**This article is part of a larger article series titled, The 941 Payroll Tax Resolution Process. There is a specific sequential order to this series, so we highly recommend that you start at the beginning.
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The Appeals division of the IRS are your best friend. They are an independent division within the IRS that makes decisions independent from any other group at the IRS. Appeals reviews tax disputes and considers the taxpayer and the IRS’ side to create a healthy outcome for both parties.
Impartial judgement and a fair application of the tax law is their goal.
The best part about filing an Appeal is that most often it stops the clock. In other words, it buys you time to fix the root cause. It then gives you a chance to build your case to defend yourself against the IRS.
There are several different types of Appeals, but we will focus on two of the most common types:
- Collection Due Process Appeals
- Collection Appeals Program
The Collection Due Process Appeals
First, let’s talk about Collection Due Process (CDP) Appeals. This pathway gets offered after you have received a Notice of Intent to Levy or a Notice of Federal Tax Lien Filing. As part of the lien and levy process, they IRS offers an Appeals hearing. At the end of the day, the IRS doesn’t want to put liens or levy assets and business property. Instead, they are taking aggressive steps to get you to start taking steps to resolve your tax debt.
This type of Appeal needs to be requested within 30 days of the date you received either of these notices.. You can do this by preparing and submitting Form 12153 (Request for a Collection Due Process or Equivalent Hearing). As a requirement, you will need to provide background information around the request. Also, provide a reason why you think the IRS should not pursue a lien or notice of intent to levy against you.
Send the letter to the address that was used to send your notice of lien or levy.
Once you have successfully requested your hearing, you’ll have a chance to make your case with an Appeals officer. During the hearing, you will be able to:
- Go through your case in-depth
- Dispute the tax liability
- Review your transcripts
- And even agree to a resolution pathway right then
Appeals is your friend. You may be able to walk out of this phone call with all periods resolved at once.
Just a heads up, every tax period has the right to only one Collection Due Process Appeal. With 941 cases, that means that each quarter only has one CDP allowance, so make it count!
Collection Appeals Program
Second, the Collection Appeals Program (CAP) is the streamlined, fast track Appeals process. The IRS offers a conference with a General Manager within two business days. Further, the Settlement Officer must review and get to a resolution within five business days.
Normally, this program is used when a levy has been put in place and you need help removing it quickly. The most common situation is a bank account levy which results in third-party harm when payroll needs to be ran.
One big benefit by going to CAP is that doing so comes with a 15-day stay of enforced collection.
One big downside is you cannot challenge the liability amount. Further, you cannot appeal the Trust Fund Recovery Penalty or an OIC rejection.
Another situation for using CAP is when the business is in jeopardy if collection continues. If cash flow is going to be ruined due to a levy, then you should fast track to CAP. The IRS will lose collection potential if the business goes bankrupt. They don’t want this to happen like you (or they get nothing!)
Use Them and Abuse Them
If you have a chance to get into Appeals, we highly recommend that you do so. This gets you into more of an even playing field with the Revenue Officer assigned to your case. Even when our firm represents taxpayers, we love going to Appeals. If we like to, then you definitely should if you are representing yourself.
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