12153, Request for a Collection Due Process Hearing, that can be used by the taxpayer to request a CDP hearing.

(ii) The Form 12153 requests the following information:

(A) The taxpayer's name, address, daytime telephone number, and taxpayer identification number (SSN or TIN).

(B) The type of tax involved.

(D) A statement that the taxpayer requests a hearing with Appeals concerning the proposed collection activity.

(E) The reason or reasons why the taxpayer disagrees with the proposed collection action.

(iii) Taxpayers are encouraged to use a Form 12153 in requesting a CDP hearing so that the request can be readily identified and forwarded to Appeals. Taxpayers may obtain a copy of Form 12153 by contacting the IRS office that issued the CDP Notice or by calling, toll-free, 1-800-829-3676.

(iv) The taxpayer may perfect any timely written request for a CDP hearing, which otherwise meets the requirements set forth above and which is made or alleged to have been made on the taxpayer's behalf by the taxpayer's spouse or any other representative, by filing, within a reasonable time of a request from Appeals, a signed written affirmation that the request was originally submitted on the taxpayer's behalf.

Q-C2. Must the request for the CDP hearing be in writing?

A-C2. Yes. There are several reasons why the request for a CDP hearing must be in writing. The filing of a timely request for a CDP hearing is the first step in what may result in a court proceeding. A written request will provide proof that the CDP hearing was requested and thus permit the court to verify that it has jurisdiction over any subsequent appeal of the Notice of Determination issued by Appeals. In addition, the receipt of the written request will establish the date on which the periods of limitation under section 6502 (relating to collection after assessment), section 6531 (relating to criminal prosecutions), and section 6532 (relating to suits) are suspended as a result of the CDP hearing and any judicial appeal. Moreover, because the IRS anticipates that taxpayers will contact the IRS office that issued the CDP Notice for further information or assistance in filling out Form 12153, or to attempt to resolve their liabilities prior to going through the CDP hearing process, the requirement of a written request should help prevent any misunderstanding as to whether a CDP hearing has been requested. If the information requested on Form 12153 is furnished by the taxpayer, the written request also will help to establish the issues for which the taxpayer seeks a determination by Appeals.

Q-C3. When must a taxpayer request a CDP hearing with respect to a CDP Notice issued under section 6330?

A-C3. A taxpayer must submit a written request for a CDP hearing within the 30-day period commencing the day after the date of the CDP Notice issued under section 6330. This period is slightly different from the period for submitting a written request for a CDP hearing with respect to a CDP Notice issued under section 6320. For a CDP Notice issued under section 6320, a taxpayer must submit a written request for a CDP hearing within the 30-day period commencing the day after the end of the five business day period following the filing of the notice of federal tax lien (NFTL).

Q-C4. How will the timeliness of a taxpayer's written request for a CDP hearing be determined?

A-C4. The rules and regulations under section 7502 and section 7503 will apply to determine the timeliness of the taxpayer's request for a CDP hearing, if properly transmitted and addressed as provided in A-C6 of this paragraph (c)(2).

Q-C5. Is the 30-day period within which a taxpayer must make a request for a CDP hearing extended because the taxpayer resides outside the United States?

A-C5. No. Section 6330 does not make provision for such a circumstance. Accordingly, all taxpayers who want a CDP hearing under section 6330 must request such a hearing within the 30-day period commencing the day after the date of the CDP Notice.

Q-C6. Where should the written request for a CDP hearing be sent?

A-C6. The written request for a CDP hearing must be sent, or hand delivered, to the IRS office that issued the CDP Notice at the address indicated on the CDP Notice. If the address of that office does not appear on the CDP notice, the request must be sent, or hand delivered, to the compliance area director, or his or her successor, serving the compliance area in which the taxpayer resides or has its principal place of business. If the taxpayer does not have a residence or principal place of business in the United States, the request must be sent, or hand delivered, to the compliance director, Philadelphia Submission Processing Center, or his or her successor. Taxpayers may obtain the address of the appropriate person to which the written request should be sent or hand delivered by calling, toll-free, 1-800-829-1040 and providing their taxpayer identification number (SSN or TIN).

Q-C7. What will happen if the taxpayer does not request a CDP hearing in writing within the 30-day period commencing on the day after the date of the CDP Notice issued under section 6330?

A-C7. If the taxpayer does not request a CDP hearing with Appeals within the 30-day period commencing the day after the date of the CDP Notice, the taxpayer will forego the right to a CDP hearing under section 6330 with respect to the unpaid tax and tax periods shown on the CDP Notice. The taxpayer may, however, request an equivalent hearing. See paragraph (i) of this section.

Q-C8. When must a taxpayer request a CDP hearing with respect to a substitute CDP Notice?

A-C8. A CDP hearing with respect to a substitute CDP Notice must be requested in writing by the taxpayer prior to the end of the 30-day period commencing the day after the date of the substitute CDP Notice.

Q-C9. Can taxpayers attempt to resolve the matter of the proposed levy with an officer or employee of the IRS office collecting the tax liability stated on the CDP Notice either before or after requesting a CDP hearing?

A-C9. Yes. Taxpayers are encouraged to discuss their concerns with the IRS office collecting the tax, either before or after they request a CDP hearing. If such a discussion occurs before a request is made for a CDP hearing, the matter may be resolved without the need for Appeals consideration. However, these discussions do not suspend the running of the 30-day period within which the taxpayer is required to request a CDP hearing, nor do they extend that 30-day period. If discussions occur after the request for a CDP hearing is filed and the taxpayer resolves the matter with the IRS office collecting the tax, the taxpayer may withdraw in writing the request that a CDP hearing be conducted by Appeals. The taxpayer can also waive in writing some or all of the requirements regarding the contents of the Notice of Determination.

(3) Examples. --The following examples illustrate the principles of this paragraph (c):

Example 1. The IRS mails a CDP Notice of intent to levy to individual A's last known address on June 24, 1999. Individual A has until July 26, 1999, a Monday, to request a CDP hearing. The 30-day period within which individual A may request a CDP hearing begins on June 25, 1999. Because the 30-day period expires on July 24, 1999, a Saturday, individual A's written request for a CDP hearing will be considered timely if it is properly transmitted and addressed to the IRS in accordance with section 7502 and the regulations thereunder no later than July 26, 1999.

Example 2. Same facts as in Example 1, except that individual A is on vacation, outside the United States, or otherwise does not receive or read the CDP Notice until July 19, 1999. As in Example 1, individual A has until July 26, 1999, to request a CDP hearing. If individual A does not request a CDP hearing, individual A may request an equivalent hearing as to the levy at a later time. The taxpayer should make a request for an equivalent hearing at the earliest possible time.

Example 3. Same facts as in Example 2, except that individual A does not receive or read the CDP Notice until after July 26, 1999, and does not request a hearing by July 26, 1999. Individual A is not entitled to a CDP hearing. Individual A may request an equivalent hearing as to the levy at a later time. The taxpayer should make a request for an equivalent hearing at the earliest possible time.

Example 4. Same facts as in Example 1, except the IRS determines that the CDP Notice mailed on June 24, 1999, was not mailed to individual A's last known address. As soon as practicable after making this determination, the IRS will mail a substitute CDP Notice to individual A at individual A's last known address, hand deliver the substitute CDP Notice to individual A, or leave the substitute CDP Notice at individual A's dwelling or usual place of business. Individual A will have 30 days commencing on the day after the date of the substitute CDP Notice within which to request a CDP hearing.

(d) Conduct of CDP hearing

(1) In general. --If a taxpayer requests a CDP hearing under section 6330(a)(3)(B) (and does not withdraw that request), the CDP hearing will be held with Appeals. The taxpayer is entitled to only one CDP hearing under section 6330 with respect to the unpaid tax and tax periods shown on the CDP Notice. To the extent practicable, the CDP hearing requested under section 6330 will be held in conjunction with any CDP hearing the taxpayer requests under section 6320. A CDP hearing will be conducted by an employee or officer of Appeals who, prior to the first CDP hearing under section 6320 or section 6330, has had no involvement with respect to the tax for the tax periods to be covered by the hearing, unless the taxpayer waives this requirement.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (d) as follows:

Q-D1. Under what circumstances can a taxpayer receive more than one pre-levy CDP hearing under section 6330 with respect to a tax period?

A-D1. The taxpayer may receive more than one CDP pre-levy hearing under section 6330 with respect to a tax period where the tax involved is a different type of tax (for example, an employment tax liability, where the original CDP hearing for the tax period involved an income tax liability), or where the same type of tax for the same period is involved, but where the amount of the unpaid tax has changed as a result of an additional assessment of tax (not including interest or penalties) for that period or an additional accuracy-related or filing-delinquency penalty has been assessed. The taxpayer is not entitled to another CDP hearing under section 6330 if the additional assessment represents accruals of interest, accruals of penalties, or both.

Q-D2. Will a CDP hearing with respect to one tax period be combined with a CDP hearing with respect to another tax period?

A-D2. To the extent practicable, a CDP hearing with respect to one tax period shown on a CDP Notice will be combined with any and all other CDP hearings which the taxpayer has requested.

Q-D3. Will a CDP hearing under section 6330 be combined with a CDP hearing under section 6320?

A-D3. To the extent it is practicable, a CDP hearing under section 6330 will be held in conjunction with a CDP hearing under section 6320.

Q-D4. What is considered to be prior involvement by an employee or officer of Appeals with respect to the tax and tax period or periods involved in the hearing?

A-D4. Prior involvement by an employee or officer of Appeals includes participation or involvement in an Appeals hearing (other than a CDP hearing held under either section 6320 or section 6330) that the taxpayer may have had with respect to the tax and tax periods shown on the CDP Notice.

Q-D5. How can a taxpayer waive the requirement that the officer or employee of Appeals have no prior involvement with respect to the tax and tax period or periods involved in the CDP hearing?

A-D5. The taxpayer must sign a written waiver.

Q-D6. How are CDP hearings conducted?

A-D6. The formal hearing procedures required under the Administrative Procedure Act, 5 U.S.C. 551 et seq., do not apply to CDP hearings. CDP hearings are much like Collection Appeal Program (CAP) hearings in that they are informal in nature and do not require the Appeals officer or employee and the taxpayer, or the taxpayer's representative, to hold a face-to-face meeting. A CDP hearing may, but is not required to, consist of a face-to-face meeting, one or more written or oral communications between an Appeals officer or employee and the taxpayer or the taxpayer's representative, or some combination thereof. A transcript or recording of any face-to-face meeting or conversation between an Appeals officer or employee and the taxpayer or the taxpayer's representative is not required. The taxpayer or the taxpayer's representative does not have the right to subpoena and examine witnesses at a CDP hearing.

Q-D7. If a taxpayer wants a face-to-face CDP hearing, where will it be held?

A-D7. The taxpayer must be offered an opportunity for a hearing at the Appeals office closest to taxpayer's residence or, in the case of a business taxpayer, the taxpayer's principal place of business. If that is not satisfactory to the taxpayer, the taxpayer will be given an opportunity for a hearing by correspondence or by telephone. If that is not satisfactory to the taxpayer, the Appeals officer or employee will review the taxpayer's request for a CDP hearing, the case file, any other written communications from the taxpayer (including written communications, if any, submitted in connection with the CDP hearing), and any notes of any oral communications with the taxpayer or the taxpayer's representative. Under such circumstances, review of those documents will constitute the CDP hearing for the purposes of section 6330(b).

(e) Matters considered at CDP hearing

(1) In general. --Appeals has the authority to determine the validity, sufficiency, and timeliness of any CDP Notice given by the IRS and of any request for a CDP hearing that is made by a taxpayer. Prior to issuance of a determination, the hearing officer is required to obtain verification from the IRS office collecting the tax that the requirements of any applicable law or administrative procedure have been met. The taxpayer may raise any relevant issue relating to the unpaid tax at the hearing, including appropriate spousal defenses, challenges to the appropriateness of the proposed collection action, and offers of collection alternatives. The taxpayer also may raise challenges to the existence or amount of the tax liability specified on the CDP Notice for any tax period shown on the CDP Notice if the taxpayer did not receive a statutory notice of deficiency for that tax liability or did not otherwise have an opportunity to dispute that tax liability. Finally, the taxpayer may not raise an issue that was raised and considered at a previous CDP hearing under section 6320 or in any other previous administrative or judicial proceeding if the taxpayer participated meaningfully in such hearing or proceeding. 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.

(2) Spousal defenses. --A taxpayer may raise any appropriate spousal defenses at a CDP hearing unless the Commissioner has already made a final determination as to spousal defenses in a statutory notice of deficiency or final determination letter. To claim a spousal defense under section 66 or section 6015, the taxpayer must do so in writing according to rules prescribed by the Commissioner or the Secretary. Spousal defenses raised under sections 66 and 6015 in a CDP hearing are governed in all respects by the provisions of sections 66 and section 6015 and the regulations and procedures thereunder.

(3) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (e) as follows:

Q-E1. What factors will Appeals consider in making its determination?

A-E1. Appeals will consider the following matters in making its determination:

(i) Whether the IRS met the requirements of any applicable law or administrative procedure.

(ii) Any issues appropriately raised by the taxpayer relating to the unpaid tax.

(iii) Any appropriate spousal defenses raised by the taxpayer.

(iv) Any challenges made by the taxpayer to the appropriateness of the proposed collection action.

(v) Any offers by the taxpayer for collection alternatives.

(vi) Whether the proposed collection action balances the need for the efficient collection of taxes and the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary.

Q-E2. When is a taxpayer entitled to challenge the existence or amount of the tax liability specified in the CDP Notice?

A-E2. A taxpayer is entitled to challenge the existence or amount of the tax liability specified in the CDP Notice if the taxpayer did not receive a statutory notice of deficiency for such liability or did not otherwise have an opportunity to dispute such liability. Receipt of a statutory notice of deficiency for this purpose means receipt in time to petition the Tax Court for a redetermination of the deficiency asserted in the notice of deficiency. An opportunity to dispute a liability includes a prior opportunity for a conference with Appeals that was offered either before or after the assessment of the liability.

Q-E3. Are spousal defenses subject to the limitations imposed under section 6330(c)(2)(B) on a taxpayer's right to challenge the tax liability specified in the CDP Notice at a CDP hearing?

A-E3. The limitations imposed under section 6330(c)(2)(B) do not apply to spousal defenses. When a taxpayer asserts a spousal defense, the taxpayer is not disputing the amount or existence of the liability itself, but asserting a defense to the liability which may or may not be disputed. A spousal defense raised under section 66 or section 6015 is governed by section 66 or section 6015 and the regulations and procedures thereunder. Any limitation under those sections, regulations, and procedures therefore will apply.

Q-E4. May a taxpayer raise at a CDP hearing a spousal defense under section 66 or section 6015 if that defense was raised and considered administratively and the Commissioner has issued a statutory notice of deficiency or final determination letter addressing the spousal defense?

A-E4. No. A taxpayer is precluded from raising a spousal defense at a CDP hearing when the Commissioner has made a final determination (under section 66 or section 6015) as to spousal defenses in a final determination letter or statutory notice of deficiency. However, a taxpayer may raise spousal defenses in a CDP hearing when the taxpayer has previously raised spousal defenses, but the Commissioner has not yet made a final determination regarding this issue.

Q-E5. May a taxpayer raise at a CDP hearing a spousal defense under section 66 or section 6015 if that defense was raised and considered in a prior judicial proceeding that has become final?

A-E5. No. A taxpayer is precluded by the doctrine of res judicata and by the specific limitations under section 66 or section 6015 from raising a spousal defense in a CDP hearing under these circumstances.

Q-E6. What collection alternatives are available to the taxpayer?

A-E6. Collection alternatives would include, for example, a proposal to withhold the proposed or future collection action in circumstances that will facilitate the collection of the tax liability, an installment agreement, an offer-in-compromise, the posting of a bond, or the substitution of other assets.

Q-E7. What issues may a taxpayer raise in a CDP hearing under section 6330 if the taxpayer previously received a notice under section 6320 with respect to the same tax and tax period and did not request a CDP hearing with respect to that notice?

A-E7. The taxpayer may raise appropriate spousal defenses, challenges to the appropriateness of the proposed collection action, and offers of collection alternatives. The existence or amount of the tax liability for the tax for the tax period specified in the CDP Notice may be challenged only if the taxpayer did not already have an opportunity to dispute that tax liability. Where the taxpayer previously received a CDP Notice under section 6320 with respect to the same tax and tax period and did not request a CDP hearing with respect to that earlier CDP Notice, the taxpayer already had an opportunity to dispute the existence or amount of the underlying tax liability.

Q-E8. How will Appeals issue its determination?

A-E8. (i) Taxpayers will be sent a dated Notice of Determination by certified or registered mail. The Notice of Determination will set forth Appeals' findings and decisions. It will state whether the IRS met the requirements of any applicable law or administrative procedure; it will resolve any issues appropriately raised by the taxpayer relating to the unpaid tax; it will include a decision on any appropriate spousal defenses raised by the taxpayer; it will include a decision on any challenges made by the taxpayer to the appropriateness of the collection action; it will respond to any offers by the taxpayer for collection alternatives; and it will address whether the proposed collection action represents a balance between the need for the efficient collection of taxes and the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. The Notice of Determination will also set forth any agreements that Appeals reached with the taxpayer, any relief given the taxpayer, and any actions the taxpayer or the IRS are required to take. Lastly, the Notice of Determination will advise the taxpayer of the taxpayer's right to seek judicial review within 30 days of the date of the Notice of Determination.

(ii) Because taxpayers are encouraged to discuss their concerns with the IRS office collecting the tax, certain matters that might have been raised at a CDP hearing may be resolved without the need for Appeals consideration. Unless, as a result of these discussions, the taxpayer agrees in writing to withdraw the request that Appeals conduct a CDP hearing, Appeals will still issue a Notice of Determination, but the taxpayer can waive in writing Appeals' consideration of some or all of the matters it would otherwise consider in making its determination.

Q-E9. Is there a period of time within which Appeals must conduct a CDP hearing or issue a Notice of Determination?

A-E9. No. Appeals will, however, attempt to conduct a CDP hearing and issue a Notice of Determination as expeditiously as possible under the circumstances.

Q-E10. Why is the Notice of Determination and its date important?

A-E10. The Notice of Determination will set forth Appeals' findings and decisions with respect to the matters set forth in A-E1 of this paragraph (e)(3). The 30-day period within which the taxpayer is permitted to seek judicial review of Appeals' determination commences the day after the date of the Notice of Determination.

Q-E11. If an Appeals officer considers the merits of a taxpayer's liability in a CDP hearing when the taxpayer had previously received a statutory notice of deficiency or otherwise had an opportunity to dispute the liability prior to the issuance of a notice of intention to levy, will the Appeals officer's determination regarding those liability issues be considered part of the Notice of Determination?

A-E11. No. An Appeals officer may consider the existence and amount of the underlying tax liability as a part of the CDP hearing only if the taxpayer did not receive a statutory notice of deficiency for the tax liability in question or otherwise have a prior opportunity to dispute the tax liability. Similarly, an Appeals officer may not consider any other issue if the issue was raised and considered at a previous hearing under section 6320 or in any other previous administrative or judicial proceeding in which the person seeking to raise the issue meaningfully participated. In the Appeals officer's sole discretion, however, the Appeals officer may consider the existence or amount of the underlying tax liability, or such other precluded issues, at the same time as the CDP hearing. Any determination, however, made by the Appeals officer with respect to such a precluded issue shall not be treated as part of the Notice of Determination issued by the Appeals officer and will not be subject to any judicial review. Because any decision made by the Appeals officer on such precluded issues is not properly a part of the CDP hearing, such decisions are not required to appear in the Notice of Determination issued following the hearing. Even if a decision concerning such precluded issues is referred to in the Notice of Determination, it is not reviewable by a district court or the Tax Court because the precluded issue is not properly part of the CDP hearing.

(4) Examples. --The following examples illustrate the principles of this paragraph (e):

Example I. The IRS sends a statutory notice of deficiency to the taxpayer at his last known address asserting a deficiency for the tax year 1995. The taxpayer receives the notice of deficiency in time to petition the Tax Court for a redetermination of the asserted deficiency. The taxpayer does not timely file a petition with the Tax Court. The taxpayer is precluded from challenging the existence or amount of the tax liability in a subsequent CDP hearing.

Example 2. Same facts as in Example 1, except the taxpayer does not receive the notice of deficiency in time to petition the Tax Court and did not have another prior opportunity to dispute the tax liability. The taxpayer is not precluded from challenging the existence or amount of the tax liability in a subsequent CDP hearing.

Example 3. The IRS properly assesses a trust fund recovery penalty against the taxpayer. The IRS offers the taxpayer the opportunity for a conference with Appeals at which the taxpayer would have the opportunity to dispute the assessed liability. The taxpayer declines the opportunity to participate in such a conference. The taxpayer is precluded from challenging the existence or amount of the tax liability in a subsequent CDP hearing.

(f) Judicial review of Notice of Determination

(1) In general. --Unless the taxpayer provides the IRS a written withdrawal of the request that Appeals conduct a CDP hearing, Appeals is required to issue a Notice of Determination in all cases where a taxpayer has timely requested a CDP hearing. The taxpayer may appeal such determinations made by Appeals within the 30-day period commencing the day after the date of the Notice of Determination to the Tax Court or a district court of the United States, as appropriate.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (f) as follows:

Q-F1. What must a taxpayer do to obtain judicial review of a Notice of Determination?

A-F1. Subject to the jurisdictional limitations described in A-F2, the taxpayer must, within the 30-day period commencing the day after the date of the Notice of Determination, appeal the determination by Appeals to the Tax Court or to a district court of the United States.

Q-F2. With respect to the relief available to the taxpayer under section 6015, what is the time frame within which a taxpayer may seek Tax Court review of Appeals' determination following a CDP hearing?

A-F2. If the taxpayer seeks Tax Court review not only of Appeals' denial of relief under section 6015, but also of relief with respect to other issues raised in the CDP hearing, the taxpayer should request Tax Court review within the 30-day period commencing the day after the date of the Notice of Determination. If the taxpayer only seeks Tax Court review of Appeals' denial of relief under section 6015, the taxpayer should request review by the Tax Court, as provided by section 6015(e), within 90 days of Appeals' determination. If a request for Tax Court review is filed after the 30-day period for seeking judicial review under section 6330, then only the taxpayer's section 6015 claims may be reviewable by the Tax Court.

Q-F3. Where should a taxpayer direct a request for judicial review of a Notice of Determination?

A-F3. If the Tax Court would have jurisdiction over the type of tax specified in the CDP Notice (for example, income and estate taxes), then the taxpayer must seek judicial review by the Tax Court. If the tax liability arises from a type of tax over which the Tax Court would not have jurisdiction, then the taxpayer must seek judicial review by a district court of the United States in accordance with Title 28 of the United States Code.

Q-F4. What happens if the taxpayer timely appeals Appeals' determination to the incorrect court?

A-F4. If the court to which the taxpayer directed a timely appeal of the Notice of Determination determines that the appeal was to the incorrect court (because of jurisdictional, venue or other reasons), the taxpayer will have 30 days after the court's determination to that effect within which to file an appeal to the correct court.

Q-F5. What issue or issues may the taxpayer raise before the Tax Court or before a district court if the taxpayer disagrees with the Notice of Determination?

A-F5. In seeking Tax Court or district court review of Appeals' Notice of Determination, the taxpayer can only ask the court to consider an issue that was raised in the taxpayer's CDP hearing.

(g) Effect of request for CDP hearing and judicial review on periods of limitation and collection activity

(1) In general. --The periods of limitation under section 6502 (relating to collection after assessment), section 6531 (relating to criminal prosecutions), and section 6532 (relating to suits) are suspended until the date the IRS receives the taxpayer's written withdrawal of the request for a CDP hearing by Appeals or the determination resulting from the CDP hearing becomes final by expiration of the time for seeking judicial review or the exhaustion of any rights to appeals following judicial review. In no event shall any of these periods of limitation expire before the 90th day after the date on which the IRS receives the taxpayer's written withdrawal of the request that Appeals conduct a CDP hearing or the Notice of Determination with respect to such hearing becomes final upon either the expiration of the time for seeking judicial review or upon exhaustion of any rights to appeals following judicial review.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (g) as follows:

Q-G1. For what period of time will the periods of limitation under section 6502, section 6531, and section 6532 remain suspended if the taxpayer timely requests a CDP hearing concerning a pre-levy or post-levy CDP Notice?

A-G1. The suspension period commences on the date the IRS receives the taxpayer's written request for a CDP hearing. The suspension period continues until the IRS receives a written withdrawal by the taxpayer of the request for a CDP hearing or the Notice of Determination resulting from the CDP hearing becomes final upon either the expiration of the time for seeking judicial review or upon exhaustion of any rights to appeals following judicial review. In no event shall any of these periods of limitation expire before the 90th day after the day on which there is a final determination with respect to such hearing. The periods of limitation that are suspended under section 6330 are those which apply to the taxes and the tax period or periods to which the CDP Notice relates.

Q-G2. For what period of time will the periods of limitation under section 6502, section 6531, and section 6532 be suspended if the taxpayer does not request a CDP hearing concerning the CDP Notice, or the taxpayer requests a CDP hearing, but his request is not timely?

A-G2. Under either of these circumstances, section 6330 does not provide for a suspension of the periods of limitation.

Q-G3. What, if any, enforcement actions can the IRS take during the suspension period?

A-G3. Section 6330(e) provides for the suspension of the periods of limitation discussed in paragraph (g)(1) of these regulations. Section 6330(e) also provides that levy actions that are the subject of the requested CDP hearing under that section shall be suspended during the same period. The IRS, however, may levy for other taxes and periods not covered by the CDP Notice if the CDP requirements under section 6330 for those taxes and periods have been satisfied. The IRS also may file NFTLs for tax periods and taxes, whether or not covered by the CDP Notice issued under section 6330, and may take other non-levy collection actions such as initiating judicial proceedings to collect the tax shown on the CDP Notice or offsetting overpayments from other periods, or of other taxes, against the tax shown on the CDP Notice. Moreover, the provisions in section 6330 do not apply when the IRS levies for the tax and tax period shown on the CDP Notice to collect a state tax refund due the taxpayer, or determines that collection of the tax is in jeopardy. Finally, section 6330 does not prohibit the IRS from accepting any voluntary payments made for the tax and tax period stated on the CDP Notice.

(3) Examples. --The following examples illustrate the principles of this paragraph (g):

Example 1. The period of limitation under section 6502 with respect to the taxpayer's tax period listed in the CDP Notice will expire on August 1, 1999. The IRS sent a CDP Notice to the taxpayer on April 30, 1999. The taxpayer timely requested a CDP hearing. The IRS received this request on May 15, 1999. Appeals sends the taxpayer its determination on June 15, 1999. The taxpayer timely seeks judicial review of that determination. The period of limitation under section 6502 would be suspended from May 15, 1999, until the determination resulting from that hearing becomes final by expiration of the time for seeking review or reconsideration before the appropriate court, plus 90 days.

Example 2. Same facts as in Example 1, except the taxpayer does not seek judicial review of Appeals' determination. Because the taxpayer requested the CDP hearing when fewer than 90 days remained on the period of limitation, the period of limitation will be extended to October 13, 1999 (90 days from July 15, 1999).

(h) Retained jurisdiction of Appeals

(1) In general. --The Appeals office that makes a determination under section 6330 retains jurisdiction over that determination, including any subsequent administrative hearings that may be requested by the taxpayer regarding levies and any collection actions taken or proposed with respect to Appeals' determination. Once a taxpayer has exhausted his other remedies, Appeals' retained jurisdiction permits it to consider whether a change in the taxpayer's circumstances affects its original determination. Where a taxpayer alleges a change in circumstances that affects Appeals' original determination, Appeals may consider whether changed circumstances warrant a change in its earlier determination.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (h) as follows:

Q-H1. Are the periods of limitation suspended during the course of any subsequent Appeals consideration of the matters raised by a taxpayer when the taxpayer invokes the retained jurisdiction of Appeals under section 6330(d)(2)(A) or (B)?

A-H1. No. Under section 6330(b)(2), a taxpayer is entitled to only one CDP hearing under section 6330 with respect to the tax and tax periods specified in the CDP Notice. Any subsequent consideration by Appeals pursuant to its retained jurisdiction is not a continuation of the original CDP hearing and does not suspend the periods of limitation.

Q-H2. Is a decision of Appeals resulting from a retained jurisdiction hearing appealable to the Tax Court or a district court?

A-H2. No. As discussed in A-H1, a taxpayer is entitled to only one CDP hearing under section 6330 with respect to the tax and tax period or periods specified in the CDP Notice. Only determinations resulting from CDP hearings are appealable to the Tax Court or a district court.

(i) Equivalent hearing

(1) In general. --A taxpayer who fails to make a timely request for a CDP hearing is not entitled to a CDP hearing. Such a taxpayer may nevertheless request an administrative hearing with Appeals, which is referred to herein as an "equivalent hearing." The equivalent hearing will be held by Appeals and generally will follow Appeals procedures for a CDP hearing. Appeals will not, however, issue a Notice of Determination. Under such circumstances, Appeals will issue a Decision Letter.

(2) Questions and answers. --The questions and answers illustrate the provisions of this paragraph (i) as follows:

Q-I1. What issues will Appeals consider at an equivalent hearing?

A-I1. In an equivalent hearing, Appeals will consider the same issues that it would have considered at a CDP hearing on the same matter.

Q-I2. Are the periods of limitation under sections 6502, 6531, and 6532 suspended if the taxpayer does not timely request a CDP hearing and is subsequently given an equivalent hearing?

A-I2. No. The suspension period provided for in section 6330(e) relates only to hearings requested within the 30-day period that commences the day following the date of the pre-levy or post-levy CDP Notice, that is, CDP hearings.

Q-I3. Will collection action be suspended if a taxpayer requests and receives an equivalent hearing?

A-I3. Collection action is not required to be suspended. Accordingly, the decision to take collection action during the pendency of an equivalent hearing will be determined on a case-by-case basis. Appeals may request the IRS office with responsibility for collecting the taxes to suspend all or some collection action or to take other appropriate action if it determines that such action is appropriate or necessary under the circumstances.

Q-I4. What will the Decision Letter state?

A-I4. The Decision Letter will generally contain the same information as a Notice of Determination.

Q-I5. Will a taxpayer be able to obtain court review of a decision made by Appeals with respect to an equivalent hearing?

A-I5. Section 6330 does not authorize a taxpayer to appeal the decision of Appeals with respect to an equivalent hearing. A taxpayer may under certain circumstances be able to seek Tax Court review of Appeals' denial of relief under section 6015. Such review must be sought within 90 days of the issuance of Appeals' determination on those issues, as provided by section 6015(e).

(j) Effective date. --This section is applicable with respect to any levy which occurs