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NAEA

NATIONAL TAX PRACTICE INSTITUTE™

LEVEL 1 Introduction to Collections

August 7, 2012

David F. Miles, EA

David F. Miles, EA is a consultant with 20/20 Tax Resolution, Inc. with over 14 years of representation experience. He works nationally as a taxpayer representative focusing on state and IRS collections. He holds a Bachelor's degree in Small Business Administration from the University of Vermont. Mr. Miles is a frequent instructor and has been published in the EA Journal, most recently in the July/August 2012 edition. He has been interviewed relating to a range of tax topics for various news articles as well as Denver television. He serves as a Level 1 instructor.

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D. Miles i Intro To Collections, 2012

TABLE OF CONTENTS – Intro to Collections

OPENING REMARKS 1

I. INTRODUCTION 1

OVERVIEW 2 CIRCULAR 230, OPR AND ENROLLED AGENTS 3 THE NUMBERS 3

HOW A TAXPAYER ENDS UP IN COLLECTIONS 4

II. THE START OF COLLECTIONS 4

COMPLIANCE 5 REPRESENTATIVE GUIDANCE 5 SECOND CHANCES 6 COLLECTIONS STATE OF MIND 6

A. CP 14 8

III. IRS NOTICES AND FORMS 7

B. CP 501 – CP 504 8 C. CP 523 8 D. FORMS 668-A & 668-W 8 E. LETTER 1058, LT-11, CP 297 8 F. LETTER 1153 AND FORM 2751 9 G. LETTER 3174 9 H. FORMS 433-F, 433-A, 433-B 9 H. NOTICE OF INSTALLMENT AGREEMENT ACCEPTANCE / 433-D 9

A. PRIORITY PRACTITIONER SERVICE 10

IV. CONTACTING THE IRS 9

B. E-SERVICES 10 C. IRS CUSTOMER SERVICE 10 D. AUTOMATED COLLECTION SYSTEM 10 E. LARGE DOLLAR COLLECTION SYSTEM (ABANDONED 2011) 11 F. REVENUE OFFICER 11 G. QUESTIONS ABOUT AGREEMENTS IN PLACE/DEFAULT 12 V. WHO THE IRS WILL CONTACT 12

A. INTEREST 13

VI. INTEREST AND PENALTY 13

B. PENALTY 13

VII. NOTICE OF FEDERAL TAX LIEN 13

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D. Miles ii Intro To Collections, 2012

VIII. ENFORCEMENT 14

A. LEVY 15 B. SEIZURES 15 C. INJUCTIVE RELIEF 15

IX. DEBT RESOLUTIONS 15

A. EXTENSION OF TIME TO PAY 15 B. INSTALLMENT AGREEMENT 15 1. GUARANTEED 16 2. STREAMLINED 16 3. TRADITIONAL 16 4. PART PAY 17 5. DIRECT DEBIT INSTALLMENT AGREEMENT 17 6. IN-BUSINESS EXPRESS TRUST FUND AGREEMENT 17 PENDING STATUS 18 C. OFFER IN COMPROMISE 18 D. CURRENTLY NOT COLLECTIBLE 19 E. COLLECTION STATUTE EXPIRATION 19 F. BANKRUPTCY 20

X. APPEALS 20

A. COLLECTION DUE PROCESS 20 B. COLLECTION APPEALS 21

XI. PREPARING FOR A COLLECTION CASE 21

A. WHAT YOU NEED FROM A TAXPAYER TO BEGIN A COLLECTION CASE 21 B. WHAT TO CONSIDER DURING YOUR INITIAL CASE ANALYSIS 22 C. WHAT THE FINANCIALS TELLING YOU 22 D. TAKING ACTION 22

XII. RESOURCES 23

A. TAXPAYER ADVOCATE 23 B. STAKEHOLDER LIAISON 23 C. IRS COLLECTION CHAIN OF COMMAND 23 D. NAEA AND ITS LOCAL AFFILIATES 23

XIII. HINTS FOR SUCCESS WITH COLLECTIONS 23

APPENDIX

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D. Miles iii Intro To Collections, 2012

APPENDIX A – FORM 433-A, COLLECTION INFORMATION STMT FOR INDIVIDUALS APPENDIX B – FORM 433-F, COLLECTION INFORMATION STMT APPENDIX C – FORM 433-B, COLLECTION INFORMATION STMT FOR BUSINESSES APPENDIX D – PUB. 1, YOUR RIGHTS AS A TAXPAYER APPENDIX E – PUB. 594, THE COLLECTION PROCESS APPENDIX F – PUB. 1660, COLLECTION APPEAL RIGHTS APPENDIX G – CP 501 APPENDIX H – CP 504

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D. Miles 1 Intro To Collections, 2012

Intro to Collections

I. Introduction: Opening Remarks: This class is intended to focus on the basics of the Internal Revenue Service (IRS) collection process also known as Collections. More specifically, the term Collections refers to the IRS’ attempts to collect on a balance due account or gain cooperation with a non-filer account. There is a noted distinction between Collections as a process and the Collection Division of the IRS. A debt can be in notice status, part of the collection process, but not assigned to the Collection Division where enforcement is more likely to occur. In this class we are not going to focus on the distinction between the two. Instead, we are going to examine the fundamentals of the collection process, including elements of the Collection Division and other information necessary to navigate the resolution of a balance due account. In years past my lectures on collections work have not included many significant changes to procedure. But over the past eight months anyone engaged in regular collection work has noticed some of the most dramatic changes to collection procedure since the 1998 IRS reformation. For those of you that do not know or remember the specifics of the Restructuring and Reform Act of 1998 (RRA 98) it created and defined today’s collection practices. In addition to defining many of the collection policies that we as representatives have come to rely on in our practice, such as codifying the Offer in Compromise, granting statutory rights to certain installment agreements and granting taxpayers appeal rights before enforcement action it also notably authored a non-retaliatory policy in Section 1203 (b)(6) stating that:

Violations of the Internal Revenue Code of 1986, Department of Treasury regulations, or policies of the Internal Revenue Service (including the Internal Revenue Manual) for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service is an act or omission requiring termination.

Because of the recent changes I am forced to reconsider a central premise of last years lecture. At that time I stated that Collections is concerned only with a specific debt of record and how that debt is going to be repaid by the taxpayer. And although that is still basically the mission of Collections because of the recent changes this is not so simply true. Collections appears to be moving towards a better balance of enforcing the IRC, collecting unpaid revenue and considering taxpayer issues. But for many of those on the front lines of IRS collections the change to the IRS’ underlying philosophy does not appear to have settled in yet it is likely only a matter of time. The changes now being introduced by the IRS to collection procedure after a decade of Taxpayer Advocate encouragement appear to be signaling a shift to the IRS treating collections with a better sense of business rather than bureaucracy. Still, anyone dealing with Collections will find

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the issues of long phone hold times, varying levels of capabilities and inexplicable decision-making prevalent. Furthermore, the IRS resolution programs are available to many more taxpayers; however, in typical IRS fashion it is not often that the new programs are advertised as available in each case. But, the introduction of the Commissioner’s Fresh Start initiative demonstrates a better appreciation of what is needed by taxpayers while at the same time balancing maximizing collection with the IRS’ limited resources. Having sufficiently congratulated the IRS for some long overdue changes it is important to note that many of you engaged in collection work will have cases that do not qualify for consideration under any of the new rules. Employment tax cases are precluded from some of the most touted of the Fresh Start initiatives, as are large dollar personal income tax cases. Overview: Enrolled Agents (EAs) have varying degrees of experience with Collections and with this lecture it is my goal to ensure the proper knowledge base. The first thing to be aware of is that IRS collections is unlike other interactions with the IRS. All too often I see tax professionals approach Collections with the same mindset that goes in to preparing returns or facing audits. However, Collections is not concerned with preparation issues such as depreciation or Section 179 deductions nor are they concerned with audit issues such as your basis for handling revenue in a certain manner. Collections is concerned only with a specific debt of record and how that debt is going to be repaid by taxpayer. Similarly, I see taxpayers that want to deal with IRS Collections as though it is a general creditor by asking me to, “see what the IRS will take to settle this debt”. Collections is not, however, a general creditor. The rules and procedures that IRS Collections uses are rigid. Accordingly, it is vital to understand what the nuances are in order to operate within them to accomplish a taxpayer’s goals. Certainly there are issues that arise in the progression of a Collection case that are extremely relevant, such as amending returns or the filing of returns to replace Service Prepared Returns (SFR or 6020B returns). Filings original returns is obviously very important to a collection case because they may reduce or even resolve the balance due account. Simply remember that the duty to amend or correct a service prepared return belongs to a taxpayer and is not the primary function of Collections. In this class I will also touch on topics that deserve much more attention than we can give them in this lecture. Yet, these topics are so closely interwoven with the subject of IRS Collections that they must be addressed in this class in order to understand Collections and how to best navigate the system. Topics such as representation, appeals, the Taxpayer Advocate and how to best communicate with the IRS will all be touched on in the course of this discussion. The mission of the IRS’ Collection function is to collect Federal taxes that are reported or assessed but not paid, and to secure tax returns that have not been filed (IRS Data Book 2010). The collection process begins when a taxpayer files a return and does not pay the balance due in full. The process will continue until the debt is paid in full, the IRS loses the right to collect through the expiration of the collection statute, or the taxpayer proposes and sets up an alternate collection resolution. The IRS has a 10-year statue of limitations to collect the debt.

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Initially it is important to understand what type of taxpayer the IRS is attempting to collect against. The reason is that the collection rules differ for individuals and businesses and based on the amount of tax owed. Individual cases are referred to as IMF (Individual Master File) whereas business cases are referred to as BMF (Business Master File). The IRS uses several techniques for collecting the debts it is owed including the filing of tax liens, issuing levies on wages, bank accounts and other sources of equity or revenue, and even offsetting money that a taxpayer may be due from another government agency such as Social Security or state income tax refunds. During the course of its collection efforts the IRS’ responsibility is to use the last known information on file to locate and contact the taxpayer. Therefore, it is critical that taxpayers regularly ensure that the IRS has their most recent contact information on file. This can be done when filing a return or filing form 8822. Taxpayers can also call the customer service line to do the same. Not receiving IRS notices is generally not an acceptable reason to excuse lack of contact. Circular 230, OPR and Enrolled Agents: The rules for practice before the IRS are outlined in IRS Circular 230. Yet for practitioners in representation work it has not always been that clear. For many years the IRS did not consider collection work as practice before the IRS. That began to change slowly after 2000 then more aggressively with the appointment of the current Director of the Officer of Professional Responsibility, Karen Hawkins. The most recent revisions to Circular 230 more clearly define the scope of the OPR’s authority over practitioners in collection work. There is considerable buzz in the industry about both the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) role in regulating collection work. In response to some of that discussion Ms. Hawkins, in a recent discussion with tax resolution companies, made clear that she believes the authority to regulate collection work falls to OPR. Yet, she remains in contact with both agencies to ensure that policies, if needed, are created to protect taxpayers as well as practitioners. Her recent webinar on Circular 230 and many recent interviews highlight her thoughts on the subject. The Numbers: The voluntary tax system still collects the lion’s share of the tax revenue in the United States. In fiscal year 2011 enforcement accounted for only 2 percent of the tax revenue received by IRS. It is the position of the National Taxpayer Advocate that the IRS needs to improve its voluntary tax compliance even more and not narrowly on increasing the amount collected by Collection. In national Taxpayer Advocate Nina Olson’s June 28, 2011 Hearing on Complexity and the Tax Gap: Making Tax Compliance Easier and Collecting What’s Due, she stated: • Taxpayers pay about 84% of taxes voluntarily and timely. • The IRS will collect roughly another 3% through late payments and enforcement. • The numbers suggest that most non-compliance is not intentional but rather a high

percentage may be inadvertent.

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However, maximizing national revenue is one of the IRS’ main goals and that means collecting unpaid monies as well as ensuring that compliance with the voluntary system does not waiver. The collection process is an important component of doing both. Every spring the IRS issues the IRS Data Book. The report details the IRS’ activities for its past fiscal year (Oct. 1 – Sept. 30). The Data Book includes a section about Collections and penalties. This is an excellent tool for staying abreast of many details of the collection process such as the total amount collected by Collections, the number of tax liens and levies filed, and even the number of Offers in Compromise received and accepted. 2011 IRS Data Book: Returns Filed with Additional Tax Due: Number in beginning inventory 10,391,000 Number of New Accounts 8,011,000

Number in Ending Inventory 10,809,000 ↑ Balance of Unpaid Assessments $116,262,380,000 ↑ Net amt. Collected by Collection (offsets, etc. not incl.) $31,009,074,342 ↑

Returns not Filed Timely: Amount Assessed from Returns Secured by Collection $28,404,660,000 ↓ Amount Collected with Delinquent Returns $1,933,279,000 ↓ Taxpayer Delinquency Investigations at end of 2010 3,862,000 ↑ *Arrows reflect FY 2011 compared to FY 2010 As you can see the numbers illustrating what is owed and what is collected are impressive. Although there remains an unpaid balance of over $116 billion the IRS managed to IRS to collect almost 27% of its unpaid assessments. In addition to the broader collection numbers listed above the IRS assessed $31 billion of civil penalties of which $15.5 billion was assessed on individuals and estate and trust income tax returns. Employment taxes in fiscal year 2011 made up the next highest amount of penalty assessments with $5.3 billion with business income tax a distant third with $1.5 billion. It is difficult to quantify but it must be assumed that much of the IRS’ unpaid assessments is money that the IRS may never collect, which seems to dictate that the IRS must keep up its collection efforts on the money that it can collect in order to maintain its contribution to revenue. Furthermore, although voluntary tax compliance is clearly the most successful component of our system Collections, through securing returns and direct enforcement, generates enough revenue to maintain its importance to the IRS. II. The Start of Collections How a Taxpayer Ends Up in Collections: A taxpayer can reach Collections through a number of different situations although they all result in one common theme and that is an underpayment of tax. They are (not necessarily all-inclusive):

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1. Non-payment or underpayment of tax. In representation work you will commonly see this result from form 1040 for individuals. For companies this generally relates to employment taxes, forms 941 and 940, although income tax issues also arise.

2. Audit; 3. IRS correction such as a refund being given in error; 4. Misapplied or returned payments for insufficient funds; 5. Math Errors; 6. Unfiled returns or returns filed late.

Compliance: The term compliance as the IRS uses it means that a taxpayer is paying current taxes and has filed all of its returns due at that point in time, including valid extensions to file. Compliance is required both to qualify for a resolution and to maintain a resolution plan. It should always be a taxpayer’s first priority. It is important to note that while an unfiled return is not often an issue that triggers the start to a collection case it is very common for the IRS to send filing inquiry notices. A key component of Collections’ role is to ensure that taxpayers file returns. And because during the collection process the IRS will look closely at a taxpayer’s filing compliance when it begins to collect against a balance due filing returns and paying current taxes are almost inseparable in terms of importance. In fact, in our voluntary tax system, filing compliance is of such importance to the IRS that Revenue Officers can actually be assigned a filing inquiry when notice inquiries do not elicit a taxpayer response. This is usually the case only when the IRS has information that would point to the taxpayer having a filing requirement. This is not a collection case but rather a field call, to verify if a return should have been filed for a particular period. This is rare and typically seen in business employment tax cases. When dealing with a collection case it is vital to ensure that a taxpayer is paying current taxes regardless of the issues that exist. Paying current taxes means paying into whatever tax period is currently open and not yet due to be filed. It is never too late to bring a taxpayer into compliance therefore your first recommendation to anyone facing a collection case for past due taxes is to begin paying current taxes. If a return is not filed by its due date a taxpayer risks the IRS filing one in their place. This can happen for individuals and businesses. These are typically referred to as SFRs or Substitute for Return with respect to 1040s and 6020bs (the code section that permits the IRS to take this action) for employment tax returns. Keep in mind that service prepared returns will almost never result in anything but a tax liability much higher than what the taxpayer truly owes. Taxpayers may file an original return at any time, but the IRS will seek to collect on their own balance until an original is filed. Representative Guidance: The authority to collect taxes due is outlined in general terms in Internal Revenue Code (IRC) sections 6301 through 6306. Because most of us, I hope, are not focused on arguing the constitutionality of this authority I find that the more useful reference for collection work is the Internal Revenue Manual (IRM).

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The IRM is Collections practical guidance. It serves to outline the specific procedures, policies, and law that must be adhered to by both representatives of the IRS and taxpayers, including taxpayer representatives. EAs should be comfortable with navigating the IRM, which can be found at http://www.irs.gov/irm/, paying particular attention to Part 5, Collecting Process, and Part 8, Appeals. These sections do a very good job of outlining a taxpayer’s rights and requirements. IRS representatives make mistakes and in some cases may not even know some of the material contained in the IRM. Hence it is important to understand the IRM in order to protect taxpayer rights. In addition to the IRM, EAs should be familiar with Circular 230 as outlined above as well as Publications 1, 594 and 1660. I suspect that most practicing EAs are already intimate with 230 but because it is our governing authority for practice you should review it periodically as a refresher. And every initial interaction with a Revenue Officer should begin with a question about your familiarity with publications 1, 594 and 1660. Updates to the IRM occur frequently. Circular 230 also changes but not as often as the IRM. The NAEA is very good at staying abreast of the updates in real time. This is important because many updates occur by IRS memorandum and are instituted practically before they are published in the IRM and Circular 230. Second Chances: The collection process can be intimidating, terribly uncomfortable and time consuming. However, it actually begins rather tamely, which leaves some to say the IRS could collect more quickly if it was more aggressive from the start. Yet, the collection process has many statutory aspects to it that are necessary to protect taxpayer rights and to allow the system to work through its incredible volume. One such step is the early notice phase. This is what I call a taxpayer’s second chance. The IRS generally has to wait until a taxpayer notifies it of a debt through the filing of a return before collections can begin. There are situations in which the IRS can prepare a return when one has not been filed but that is not the typical situation. When a return is filed and subsequently processed the IRS begins its notice phase. Balance due reminder letters and letters specifically requesting payment of a balance due are the essence of the early collection process. The most common notices a taxpayer will see at the very start are the CP 14 or the CP 161. These notices outline the specifics of the balance due and politely request payment. If a taxpayer does not or cannot heed the IRS’ advice to remit full payment of a tax debt the collection process moves along. And at this point it gets much more serious. Taxpayers usually take note of this transition with the issuance of the IRS’ CP 501 through the CP 504 letters. These letters take on a more urgent tone, a new look and even begin to discuss adverse action. After the final letter, CP 504, a case will move to the Collection Division and likely face enforcement. This is the time in most cases that a collection representative, more commonly known as a Power of Attorney, gets involved. Collections State of Mind: This is a topic that I consider to be very important. If a debt remains unpaid after the “second chance” letters Collections will begin to be aggressive about making

http://www.irs.gov/irm/�

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arrangements for the full payment of a debt. IRS Collections has a set of guidelines or road map to follow in each case. As much as the circumstances with each case are likely different Collections will try to work each case in the same manner. Collections will first make a request for full payment and/or returns to be filed. If full payment is not possible Collections will ask if any payment is possible that day. If payment is not possible Collections will request financial information about the taxpayer. If you are not prepared to provide the information, and there should be no rush to do this, Collections will then make arrangements for a deadline to provide information about the taxpayer’s financial condition and any unfiled tax returns in order to work towards a collection determination. A collection determination is the IRS’ decision about what resolution is best for the case. The IRS’ initial collection determination in many circumstances is not the plan that is best suited for the IRS or the taxpayer. There is not necessarily anything that can be done to prevent the IRS from coming to its own decision. In fact, sometimes this helps define where one stands with Collections. What is important is to understand how that proposed resolution suits the taxpayer and if there are ways to argue for a different plan. Making a payment to the IRS on the date you or the taxpayer is contacted by the IRS is not necessary. It certainly can benefit a taxpayer from the perspective of limiting interest and penalty accruals but typically immediate payments should not shape the outcome of a case. Recent changes to IRS rule, however, has changed that assumption slightly by providing thresholds of debt at $10,000, $25,000 and $50,000 at which point taxpayers may qualify for certain plans. When speaking with Collections it is not necessary to explain what led to the debt. Although the origin of the debt may be asked of you this should not be misinterpreted as a question that will impact how the case is handled. This question is commonly used to identify the underlying cause of the debt for the purpose of ensuring that no new debt accrues. For example, if there is no reasonable explanation for the debt, Collections will likely be very concerned with the accrual of new debt. However, if a taxpayer experienced an isolated event such as a tax on capital gain, Collections may feel more comfortable with making arrangements for repayment. Collections will most likely be polite by listening to an explanation of what led to the tax debt. Collections may also grant some extension of time to pay (up to 120 days) or an extension to provide information based on a taxpayer’s situation. But Collections’ willingness to listen to an explanation should not be misconstrued as it weighing in on the resolution. Collections protocol does not allow for consideration of why a debt accrued when evaluating resolution options. III. IRS Notices and Forms: IRS notices are critical to the collection process. They can explain exactly where a taxpayer stands in the process. Collection letters, amongst various other topics, explain why a debt is owed, penalty and interest accruals, appeal rights and the acceptance or denial or resolution proposals.

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When reviewing IRS notices or recommending action to a taxpayer based on a specific notice it is important for one to remember that each period of debt requires its own series of statutory notices. Therefore, commenting on what action to take based on one notice may not be the best action with respect to other periods of debt. One must know where each period of debt is in the notice phase. Some important notices and forms to take note of are:

A. CP 14/CP 161 – Notice of tax due that requests payment rather politely. This should be carefully reviewed to ensure that the amount stated as being owed is in fact what is owed. Enforcement is not a consequence for not responding.

B. CP 501 – CP 504 - This series of notices begins when there is no response to CP 14 or

CP161. These letters have an escalating sense of urgency both in IRS language and consequences for failure to respond. The taxpayer is not likely to have reached the Collection Division until just after the CP 504 but certainly a call to the IRS should be an immediate priority when beginning a collection case if this series of letters has begun.

C. CP 523 – Notice that the IRS intends to terminate an installment agreement. The

newest form details the reason for the default such as a missed payment, an unfiled return, or a new balance due. This letter is an excellent resource for knowing that an agreement is in jeopardy, however, the system IRS has in place to handle responses to the letter needs work. There are times that the stated reason is incorrect. Also, the letter states a date for the agreement to be terminated. The date often has no relationship to the actual default date.

D. Forms 668-A & 668-W – These are notices of levy. The 668-A is typically issued to

bank accounts and is one-time levy. This means that the money in the account is “frozen” on the day that the financial institution receives the levy. The money is set aside by the bank for a period of 21 days in order to allow a taxpayer to make arrangements for its release or payment of the tax due. Aside from the “frozen” or set aside funds the account is open to be used by the taxpayer during the 21 days. Subsequent deposits will not be taken or held unless a new levy is issued. Although a new levy is technically possible it is very rare in today’s collection process. A release is also possible but is becoming more difficult. A hardship needs to be established for a release.

A 668-W is most often issued as a wage garnishment. An employer will receive the levy and according to the taxpayer’s pay scale and frequency the employer will garnish a certain percentage of the check and remit it to the IRS. These levies generally do not self-satisfy, as is the case with the 668-A. A release must be obtained from the IRS if the debt cannot be satisfied. A release is best accomplished by establishing a hardship that the levy is causing to the taxpayer. One should expect to prove the hardship.

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E. Letter 1058, LT 11, and CP 297 – Each of these letters is a final notice before the IRS takes enforcement action and each offers appeal rights. The appeal offered is a Collection Due Process (CDP) Hearing. The appeal rights must be exercised within 30 days of the notice date. Enforcement action will almost certainly follow any of these letters if they are ignored. If any of these notices are issued carefully consider filing a CDP appeal because it will prevent enforcement against the taxpayer.

F. Letter 1153 and Form 2751 – A letter and form proposing that an individual is

responsible for a company’s trust taxes. This is going to be seen only during business collection cases and is an advanced collection topic because of the various nuances that go along with it.

G. Letter 3174 – Commonly referred to as the “refresher letter”. It is similar to a 1058 in

language but does not offer specific appeal rights. However, a taxpayer can respond through the use of a Collection Appeal Request (CAP) or an Equivalent Hearing (EH) if within one year of the period’s original 1058. This letter is issued if it has been six months since a taxpayer has faced collection action, received a Notice of Intent to levy or otherwise been advised of the IRS’ intent to take enforcement action. Contact the IRS should be made immediately. The generally accepted time before levy is 15 days although it is not specifically stated in the IRM and that time can change if a taxpayer is given a formal deadline to respond. Collection is imminent.

H. Forms 433-F, 433-A and 433-B – IRS Collection Information Statements (CIS).

These forms are the foundation to almost every resolution option outside of full payment. They show what a taxpayer owns and owes and makes and spends. The 433-F is more of a short form and is commonplace with ACS cases whereas Revenue Officers always use Forms 433-A & B.

I. Notice of Installment Agreement Acceptance or 433-D - These are also used

interchangeably. In years past the IRS issued 433-Ds that required taxpayer signature and outlined the periods of debt and the installment agreement terms. The 433-D is most commonly seen now when a Revenue Office wants to set up a direct debit installment from the onset of the agreement. Today, the IRS is issuing less formal looking notices of agreement acceptance. The new notice does not require a taxpayer signature for the agreement to begin however it still has all the same rights and obligations of the 433-D.

IV. Contacting the IRS: Contacting the IRS in a collection case is absolutely critical. It is the first step that should be taken by a representative immediately after securing form 2848, Power of Attorney, from a taxpayer and filing it with the IRS. Be prepared to share basic taxpayer information and establish dates for follow up with additional information the IRS may require. If a question cannot be answered simply tell the representative you will need time to call back. Contact with the IRS can be made in the following manner:

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A. Priority Practitioner Service (PPS )(p: 866.860.4259) – The PPS is not Collections. It is used to gather facts about a case. I recommend doing a call to PPS at the start of each new case. Do not expect to set up agreements or stay enforcement with PPS if the case is in Collections. PPS can set up agreements in simple cases at an early stage of the debt. For cases in collection PPS is excellent for finding out the amount owed, unfiled return issues, and to whom the collection case is assigned.

B. E-Services – The E-Services system is also not Collections but is an effective way to

interact with the IRS. Like PPS, it is not a substitute for communicating with the Collection Division. Representatives can, however, use the system to file Powers of Attorney, get transcripts of an account, and even propose installment agreements. I have found it most effective for its transcript delivery system (TDS), which allows almost instant access to each period of tax. E-Services is accessible for Circular 230 practitioners. A Power of Attorney for a particular taxpayer must already be on the IRS system or filed at that time in order to use E-Services.

C. IRS Customer Service – Customer Service is typically whom you will reach if calling

just after a CP 14 or other preliminary notice has been received. It is possible to propose a resolution at this stage although this is not a collection contact. Representatives at this level may not understand the entire collection process but they most certainly should be able to take information and relay what is needed to implement a resolution plan.

1. Individuals p: 800.829.1040 2. Businesses p: 800.829.4933 D. Automated Collection System (ACS)(Collection Division)(p: 800.829.3903) – The

last and most serious step in the automated collection process. This is a collection contact and where a case will be assigned after the CP 504 has been issued. ACS takes enforcement action. Enforcement is most common when a taxpayer does not make contact or when a scheduled call back or deadline is missed.

An ACS representative will request current banking and employer information. You will also likely be asked if the taxpayer is prepared to pay the debt and alternatively how the taxpayer proposes to resolve the debt. The answers to these questions can have serious consequences and for that reason it is important not to comment with specifics unless you are prepared to do so. Most any call to ACS should end with a scheduled call back. It is important to ensure that until the call back date there will not be enforcement action.

During the call a practitioner should be sure to: 1. Take detailed notes including the name and identification number of the

representative as well as the time of the call. These calls are recorded and can be referenced back to by IRS management if the need arises.

2. Find out exactly where the case stands in the collection process and if there are any deadlines already established.

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3. Find out if there are any obstacles, such as unfiled tax returns, to the taxpayer qualifying for an installment agreement or other resolution option.

4. Establish a deadline for follow up with an assurance that no enforcement action will take place during that timeline. Specifically, request a hold of enforcement action.

5. Propose a resolution if you are prepared to do so. E. Large Dollar Cases in ACS (Collection Division)(Abandoned, Fall 2011) – Debts of

over $100,000 used to be handled by this unit of Collections. Presumably in an effort to realign its resources, better collect debt and better serve taxpayers debts of this size are now automatically assigned to Revenue officers. I have continued to include mention of this unit because it was only recently abandoned. In fact, some in collection still refer to it as though it exists.

F. Revenue Officer (RO)(Collection Division) – The highest level of case assignment in

the collection process. According to a 2010 audit by the Treasury Inspector General for Tax Administration, Revenue Officers comprise one of the core competencies of the IRS and have a direct impact on the IRS’ ability to meet its mission. The report goes on to state that although the SB/SE Division added 1,515 Revenue Officers over a recent nine month period it struggles to keep pace with attrition and workload potentially creating an unfair burden on the majority of taxpayers who fully pay their taxes on time.

Compliance with current tax payments and return filings will absolutely be the first

and highest priority of this individual. An RO is usually local to the taxpayer but some ROs cover large jurisdictions. This is common in more rural settings. At this phase there is no question that enforcement action has a very real probability of occurring. One should immediately reach out to an RO if it is determined that an RO is assigned to the case and follow the same steps as listed above in the ACS section.

It is important to remember that Revenue Officers are people. When dealing with a

Revenue Officer, respect and a professional attitude do well beginning a case positively. Like with ACS, do not give an RO information that you are not confident is accurate. You will have to explain the information later if you attempt to provide something different in the future. It can be easier to simply ask for time to respond to an inquiry.

Every Revenue Officer has a boss, also known as a Group Manger. If there is a

problem, whether it is a personality issue or a disagreement about a technical issue you should feel comfortable asking the Revenue Officer for that person’s contact information.

• Note: If you are engaging in a representation case in which a taxpayer has

already spoken to the IRS you must determine if there are deadlines or meetings scheduled and the consequences of each if missed. IRM section 5.1.10 details taxpayer contact rights. If needed, request a reasonable

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extension (10 days) of any deadline to allow you to become familiar with the case (see Preparing for a Collection Case).

G. Questions about Agreements in place or in default – It is not uncommon for cases that

have been given agreements to face some setbacks. Whether the taxpayer causes the problem or the IRS is sometimes determined only from contacting the IRS directly. If a taxpayer receives a notice call the number on that notice. If the taxpayer is on an installment agreement consider the following telephone numbers to answer questions that may arise.

Business – 800.829.0115 Individual, Self-Employed – 800.829.8374 Individual, Wage Earner – 800.829.0922 Manual Monitoring Installment Agreement (MMIA) – 866.897.4289

V. Who the IRS Will Contact:

The IRS relies on a strong mail campaign to compel taxpayer action. Balance due reminders and letters requesting payments of a balance due are the essence of the early collection process. The IRS will send a copy of each letter to a valid Power of Attorney. However, the filing of a Power of Attorney will not stop the letters that are sent to the taxpayer. Historically, there is very little effort made by ACS though outbound phone call. In fact, even when I am told that I will receive a call back from ACS I remain skeptical that it will happen. The early collection process centers on taxpayers making inbound calls and thus that should remain your expectation anytime you are dealing with ACS. Having said that, the IRS appears to be making an effort to improve on this issue. At a 2011 practitioner walk-through of the COIC facility in Memphis, Cheryl Cordero, Director of Filing & Payment Compliance, noted that outbound phone calls, especially ACS manager callbacks are an absolute focal point of ACS and is being closely monitored for improvement.

From a practical perspective most recently a change has been noted in cases being worked by ACS. In a situation in which information has already been provided to the IRS it is becoming more commonplace for ACS to make an outbound call in order to clarify information that has been submitted or request additional information. This call can also be used as an opportunity to propose a resolution.

Not until a Revenue Officer is assigned to a case should one expect face-to-face contact. Revenue Officers aggressively seek out direct contact with taxpayers. When there is direct contact by the IRS by phone or in-person, regardless if it is by ACS or a Revenue Officer, it should be made with a taxpayer representative if there is a valid Power of Attorney on file. When beginning a case, a representative should instruct their client that if for any reason the IRS calls them directly, to politely inform the IRS representative that there is a Power of Attorney and ask that person to call the POA.

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VI. Interest and Penalty:

Penalties and interest (P&I) continue to accrue throughout the collection process for as long as there is a balance due. It is possible for a taxpayer to qualify for relief from penalty if the circumstances surrounding the accrual qualify for relief due to reasonable cause. In addition to qualifying for relief due to reasonable cause relief recently Collections appears to be more willing to recommend one-time relief of penalty for those taxpayers with an excellent history of compliance. Relief from penalty must always be requested in writing. Interest will not be waived except in very special circumstances such as a national disaster or documented IRS erroneous advice. Please refer to IRM Part 20.

A. Interest – The IRS interest rate changes. It consists of the federal short-term rate plus 3% and it compounds daily.

B. Penalty: 1. Late Payment – ½% will be assessed per month from the return’s due

date until the debt is paid in full or it reaches 25%. The ½% goes to 1% 10 days after a Final Notice of Intent to Levy is issued. If the return was filed timely the ½% goes to ¼% during the time the debt is on an installment agreement.

2. Late Filing – 5% of the tax due will be assessed each month up to five months. The minimum late filing penalty was increased in 2008 to $135 or 100% of the tax due.

VII. Notice of Federal Tax Lien: According to the 2011 IRS Data Book there were almost 1,042,230 Notice of Federal Tax Liens (NFTL) filed in fiscal year 2011. This is a decrease of more than 50,000 liens as compared to 2010 and may represent greater leniency with the filing of NFTLs. It is important to note that a NFTL differs from a statutory lien. A statutory lien secures the government’s interest in taxpayer property automatically10 days after a demand for payment is made whereas the NFTL is used primarily to secure the government’s interest in taxpayer property with respect to third party debts such as mortgages. A Notice of Federal Tax Lien filing is done by the IRS to put a taxpayer’s general creditors on notice of the existence of a federal tax debt. It is not a step that is required by the IRS to enforce collection against a taxpayer. And although the filing of liens is commonly listed by the IRS statistically amongst enforcement activity the IRS, specifically Collections, is adamant that a NFTL is not an enforcement tool. Therefore, the NFTL does not fall under the same guidelines as other enforcement measures of when it may be used. The IRS exercises complete control and discretion over lien filing. It can and will usually file liens quickly and with few exceptions beyond those outlined by public rule such as with debts under $2,500. In the modern collection era historically the filing of a federal tax lien is the IRS’ first line of defense. In other words, the IRS traditionally files a NFTL very soon after it is established that a taxpayer has an unpaid assessment that cannot be immediately paid in full. The lien is so important to the IRS, that should a case make it to a Revenue Officer (a rare occurrence) without

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a tax lien a decision of whether to file one must be made within 10 days. At the time of this class last year it was announced that the timeframe for Revenue Officers to decide on a NFTL would be extended but practically I have not noticed any less emphasis or urgency put on the lien determination. Taking an even greater step in the recognition of the issues that come with the filing of a NFTL the IRS Commissioner announced on February 11, 2011 its Fresh Start initiative. Although most collection professionals have already heard of the Fresh Start it is a fairly landmark initiative for Collections. The Fresh Start introduced major changes to lien filing guidelines that had not changed in over 30 years. The program increased the threshold for filing a lien from $5,000 to $10,000 (aggregate balance due) and said that under very few circumstances should a lien be filed on a balance due of under $2,500. The IRS devoted a page of its web site in 2011 to publicizing the fresh start program: http://www.irs.gov/businesses/small/article/0,,id=239094,00.html The program also broadened the circumstances under which the IRS may consider a lien withdrawal after a debt is paid and introduced the lien withdrawal/Direct Debit installment agreement (DDIA) program. VIII. Enforcement: Enforcement is the IRS’ most aggressive form of collecting money. The IRS has the power to levy or take many sources of money and income as defined in IRC section 6331 and discussed in IRM parts 5.10 and 5.11. This includes, but is not limited to, wages, funds in bank accounts, accounts receivable, IRAs, Social Security, the cash value of life insurance and state income tax refunds. Although there is no legal distinction between levy and seizure there are different procedures that must followed by the IRS. Therefore, there is a distinct difference between levy and seizure when dealing with Collections. Seizure proceedings are used to take cars, land and home, and business property. The National Taxpayer Advocate noted in her written statement to Congress titled, Hearing on Complexity and the Tax Gap: Making Tax Compliance Easier and Collecting What’s Due, that between 2008 and 2010 the ratio of levies to taxpayer case receipts in ACS was 86 percent. She goes on to note that ACS personnel used less than three percent of “direct time” to contact taxpayer’s by making outbound phone calls. Clearly then, one can see that if the IRS levies in a majority of cases while at the same time making almost no outbound phone calls it is especially important to be proactive in your contact with IRS. Initiating contact with ACS or Revenue Officers will help avoid enforcement and should be one of your first steps in a collection case. Contrary to what many taxpayers think the IRS is not omnipotent when it comes to enforcement. There is no magic button that the IRS uses to find where a taxpayer banks or works. The IRS is simply resourceful in using information taxpayers or their employers have provided to it in the

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past or found through credit bureau checks to take enforcement action against bank accounts and wages. When it comes to locating assets, however, the IRS has more resources such as access to states’ Department of Motor Vehicles. To my knowledge the IRS maintains its use of Lexis Nexis’ Accurint as its asset locator tool.

A. Levy – Without question the most widely used of enforcement tactics. In 2011 there

were over 3.75M levies issued by the IRS to third parties. B. Seizures – With only 776 seizures in 2011 you can see that this is clearly a last resort

of the IRS. Note, however, that this number is up by nearly 30% from the 605 seizures in 2010.

C. Injunctive Relief – Used to prevent business taxpayers from continuing in operation. Without any definitive numbers it is very difficult to tell how often this is used by the IRS but as a practitioner specializing in business representation I can tell you that it is rare that you will see this occur.

• There are very few sources of income exempted from IRS levy.

Exemptions include unemployment compensation, workers compensation, and judgments for the support of minors and certain military disability and public assistance payments and assistance under the Job Training Partnership Act.

IX. Debt Resolutions: It is important to note that with the exception of an accepted and paid Offer in Compromise the IRS has the right to request to review financial information at almost any time to determine the appropriate resolution to a debt. This is true even when a taxpayer is already on an agreement. Practically, however, this is not often done except in cases where the debt will not be paid within the collection statute.

A. Extension of Time to Pay – In many cases the IRS will grant up to 120 days to resolve a balance due. Although still used by ACS I have learned recently that Revenue Officers have been advised not to use this tool. Too often taxpayers interpret this plan as some type of extension or follow up date. Do not be confused. The IRS considers this a formal plan for resolution. If a taxpayer cannot meet the 120 days it is likely that the taxpayer case will be noted as a defaulted agreement.

B. Installment Agreement – IRM section 5.14.1. The installment agreement (IA) is the IRS’ most popular resolution tool. Although the IRS’ own statistics show that almost half of all installment agreements default it is still a tool both requested by taxpayers and granted by the IRS. Installment agreements are best suited for taxpayers that have an ability to make monthly payments and do not qualify for an Offer in Compromise.

With almost any IA, Form 433-F, 433-A, or 433-B must be provided before a decision will be rendered on a proposal. In business employment tax cases it is not

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uncommon for the IRS to request both a 433-A and a 433-B because of the relationship and ultimate responsibility of the owners of the company for the company debt. A Revenue Officer will always require form 433-A but when dealing with ACS be sure to clarify if a 433-F or a 433-A is being requested since it is important to provide only the form requested. All installment agreements require that a taxpayer be in compliance with filing and taxes prior to the IA being granted as well as remaining compliant with ongoing taxes and filing on time. Failure to do so even while remitting timely installment payments will default the plan. Generally speaking taxpayers on installment agreements cannot be enforced upon and liens will not be released until the agreement is concluded (with the recent exception of the (DDIA).

1. Guaranteed - Taxpayers having an aggregate balance of $10,000 or less (excluding penalty and interest). Does not apply to employment taxes.

a. Cannot have failed to file or owed tax in any of the preceding five years.

b. Will pay in full within three (3) years. c. Have not entered into an installment agreement in the past

five years. d. Can be granted even if taxpayer has ability to pay in full.

2. Streamlined (under 25k) – Taxpayers having an aggregate balance of $25,000 or less (total balance due). Does not apply to employment taxes unless business is closed.

a. The debt must be paid in 72 months. b. Lien determination not required. c. No managerial approval. d. No financial statements required. e. Taxpayers may pay down the debt to qualify. f. Can be granted even if the ability to full pay exists. g. IMF, BMF (income tax) and out of business BMF.

3. Streamlined ($25,001 – $50,000) – The criteria become more specific in this new program.

a. The debt must be paid in 72 months. b. The CSED must be protected. c. No lien determination or managerial approval. d. IMF or out of business Sole Proprietors. e. Must be a DDIA. f. Debt may be paid down to qualify. g. Verify ability to pay through a Collection Information

Statement (CIS) or the Streamlined IA Calculator (SLIAC). The SLIAC is intended to verify the ability to support the proposed payment. It will not be used to demand a higher payment.

4. Traditional – Pays the entire tax liability (over the streamlined threshold) within 72 months.

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a. Financial analysis of taxpayers’ assets income and assets will be required.

b. All expenses may be allowed without substantiation if reasonable and CSED is protected.

c. A lien determination will be required. d. Managerial approval will be required. e. A request to liquidate assets or pursue lending may be

made. f. A field call to view assets may be required. g. Does not apply to BMF.

5. Part Pay – An installment agreement that does not full pay the tax liability within the statue of limitations for collection. As a more advanced collection resolution tool, I invite you to review an article that I wrote for the EA Journal in the Sept./Oct. issue of 2010. Please note that the article was written prior to the latest Offer in Compromise changes, which served to draw a more obvious line between the two programs.

a. The debt will be considered satisfied if the terms of the agreement are met and the statute of limitations for collection expires even if the debt is not full paid.

b. A mandatory review of the account will be required no more than every two years and the IRS may request a change to the terms of the agreement.

c. Managerial approval and all other terms of a traditional installment agreement will be met.

6. Direct Debit Installment Agreement (DDIA) – An installment agreement designed to debit a bank account automatically each month to fulfill the payment. These agreements have been shown to have a default rate that is ½ of non-direct debit agreements. Furthermore, under certain conditions a taxpayer may qualify for a lien withdrawal while on a DDIA.

7. In-Business Trust Fund Agreements – The IRM does not define the amount of the liability that may qualify for an in-business trust agreement. However, it is fairly well known that the amount is $25,000.

a. The debt must be paid in 24 months. b. A field call to view assets is required. c. A lien determination is required. d. Managerial approval is required. e. No financial statement is required. f. No TFRP determination is required.

• Note: A taxpayer cannot “prepay” installment agreement payments. One

can choose to pay more than the installment amount but that will not effect the next month’s payment. There is no penalty to paying the debt off early.

• Note: The IRS is not required to send installment agreement statements. The IRS may send a taxpayer a “reminder” notice but it should not be expected even if one has been issued regularly in the past. Once an agreement is granted it is the taxpayer’s responsibility to ensure payments are made timely.

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Pending Status: When considering an IA as a resolution it is less important to first determine what type of installment agreement a taxpayer may qualify for and more important to simply propose an installment agreement. A valid proposal for resolution will stay enforcement until a decision on the proposal has been reached. The type of agreement can be established in the course of the financial analysis. When a valid proposal for payments is made the IRS should code the case as being in “pending” status. This requires that a decision on the proposal be sent to an independent reviewer (IR) after a collection determination is made. If the decision to reject the proposal is sustained (typical) the taxpayer will be afforded Collection Appeal Rights (CAP) rights in order to discuss the proposal further. No enforcement can take place during this process. If the IRS finds flaws in the collection determination the proposal may be accepted or simply referred back to Collection to look into the issue. To acquire pending status one must:

• Have all returns filed. • Ensure the taxpayer is clearly identified in the proposal. • Identify the tax liability to be covered by the agreement. • Propose a monthly or other periodic specific amount. An amount must be

stated, not the total debt over a period of time. • The taxpayer is NOT required to be in compliance with ES or federal tax

deposits.

C. Offer in Compromise – IRM Section 5.8.1. There are situations where there is a legitimate doubt as to the balance due or it is clear that the account cannot be paid in full. When these situations arise the IRS may accept an Offer in Compromise to settle the debt. In fiscal year 2011 59,000 offers were filed and 20,000 were accepted. The number of offers being submitted is steadily on the rise again following some dramatic reductions with the introduction of the offer fee of $150 and later the TIPRA or down payment requirement. I expect to see the number of offers submitted spike in the 2012 fiscal year as a result of recent changes to the OIC minimum offer calculation and financial analysis. These changes represent some of the most significant changes to collection procedures in the last 15 years.

1. Complete Form 656 and its related 433 A&B (OIC). The CIS is specific to the program.

2. Basis for offer: Doubt as to Collectibility, Exceptional Circumstances (ETA), and Doubt as to Liability.

3. Two payment options. Lump sum offer and periodic payments. 4. COIC sites are in Memphis, TN and Brookhaven, NY. COIC works offers

from wage earners who earn less than $100,000 and self-employed individuals with gross receipts of less than $500,000 who owe less than $50,000.

5. Field sites investigate the more complex offers such as SB/SE with gross receipts over 500k or corporations. Those sites are located in California, Gulf States, and the South Atlantic.

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6. Respond promptly. Missed deadlines will result in the offer being returned and money paid forfeited. If you believe an offer is returned in error contact the IRS within 30 days.

7. A lump sum offer or cash offer must be paid within five (5) months of acceptance and requires a 20 % deposit. A periodic payment offer calls for payments to begin when the offer is submitted and must continue through the investigation. These payments are mandated by TIPRA and are legislative, not IRS rules. In fact, the IRS disagreed with the Congressional decision to enact the TIPRA payments but was overridden.

8. Taxpayers may be exempt from TIPRA payments through the low-income certification. This is based on the gross household income and the number of family members in the home.

9. Refunds through the year in which the offer is accepted are lost. Adjust accordingly.

10. If an offer is returned or deemed unacceptable any payments made with the offer will be kept by the IRS but applied to the debt.

11. Collection action and the statute of limitations for collection are stayed while an offer is pending. No payments except those made in the offer program are applied to the offer total. Refunds are not considered a payment.

D. Currently Not Collectible (CNC) – IRM 5.16.1. There are situations in which the

IRS will determine that a case is uncollectible. This is referred to as CNC or Status 53. This status is usually given to taxpayers that are able to show an ability to remain compliant but have no assets or net income from which to make payments. It can also be given to taxpayers that cannot be located, taxpayers that would have an undue hardship if forced to pay, or the death of a taxpayer with no estate collection potential. Businesses that close often have their cases put in uncollectible.

CNC is not to be misconstrued as a resolution. The IRS can revisit the case at any time and as a result there is no peace of mind that goes with uncollectible. Nonetheless, while in uncollectible status a taxpayer is not required to make payments, does not face enforcement, and the statute of limitations for collections ticks away.

1. Managerial approval is required. 2. Mandatory reviews may be ordered.

E. Collection Statue Expiration (CSED) – IRM Section 5.1.19. The IRS has a ten-year

statute of limitations for collection. The statute begins with the date that the tax was assessed or the return’s due date, whichever is later. After ten years the IRS loses the right to collect its debt and will usually clear the account of any balance due.

1. If the tax debt owed is from older periods be sure to verify the statue expiration or CSED. This can be found on an Electronic Master File Tax Account, MFTRA-C (different from the MFTRA-X from PPS) or requested over the phone.

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2. Depending on what is found weigh carefully actions that may extend that statute such as appeals or Offers in Compromise. 3. Liens will release at the expiration of the collection statute.

F. Bankruptcy – Some taxes are dischargeable in bankruptcy, which can resolve a

collection case. Bankruptcy does not usually release IRS tax liens. Still, in some cases bankruptcy can be a taxpayer’s best option. However, if taxes are a taxpayer’s only financial issue the IRS is likely to grant the same, if not better, relief than a bankruptcy court. Every taxpayer’s situation is different. As a result, if bankruptcy is being considered or appears to have some benefit to the taxpayer I recommend a consultation with a local bankruptcy specialist. Although bankruptcy is a federal program it is governed by state law and thus very specialized.

X. Appeals: Appeals is separate and independent of the Collection function of the IRS. Appeals Officers are not charged with collecting a balance due but rather evaluating each appeal based on the merit of the issue in order to render the appropriate decision. Generally speaking, Appeals may not consult with Collections unless the taxpayer or taxpayer representative is present. The topic of Appeals arises in the context of this introduction class because the use of the appeals program is an integral part of many collection cases. Filing an appeal on behalf of a taxpayer moves the periods of debt under appeal from the Collection Division to the appeals function. However, in cases that have multiple periods of debt, certain periods may move to Appeals and others may stay with Collection. It is, therefore, very important to understand Collections intent with respect to the remaining periods. Often, Collections will honor the stay of enforcement even for the periods not under appeal. There are two common and useful appeals programs to familiarize oneself with in collections work. They are the Collection Due Process program (CDP) and the Collections Appeals program (CAP). For a thorough review of each I recommend that you review an article written by Stephen Uhl, EA in the Sept./Oct. 2010 issue of the EA Journal. Mr. Uhl does an excellent job of summarizing the practical applications and implications of each program. For this lecture I will cover only the basics.

A. Collection Due Process: 1. Filed using Form 12153; 2. Grants a stay of enforcement to taxpayers except in cases of jeopardy; 3. Affords taxpayer rights in court if a decision is in dispute; 4. Must be filed within 30 days of a specific notice affording this

opportunity; 5. Most commonly filed in response to a notice of lien or notice of intent to

levy; 6. It is lengthy process. Can take months to be heard because of appeals

backlog. Not recommended for cases that require a quick resolution;

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7. If not filed within 30 days a hearing can still be requested within one year but it converts to an Equivalent Hearing, which does not afford judicial rights or the automatic stay of enforcement (although Collections may opt to honor it).

B. Collection Appeals Program:

1. Filed using Form 9423; 2. Grants a stay of enforcement; 3. Used to appeal the IRS’ intent to take a certain action and/or action that

may have already occurred. If you believe that a lien or levy is a likely next step it can be used to stop that action before it happens.

4. The CAP can be used at any Collection level including ACS and Revenue Officers. If you disagree with a proposed course of action be very clear that you want to pursue a CAP.

5. Requires a conference with a Collections Manager before filing with installment agreement rejections being the only exception to that rule. Technically, the first step is to request the manager meeting and then file the CAP. I usually request the meeting and at the same time my intent to pursue CAP rights if I do not present the CAP form initially. Therefore, the CAP process is started and the stay of enforcement should be granted.

6. Usually forwarded from Collections to Appeals within two days. Once assigned to an Appeals officer a resolution to the issue is sought within five business days. Therefore, it is a quick fix program.

7. Used to appeal issues of procedure. Although under the CAP an appeals officer can entertain resolution options to the debt, more times than not they are seeking simply to see if the Revenue Officer or ACS followed protocol. Therefore, it can be limited in its results.

XI. Preparing for a Collection Case:

A. What you need from a taxpayer to begin a Collection case: 1. A completed Power of Attorney, Form 2848. 2. Recent IRS notices. 3. A draft of a 433-A, 433-B, or 433-F. Again, these forms are the basis for

a collection determination. In essence, they guide the IRS to certain actions and decisions. A collection determination is a decision about how the IRS believes the debt should be resolved. Generally a 433-A or 433-B will be requested but less complex, wage earner cases in ACS may be asked for a 433-F. Prepare the document requested by the IRS in each specific case.

4. Supporting documents for the financial statement. a. Three months of earnings statements, including non-liable

spouse, if applicable. b. Three months of bank statements. c. Itemized household or business expenses.

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d. A list of all assets and related loans accompanied by statements to support each.

B. What to consider during your initial case analysis: 1. The age and frequency of the debt accrual. It tells you how regularly the

taxpayer accrues tax debt and what options for resolution may be available.

2. Are there any deadlines currently pending? Contact may be required that day or very soon. If a deadline was missed more urgent action may be needed.

3. Is there a Letter 1058 in the information provided by the taxpayer? An immediate appeal may be necessary.

4. Have any requests of the taxpayer been made by the IRS that have not been met?

5. Has the taxpayer been contacted by anyone from the IRS locally? 6. Is the taxpayer paying taxes currently? 7. Has the taxpayer filed all of his/her returns?

C. What the financials telling you: 1. Review a potential Form 433-A and a quick review of Form 433-B

including an explanation of any glaring differences between the 433-A and 433-F.

2. Carefully analyze assets to understand taxpayer’s exposure to both seizure and likely IRS demands in the future. A taxpayer with assets will undoubtedly be asked to sell or get a loan against those assets. You should advise the taxpayer of such as soon as possible.

3. Compare the taxpayer’s income to its expenses and its expenses to the IRS’ standards. Any considerable differences between either of the comparisons should be noted.

D. Taking Action: 1. Prepare your taxpayer for the first phases of the collection case. This

should include your proposed initial action with the IRS, what you expect of them, and what they should expect from you.

2. Contact the IRS. I recommend using either PPS or E-Services and making a call to either ACS or a local Revenue Officer. This will depend on where the case is assigned. It is not uncommon to have to call ACS to find out that the case is assigned to a local Revenue Officer although the taxpayer should know if a case is assigned to a Revenue Officer and should have that person’s information since a Revenue Officer is required to make initial contact quickly.

3. Find out what may be preventing the taxpayer from securing a resolution to the debt or preventing the IRS from identifying the scope of the debt. Most commonly this will be unfiled returns or lack of compliance with current payments.

4. Request a hold of enforcement and set a clear deadline for follow-up. If for any reason the IRS representative is not willing to grant a hold of enforcement or give time to fulfill a request consider requesting manager

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contact and a Collection Appeal Request given the circumstances of the case.

5. Voluntary payments do matter. Although Collections is not allowed to accept or reject a proposed resolution plan on a taxpayer’s history of making voluntary payments the fact of the matter is it helps. The same is true for paying of small balances even if large ones require an installment agreement or other resolution plan. Collections employees have bosses and it makes their cases look better when voluntary payments are made and balance dues, even small ones, are paid off.

XII. Resources:

A. Taxpayer Advocate (Form 911) 1. Excellent resource for resolving issues that the IRS is causing such as

unnecessary delays. Not to be used to circumvent normal channels. 2. Separate and distinct from both Collection and Appeals. 3. File form 911, Request for Taxpayer Assistance Order. 4. In 2011 295,904 911s were filed and 223,635 were given full or partial

relief. 5. Tasked not only with assisting in specific hardship cases but also with

making recommendations to Congress about how the IRS, and many times Collections, can improve its systems.

B. Stakeholder Liaison C. IRS Collection Chain of Command D. NAEA and its local affiliates

XIII. Hints for Success:

A. Note-taking; B. Be proactive. If a taxpayer is in Collections it is just a matter of time before

action is taken against that person or business. Call or write immediately. C. Never hang up or leave a meeting without a deadline and a clear understanding of

what is expected and the consequences of not fulfilling that deadline. And always understand where the taxpayer stands with respect to enforcement during deadlines.

D. Remember that your obligation is to represent your taxpayer as aggressively as possible within the confines of Circular 230. But, IRS representatives are regular people so the respect and professionalism you afford them will likely bring about the best result.

E. Don’t argue just to argue. Pick your battles.

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Form 433-A (Rev. January 2008) Department of the Treasury Internal Revenue Service

Collection Information Statement for Wage Earners and Self-Employed Individuals

Wage Earners Complete Sections 1, 2, 3, and 4, including signature line on page 4. Answer all questions or write N/A. Self-Employed Individuals Complete Sections 1, 2, 3, 4, 5 and 6 and signature line on page 4. Answer all questions or write N/A. For Additional Information, refer to Publication 1854, “How To Prepare a Collection Information Statement” Include attachments if additional space is needed to respond completely to any question. Name on Internal Revenue Service (IRS) Account Social Security Number SSN on IRS Account Employer Identification Number EIN

Section 1: Personal Information 1a Full Name of Taxpayer and Spouse (if applicable)

1b Address (Street, City, State, ZIP code) (County of Residence)

1c Home Phone 1d Cell Phone

1e Business Phone 1f Business Cell Phone

2b Name, Age, and Relationship of dependent(s)

2a Marital Status: Married Unmarried (Single, Divorced, Widowed)

( ) ( ) ( ) ( )

Taxpayer 3a

Spouse 3b

Date of Birth (mmddyyyy) Driver’s License Number and State Social Security No. (SSN)

Section 2: Employment Information If the taxpayer or spouse is self-employed or has self-employment income, also complete Business Information in Sections 5 and 6.

Taxpayer Spouse 4a Taxpayer’s Employer Name 5a Spouse’s Employer Name

4b Address (Street, City, State, ZIP code) 5b Address (Street, City, State, ZIP code)

4c Work Telephone Number

( ) Does employer allow contact at work4d

Yes No

5c Work Telephone Number

( ) Does employer allow contact at work5d

Yes No 4e How long with this employer

(years) (months)

Occupation4f 5e How long with this employer

(years) (months)

Occupation5f

4g Number of exemptions claimed on Form W-4

4h Pay Period:

Weekly

Monthly

Bi-weekly

Other

5g Number of exemptions claimed on Form W-4

5h Pay Period:

Weekly

Monthly

Bi-weekly

Other

Section 3: Other Financial Information (Attach copies of applicable documentation.)

6 Is the individual or sole proprietorship party to a lawsuit (If yes, answer the following) Yes No

Plaintiff Defendant Location of Filing Represented by Docket/Case No.

Amount of Suit

$

Possible Completion Date (mmddyyyy) Subject of Suit

Has the individual or sole proprietorship ever filed bankruptcy (If yes, answer the following)7 Yes No

Date Filed (mmddyyyy) Date Dismissed or Discharged (mmddyyyy) Petition No. Location

8 Any increase/decrease in income anticipated (business or personal) (If yes, answer the following) Yes No

Explain. (Use attachment if needed) How much will it increase/decrease $

When will it increase/decrease

9 Is the individual or sole proprietorship a beneficiary of a trust, estate, or life insurance policy (If yes, answer the following) Yes No

Place where recorded: EIN:

Name of the trust, estate, or policy Anticipated amount to be received $

When will the amount be received

In the past 10 years, has the individual resided outside of the United States for periods of 6 months or longer (If yes, answer the following)

10 Yes No

Dates lived abroad: from (mmddyyyy) To (mmddyyyy)

www.irs.gov Cat. No. 20312N Form 433-A (Rev. 1-2008)

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Form 433-A (Rev. 1-2008) Page 2 Section 4: Personal Asset Information for All Individuals

11 Cash on Hand. Include cash that is not in a bank. Total Cash on Hand $

Personal Bank Accounts. Include all checking, online bank accounts, money market accounts, savings accounts, stored value cards (e.g., payroll cards, government benefit cards, etc.) List safe deposit boxes including location and contents.

Type of Account

Full Name & Address (Street, City, State, ZIP code) of Bank, Savings & Loan, Credit Union, or Financial Institution.

Account Number Account Balance As of ____________ mmddyyyy

12a

$

12b

$

12c Total Cash (Add lines 12a, 12b, and amounts from any attachments) $

Investments. Include stocks, bonds, mutual funds, stock options, certificates of deposit, and retirement assets such as IRAs, Keogh, and 401(k) plans. Include all corporations, partnerships, limited liability companies or other business entities in which the individual is an officer, director, owner, member, or otherwise has a financial interest.

Type of Investment or

Financial Interest Full Name & Address (Street, City, State, ZIP code) of Company Current Value

Loan Balance (if applicable)

As of ____________ mmddyyyy

Equity Value Minus Loan

13a

Phone $ $ $

13b

Phone $ $ $

13c

Phone $ $ $

13d Total Equity (Add lines 13a through 13c and amounts from any attachments) $

Available Credit. List bank issued credit cards with available credit. Full Name & Address (Street, City, State, ZIP code) of Credit Institution

14a

Acct No.:

Credit Limit

$ $

Amount Owed As of ____________

mmddyyyy

$

Available Credit As of ____________

mmddyyyy

14b

Acct No.: $ $ $

Total Available Credit (Add lines 14a, 14b and amounts from any attachments)14c $

15a Life Insurance. Does the individual have life insurance with a cash value (Term Life insurance does not have a cash value.)

Yes No If Yes complete blocks 15b through 15f for each policy:

15b Name and Address of Insurance Company(ies):

15c

Policy Number(s)

15d Owner of Policy

15e Current Cash Value $ $ $

15f Outstanding Loan Balance $ $ $

Total Available Cash. (Subtract amounts on line 15f from line 15e and include amounts from any attachments)15g $

Form 433-A (Rev. 1-2008)

NAEA

Form 433-A (Rev. 1-2008) Page 3

16 In the past 10 years, have any assets been transferred by the individual for less than full value (If yes, answer the following. If no, skip to 17a) Yes No

List Asset Value at Time of Transfer

$

Date Transferred (mmddyyyy) To Whom or Where was it Transferred

Real Property Owned, Rented, and Leased. Include all real property and land contracts.

Purchase/Lease Date (mmddyyyy)

Current Fair Market Value

(FMV)

Current Loan Balance

Amount of Monthly Payment

Date of Final Payment

(mmddyyyy)

Equity FMV Minus Loan

Property Description17a $ $ $ $

Location (Street, City, State, ZIP code) and County Lender/Lessor/Landlord Name, Address, (Street, City, State, ZIP code) and Phone

17b Property Description $ $ $ $

Location (Street, City, State, ZIP code) and County Lender/Lessor/Landlord Name, Address, (Street, City, State, ZIP code) and Phone

17c Total Equity (Add lines 17a, 17b and amounts from any attachments) $

Personal Vehicles Leased and Purchased. Include boats, RVs, motorcycles, trailers, etc.

Description (Year, Mileage, Make, Model)



(FMV) Current Loan

Balance



(mmddyyyy)


Year18a Mileage $ $ $ $

Make Model Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone

18b Year Mileage

$ $ $ $ Make Model Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone

18c Total Equity (Add lines 18a, 18b and amounts from any attachments) $ Personal Assets. Include all furniture, personal effects, artwork, jewelry, collections (coins, guns, etc.), antiques or other assets.



(FMV)




(mmddyyyy)


19a Property Description $ $ $ $

Location (Street, City, State, ZIP code) and County Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone


Location (Street, City, State, ZIP code) and County Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone


Form 433-A (Rev. 1-2008)

NAEA

Form 433-A (Rev. 1-2008) Page 4 If the taxpayer is self-employed, sections 5 and 6 must be completed before continuing.

Monthly Income/Expense Statement (For additional information, refer to Publication 1854.)

Total Income Total Living Expenses IRS USE ONLY

Source Gross Monthly Expense Items 5 Actual Monthly Allowable Expenses

20 Wages (Taxpayer) 1 $ 33 Food, Clothing, and Misc. 6 $

21 Wages (Spouse) 1 $ 34 Housing and Utilities 7 $

22 Interest - Dividends $ 35 Vehicle Ownership Costs 8 $

23 Net Business Income 2 $ 36 Vehicle Operating Costs 9 $

24 Net Rental Income 3 $ 37 Public Transportation 10 $ 25 Distributions 4 $ 38 Health Insurance $

26 Pension/Social Security (Taxpayer) $ 39 Out of Pocket Health Care Costs 11 $

27 Pension/Social Security (Spouse) $ 40 Court Ordered Payments $

28 Child Support $ 41 Child/Dependent Care $

29 Alimony $ 42 Life insurance $

30 Other (Rent subsidy, Oil credit, etc.) $ 43 Taxes (Income and FICA) $

31 Other $ 44 Other Secured Debts (Attach list) $

32 Total Income (add lines 20-31) $ 45 Total Living Expenses (add lines 33-44) $

1 Wages, salaries, pensions, and social security: Enter gross monthly wages and/or salaries. Do not deduct withholding or allotments taken out of pay, such as insurance payments, credit union deductions, car payments, etc. To calculate the gross monthly wages and/or salaries:

If paid weekly - multiply weekly gross wages by 4.3. Example: $425.89 x 4.3 = $1,831.33 If paid biweekly (every 2 weeks) - multiply biweekly gross wages by 2.17. Example: $972.45 x 2.17 = $2,110.22 If paid semimonthly (twice each month) - multiply semimonthly gross wages by 2. Example: $856.23 x 2 = $1,712.46

2 Net Income from Business: Enter monthly net business income. This is the amount earned after ordinary and necessary monthly business expenses are paid. This figure is the amount from page 6, line 82. If the net business income is a loss, enter “0”. Do not enter a negative number. If this amount is more or less than previous years, attach an explanation.

3 Net Rental Income: Enter monthly net rental income. This is the amount earned after ordinary and necessary monthly rental expenses are paid. Do not include deductions for depreciation or depletion. If the net rental income is a loss, enter “0”. Do not enter a negative number.

4 Distributions: Enter the total distributions from partnerships and subchapter S corporations reported on Schedule K-1, and from limited liability companies reported on Form 1040, Schedule C, D or E.

5 Expenses not generally allowed: We generally do not allow tuition for private schools, public or private college expenses, charitable contributions, voluntary retirement contributions, payments on unsecured debts such as credit card bills, cable television and other similar expenses. However, we may allow these expenses if it is proven that they are necessary for the health and welfare of the individual or family or for the production of income.

6 Food, Clothing, and Misc.: Total of clothing, food, housekeeping supplies, and personal care products for one month.

7 Housing and Utilities: For principal residence: Total of rent or mortgage payment. Add the average monthly expenses for the following: property taxes, home owner’s or renter’s insurance, maintenance, dues, fees, and utilities. Utilities include gas, electricity, water, fuel, oil, other fuels, trash collection, telephone, and cell phone.

8 Vehicle Ownership Costs: Total of monthly lease or purchase/loan payments.

9 Vehicle Operating Costs: Total of maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking, and tolls for one month.

10 Public Transportation: Total of monthly fares for mass transit (e.g., bus, train, ferry, taxi, etc.)

11 Out of Pocket Health Care Costs: Monthly total of medical services, prescription drugs and medical supplies (e.g., eyeglasses, hearing aids, etc.)

Certification: Under penalties of perjury, I declare that to the best of my knowledge and belief this statement of assets, liabilities, and other information is true, correct, and complete.

DateSpouse’s SignatureTaxpayer’s Signature

Attachments Required for Wage Earners and Self-Employed Individuals: Copies of the following items for the last 3 months from the date this form is submitted (check all attached items):

Income - Earnings statements, pay stubs, etc. from each employer, pension/social security/other income, self employment income (commissions, invoices, sales records, etc.).

Banks, Investments, and Life Insurance - Statements for all money market, brokerage, checking and savings accounts, certificates of deposit, IRA, stocks/bonds, and life insurance policies with a cash value.

Assets - Statements from lenders on loans, monthly payments, payoffs, and balances for all personal and business assets. Include copies of UCC financing statements and accountant’s depreciation schedules.

Expenses - Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, phone and cell phone, insurance premiums, court orders requiring payments (child support, alimony, etc.), other out of pocket expenses.

Other - credit card statements, profit and loss statements, all loan payoffs, etc.

A copy of last year’s Form 1040 with all attachments. Include all Schedules K-1 from Form 1120S or Form 1065, as applicable.

Form 433-A (Rev. 1-2008)

NAEA

Form 433-A (Rev. 1-2008) Page 5

Sections 5 and 6 must be completed only if the taxpayer is SELF-EMPLOYED. Section 5: Business Information

Is the business a sole proprietorship (filing Schedule C) Yes, Continue with Sections 5 and 6. No, Complete Form 433-B.46 All other business entities, including limited liability companies, partnerships or corporations, must complete Form 433-B.

47 Business Name 48 Employer Identification Number Type of Business49

Federal Contractor Yes No

50 Business Website 51 Total Number of Employees 52a Average Gross Monthly Payroll

52b Frequency of Tax Deposits

Yes No53 Does the business engage in e-Commerce (Internet sales)

Payment Processor (e.g., PayPal, Authorize.net, Google Checkout, etc.) Name & Address (Street, City, State, ZIP code) Payment Processor Account Number

54a

54b

Credit Cards Accepted by the Business. Credit Card Merchant Account Number Merchant Account Provider, Name & Address (Street, City, State, ZIP code)

55a

55b

55c

56 Business Cash on Hand. Include cash that is not in a bank. Total Cash on Hand $ Business Bank Accounts. Include checking accounts, online bank accounts, money market accounts, savings accounts, and stored value cards (e.g. payroll cards, government benefit cards, etc.) Report Personal Accounts in Section 4.

Type of Account

Full name & Address (Street, City, State, ZIP code) of Bank, Savings & Loan, Credit Union or Financial Institution.

Account Number Account Balance As of ____________

mmddyyyy

57a

$

57b

$

57c Total Cash in Banks (Add lines 57a, 57b and amounts from any attachments) $

Accounts/Notes Receivable. Include e-payment accounts receivable and factoring companies, and any bartering or online auction accounts. (List all contracts separately, including contracts awarded, but not started.) Include Federal Government Contracts.

Accounts/Notes Receivable & Address (Street, City, State, ZIP code) Status (e.g., age, factored, other)

Date Due (mmddyyyy)

Invoice Number or Federal Government Contract Number Amount Due

58a

$

58b

$

58c

$

58d

$

Total Outstanding Balance (Add lines 58a through 58d and amounts from any attachments)58e $

Form 433-A (Rev. 1-2008)

NAEA

Form 433-A (Rev. 1-2008) Page 6 Business Assets. Include all tools, books, machinery, equipment, inventory or other assets used in trade or business. Include Uniform Commercial Code (UCC) filings. Include Vehicles and Real Property owned/leased/rented by the business, if not shown in Section 4.

Purchase/Lease/Rental Date (mmddyyyy)


(FMV)




(mmddyyyy)


Property Description59a $ $ $ $

Location (Street, City, State, ZIP code) and County Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code) and Phone


Location (Street, City, State, ZIP code) and County Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code) and Phone


Section 6: Sole Proprietorship Information (lines 60 through 81 should reconcile with business Profit and Loss Statement)

Section 6 should be completed only if the taxpayer is SELF-EMPLOYED

Accounting Method Used: Cash Accrual

Income and Expenses during the period (mmddyyyy) to (mmddyyyy) . Total Monthly Business Income Total Monthly Business Expenses (Use attachments as needed.)

Source Gross Monthly Expense Items Actual Monthly

60 Gross Receipts $ Materials Purchased 170 $

61 Gross Rental Income $ Inventory Purchased 271 $ 62 Interest $ Gross Wages & Salaries72 $

63 Dividends $ Rent73 $

64 Cash $ Supplies 374 $

Other Income (Specify below) Utilities/Telephone 475 $

65 $ Vehicle Gasoline/Oil76 $

66 $ Repairs & Maintenance77 $

67 $ Insurance78 $

68 $ Current Taxes 579 $ Other Expenses, including installment payments (Specify)80 $

69 Total Income (Add lines 60 through 68) $ Total Expenses (Add lines 70 through 80)81 $

Net Business Income (Line 69 minus 81) 682 $ Enter the amount from line 82 on line 23, section 4. If line 82 is a loss, enter “0” on line 23, section 4.

Self-employed taxpayers must return to page 4 to sign the certification and include all applicable attachments.

1 Materials Purchased: Materials are items directly related to the production of a product or service.

2 Inventory Purchased: Goods bought for resale. 3 Supplies: Supplies are items used in the business that are consumed or used up within one year. This could be the cost of books, office supplies, professional equipment, etc. 4 Utilities/Telephone: Utilities include gas, electricity, water, oil, other fuels, trash collection, telephone and cell phone.

5 Current Taxes: Real estate, excise, franchise, occupational, personal property, sales and employer’s portion of employment taxes. 6 Net Business Income: Net profit from Form 1040, Schedule C may be used if duplicated deductions are eliminated (e.g., expenses for business use of home already included in housing and utility expenses on page 4). Deductions for depreciation and depletion on Schedule C are not cash expenses and must be added back to the net income figure. In addition, interest cannot be deducted if it is already included in any other installment payments allowed.

FINANCIAL ANALYSIS OF COLLECTION POTENTIAL FOR INDIVIDUAL WAGE EARNERS AND SELF-EMPLOYED INDIVIDUALS (IRS USE ONLY)

Cash Available (Lines 11, 12c, 13d, 14c, 15g, 56, 57c and 58e) Total Cash $

Distrainable Asset Summary (Lines 17c, 18c, 19c, and 59c) Total Equity $

Monthly Total Positive Income minus Expenses (Line 32 minus Line 45) Monthly Available Cash $

Privacy Act: The information requested on this Form is covered under Privacy Acts and Paperwork Reduction Notices which have already been provided to the taxpayer.

Form 433-A (Rev. 1-2008)

NAEA

Form 433-F (Rev. 6-2010)

Department of the Treasury — Internal Revenue Service

Collection Information Statement Name(s) and Address

If address provided above is different than last return filed please check here.

County of Residence

Your Social Security Number or Individual Taxpayer Identification Number

Your Spouse’s Social Security Number or Individual Taxpayer Identification Number

Your Telephone Numbers

Home: (

) Work:

( )

Cell: ( )

Spouse’s Telephone Numbers

Home: ( )Work: ( )

Cell: ( )

A. ACCOUNTS / LINES OF CREDIT (including Banking Institutions, Checking and Savings accounts, Credit Unions, Certificates of Deposit, Individual Retirement Accounts (IRAs), Keogh Plans, Simplified Employee Pensions, 401(k) Plans, Profit Sharing Plans, Mutual Funds and Stock Brokerage Accounts)

Name and Address of Institution Type of Account Current Balance / Value

Total number of dependents you will be claiming on next year’s tax return Over 65 Under 65

Total number of dependents you claimed on last year’s tax return Over 65 Under 65

B. REAL ESTATE (home, vacation property, timeshares and other real estate)

County / Description Monthly Payment(s) Financing Current Value Balance Owed Equity

Primary Residence Other

Year Purchased Purchase Price

Year Refinanced Refinance Amount







C. OTHER ASSETS (cars, boats, recreational vehicles, whole life policies, etc.)

Description Monthly Payment Year Purchased Final Payment (mo / yr) Current Value Balance Owed Equity

/

/

/

/

/

/

/

Catalog 62053J TURN PAGE TO CONTINUE Form 433-F (Rev. 6-2010)

NAEA

D. CREDIT CARDS (Visa, MasterCard, American Express, Department Stores, etc.)

Type Credit Limit Balance Owed Minimum Monthly Payment

E. WAGE INFORMATION (If you have more than one employer, include the information on another sheet of paper.)

Your current Employer (name and address)

How often are you paid? (Check one) Weekly Biweekly Semi-monthly Monthly

Gross per pay period Taxes per pay period (Fed) (State) (Local) How long at current employer Date of Birth Total Income from Last Year’s 1040 Tax Return

Spouse’s current Employer (name and address)

How often are you paid? (Check one) Weekly Biweekly Semi-monthly Monthly

Gross per pay period Taxes per pay period (Fed) (State) (Local) How long at current employer Date of Birth Total Income from Last Year’s 1040 Tax Return

F. NON-WAGE HOUSEHOLD INCOME (List monthly amounts. For Self-Employment and Rental Income, list the monthly amount received after expenses or taxes.)

Alimony Income:

Child Support Income:

Net Self Employment Income:

Net Rental Income:

Unemployment Income: Pension Income:

Interest Income: Social Security Income:

Other:

G. MONTHLY NECESSARY LIVING EXPENSES (List monthly amounts. For expenses paid other than monthly, see instructions.)

1. Food / Personal Care Food:

Housekeeping Supplies: Clothing and Clothing Services:

Personal Care Products & Services: Misc. (Cable, Internet, etc.)*:

Total: 2. Transportation

Gas/Insurance/Licenses/Parking/Maintenance etc.:

Public Transportation:

3. Housing & Utilities Rent:

Electric, Oil/Gas, Water/Trash: Telephone and/or Cell Phone:

Real Estate Taxes and Insurance: (if not included in B above)

Total: 4. Medical

Health Insurance:

Out of Pocket Health Care Expenses:

5. Other Child / Dependent Care:

Estimated Tax Payments:

Term Life Insurance:

Retirement (Employer Required):

Retirement (Voluntary):

Court Ordered Payments:

Profit and Loss Statement:

See the instructions for detailed information on how to complete the Monthly Necessary Living Expenses. IRS standard amounts are found on the internet at http://www.irs.gov/individuals/article/0,,id=96543,00.html. If you are required to send supporting documentation, please send copies and not the original documents.

H. ADDITIONAL INFORMATION

1. The IRS may establish a payment agreement for you based on the financial data you provided. 2. We cannot consider an installment agreement unless all returns have been filed.

Attach a signed copy of ALL unfiled return(s). 3. Proposed Monthly Installment Agreement Payment Amount: 4. Proposed Monthly Payment Date: 5. Down Payment Amount: Under penalty of perjury, I declare to the best of my knowledge and belief this statement of assets, liabilities and other information is true, correct and complete. Your Signature Spouse’s Signature Date

Catalog 62053J Form 433-F (Rev. 6-2010)

0.00 0.00

NAEA

Instructions Complete all the blocks. Write N/A (Not Applicable) for those which don’t apply to you. We need you to complete the form so we can establish the best method for you to pay the amount due. If any section is too small for the information you need to supply, please use a separate sheet.

Failure to complete the form or provide copies (not originals) of required attachments (as stated below) may result in a delay in resolving your account. We may also require you to submit financial substantiation after our financial analysis is complete.

Section A – Accounts / Lines of Credit List all accounts, even if they currently have no balance. However, do not enter bank loans in this section.

Section B – Real Estate List all real estate you own or are purchasing. This listing should include your home and any other real estate you own. Include the county and description, the year(s) and amount(s) of purchase and/or refinancing, the current market value and the amount you owe. To determine equity, subtract the amount owed from its current market value.

Section C – Other Assets List all cars, boats, recreational vehicles, whole life policies, or other assets that you own. If a vehicle is leased, write “lease” in the “year purchased” column. To determine equity, subtract the amount owed from its current market value.

Section D – Credit Cards List all credit cards and lines of credit, even if there is no balance owed.

Section E – Wage Information Provide the name and address of employers for you and your spouse. Include both spouses’ income, even if the tax liability is not the result of a jointly filed return. Check the appropriate box indicating how you are paid. Year to Date Income includes all income, without deductions, for you and your spouse. Include all wage income from all employers since January of the current year. Last years gross income should be recorded from last years filed return.

Section F – Non-Wage Household Income Enter monthly amounts for all sources of household income. For any income not received monthly, calculate the monthly amount as follows: • If received quarterly - divide by three. • If received weekly - multiply by 4.3. • If received biweekly - multiply by 2.17.

Net Self-Employment Income is the amount you earn after you pay ordinary and necessary monthly business expenses. This figure should relate to the yearly net profit from Schedule C on your Form 1040 or your current year profit and loss statement, but should not include depreciation expenses. If your net income is less than the previous year, attach an explanation. If net income is a loss, enter “0”.

Net Rental Income is the amount you earn after you pay ordinary and necessary monthly rental expenses. This figure should relate to the amount reported on Schedule E of your Form 1040 (do not include depreciation expenses). If net rental income is loss, enter “0”.

Section G – Monthly Necessary Living Expenses Expenses that do not provide for the health and welfare of youor your family or for the production of income are generallynot considered necessary. These may include tuition for private schools, public or private college expenses, charitable contributions, voluntary retirement contributions and payments to unsecured debts.Enter monthly amounts for expenses. For any expenses not paid monthly, calculate the monthly amount as follows: • If paid quarterly - divide by three. • If paid weekly - multiply by 4.3. • If paid biweekly - multiply by 2.17.For expenses claimed in boxes 1 and 4 you may either use the total amounts shown on the IRS website at http://www.irs.gov/individuals/article/0,,id=96543,00.html. Substantiation may be required once the financial analysis is completed. If you are currently paying higher expenses you may enter that amount,but you are also required to submit supporting documentationwith this form, which show payments being made.For boxes 2 and 3 you must enter only the amount you actuallyspend on these expenses. If your total amount is higher than theamount shown on the IRS website shown above, you areREQUIRED to submit supporting documentation when submitting this form, such as copies of cancelled checks etc. which show payments being made.All expenses claimed in box 5 REQUIRE supporting documentation when submitting this form. This includes copies of cancelled checks, pay stubs etc. that indicate payments are being made. For any court ordered payments you MUST submit a copy of thecourt order portion that shows the amount you are ordered to payand the signatures. If you do not have access to the IRS website, itemize your actual expenses and we will ask you for additional proof, if required.

Rent - Do not enter mortgage payment here.

Medical - Enter only ongoing medical expenses. Do not include a one time only medical expense. Out-of-Pocket health care expenses include:• Medical services• Prescription drugs • Medical supplies, including eyeglasses and contact lenses.

Child / Dependent Care - Enter the monthly amount you pay forthe care of dependents that can be claimed on your Form 1040.

Estimated Tax Payments - Calculate the monthly amount youpay for estimated taxes by dividing the quarterly amount due onyour Form 1040ES by 3.

Life Insurance - Enter the amount you pay for term lifeinsurance only. Whole life insurance has cash value and shouldbe listed in Section C.

Section H – Additional Information 1. The IRS will review your financial information and may

establish a payment agreement for you.2. Attach signed unfiled returns to this form for processing.3. Propose a payment amount to be paid:

• In 60-120 days or • monthly payments in 60 months

4. Show the date you will make your payment each month.Valid dates are from the 1st -28th of the month.

5. Show the maximum down payment you can make to lower the balance due.

Catalog 62053J www.irs.gov Form 433-F (Rev. 6-2010)

NAEA

Form

(Rev. January 2008)

433-B Collection Information Statement for Businesses

Department of the Treasury Internal Revenue Service

Note: Complete all entry spaces with the current data available or “N/A” (not applicable). Failure to complete all entry spaces may result in rejection of your request or significant delay in account resolution. Include attachments if additional space is needed to respond completely to any question.

Section 1: Business Information

1a Business Name

1b Business Street Address Mailing Address City State ZIP

1c County 1d 1e

Business Telephone Type of Business

1f

4

Business Website

2a Employer Identification No. (EIN) 2b Type of Entity (Check appropriate box below)

Partnership Corporation Other Limited Liability Company (LLC) classified as a corporationOther LLC – Include number of members

2c Date Incorporated/Establishedmmddyyyy

Number of Employees3a 3b Monthly Gross Payroll

( )

Frequency of Tax Deposits

3c Is the business enrolled in Electronic Federal Tax Payment System (EFTPS)

3d Yes No

Does the business engage in e-Commerce (Internet sales) Yes No

Payment Processor (e.g., PayPal, Authorize.net, Google Checkout, etc.), Name and Address (Street, Cty, State, ZIP code) Payment Processor Account Number

5a

5b Credit cards accepted by the business

6a

6b

6c Phone

Phone

Type of Credit Card (e.g., Visa, MasterCard, etc.) Merchant Account Provider Name and Address (Street, Cty, State, ZIP code)Merchant Account Number

Section 2: Business Personnel and Contacts

Partners, Officers, LLC Members, Major Shareholders, Etc.

Social Security Number ( ) Home Telephone

Work/Cell Phone (( ))

Ownership Percentage & Shares or Interest

7a Full Name Title Home Address City State ZIP Responsible for Depositing Payroll Taxes Yes No

7b Full Name Title Home Address City State ZIP Responsible for Depositing Payroll Taxes Yes No

7c Full Name Title Home Address City State ZIP Responsible for Depositing Payroll Taxes Yes No

7d Full Name Title Home Address City State ZIP Responsible for Depositing Payroll Taxes Yes No

Social Security Number ( Home Telephone )

) ( Work/Cell Phone Ownership Percentage & Shares or Interest


( Work/Cell Phone )

)

Ownership Percentage & Shares or Interest


( Work/Cell Phone Ownership Percentage & Shares or Interest

www.irs.gov Cat. No. 16649P Form 433-B (Rev. 1-2008)

Phone

NAEA

Section 3: Other Financial Information (Attach copies of all applicable documentation.)

Form 433-B (Rev. 1-2008) Page 2

8 Does the business use a Payroll Service Provider or Reporting Agent (If yes, answer the following) Yes No

Name and Address (Street, City, State, ZIP code) Effective dates (mmddyyyy)

9 Yes NoIs the business a party to a lawsuit (If yes, answer the following)

Plaintiff Defendant

Location of Filing Represented by Docket/Case No.

Amount of Suit

$

Possible Completion Date (mmddyyyy) Subject of Suit

Has the business ever filed bankruptcy (If yes, answer the following)10 Yes No

Date Filed (mmddyyyy) Date Dismissed or Discharged (mmddyyyy) Petition No. Location

11 Do any related parties (e.g., officers, partners, employees) have outstanding amounts owed to the business (If yes, answer the following) Yes No

Name and Address (Street, City, State, ZIP code) Date of Loan Current Balance As of mmddyyyy

$

Payment Date Payment Amount

$

12 Have any assets been transferred, in the last 10 years, from this business for less than full value (If yes, answer the following) Yes No

List Asset Value at Time of Transfer

$

Date Transferred (mmddyyyy) To Whom or Where Transferred

13 Does this business have other business affiliations (e.g., subsidiary or parent companies) (If yes, answer the following) Yes No

Related Business Name and Address (Street, City, State, ZIP code) Related Business EIN:

14 Any increase/decrease in income anticipated (If yes, answer the following) Yes No

Explain (use attachment if needed) How much will it increase/decrease When will it increase/decrease

$

Section 4: Business Asset and Liability Information

15 Cash on Hand. Include cash that is not in the bank Total Cash on Hand $

Business Bank Accounts. Include online bank accounts, money market accounts, savings accounts, checking accounts, and stored value cards (e.g., payroll cards, government benefit cards, etc.) List safe deposit boxes including location and contents.

Type of Account

Full Name and Address (Street, City, State, ZIP code) of Bank, Savings & Loan, Credit Union or Financial Institution.

Account Number Account Balance As of mmddyyyy

16a

$

16b

$

16c

$

16d Total Cash in Banks (Add lines 16a through 16c and amounts from any attachments) $

Form 433-B (Rev. 1-2008)

NAEA

Form 433-B (Rev. 1-2008) Page 3 Accounts/Notes Receivable. Include e-payment accounts receivable and factoring companies, and any bartering or online auction accounts. (List all contracts separately, including contracts awarded, but not started.)

Is the business a Federal Government Contractor 17 Yes No (Include Federal Government contracts below)

18a

18b

18c

18d

Phone:

Phone:

18e

Accounts/Notes Receivable & Address (Street, City, State, ZIP code) Status (e.g., age, factored, other)

Date Due (mmddyyyy)

Invoice Number or Federal Government Contract Number

Amount Due

Contact Name: Phone: $


Contact Name: $

Contact Name: $


18f Outstanding Balance (Add lines 18a through 18e and amounts from any attachments) $

Investments. List all investment assets below. Include stocks, bonds, mutual funds, stock options, and certificates of deposit.

Name of Company & Address (Street, City, State, ZIP code) Used as collateral

on loan Current Value Loan Balance Equity

Value Minus Loan

Phone:

Yes No

$ $ $ 19b

Phone:

Yes No

$ $ $

19c Total Investments (Add lines 19a, 19b, and amounts from any attachments) $

19a

Available Credit. Include all lines of credit and credit cards. Full Name & Address (Street, City, State, ZIP code) of Credit Institution Credit Limit

Amount Owed As of

mmddyyyy

Available Credit As of

mmddyyyy

20a

Account No. $ $ $

20b

Account No. $ $ $

Total Credit Available (Add lines 20a, 20b, and amounts from any attachments)20c $ Form 433-B (Rev. 1-2008)

NAEA

Form 433-B (Rev. 1-2008) Page 4

Real Property. Include all real property and land contracts the business owns/leases/rents.



(FMV)




(mmddyyyy)


21a Property Description $ $ $ $

Location (Street, City, State, ZIP code) and County Lender/Lessor/Landlord Name, Address (Street, City, State, ZIP code), and Phone



21c Property Description $ $ $ $


21d Property Description $ $ $ $


21e Total Equity (Add lines 21a through 21d and amounts from any attachments) $

Vehicles, Leased and Purchased. Include boats, RVs, motorcycles, trailers, mobile homes, etc.



(FMV)




(mmddyyyy)


22a Year Mileage $ $ $ $


22b Year Mileage $ $ $ $


22c Year Mileage $ $ $ $


22d Year Mileage $ $ $ $


22e Total Equity (Add lines 22a through 22d and amounts from any attachments) $ Form 433-B (Rev. 1-2008)

NAEA

Form 433-B (Rev. 1-2008) Page 5

24d Total Payments (Add lines 24a through 24c and amounts from any attachments) $

Business Equipment. Include all machinery, equipment, merchandise inventory, and/or other assets. Include Uniform Commercial Code (UCC) filings.



(FMV)




(mmddyyyy)


23a Asset Description $ $ $ $

Location of asset (Street, City, State, ZIP code) and County Lender/Lessor Name, Address, (Street, City, State, ZIP code) and Phone

23b Asset Description $ $ $ $


23c Asset Description $ $ $ $


23d Asset Description $ $ $ $


23e Total Equity (Add lines 23a through 23d and amounts from any attachments) $ Business Liabilities. Include notes and judgments below.

Business Liabilities Secured/ Unsecured

Date Pledged (mmddyyyy)

Balance Owed Date of Final

Payment (mmddyyyy)

Payment Amount

24a Description: Secured

Unsecured $ $ Name Street Address City/State/ZIP code Phone:

24b Description: Secured

Unsecured $ $ Name Street Address City/State/ZIP code Phone:

24c Description: Secured

Unsecured $ $

Name Street Address City/State/ZIP code

Phone:

Form 433-B (Rev. 1-2008)

NAEA

$ $

$ $

$ $

$

$ $

Form 433-B (Rev. 1-2008) Page 6 Section 5: Monthly Income/Expense Statement for Business

Accounting Method Used: Cash Accrual

Income and Expenses during the period (mmddyyyy) to (mmddyyyy) . Total Monthly Business Income Total Monthly Business Expenses

Source Gross Monthly Expense Items Actual Monthly

25 Gross Receipts from Sales/Services 36 Materials Purchased1 $ 26 Gross Rental Income 37 Inventory Purchased2 $ 27 Interest Income $ 38 Gross Wages & Salaries $ 28 Dividends 39 Rent $ 29 Cash 40 Supplies3 $

Other Income (Specify below) 41 Utilities/Telephone4 $ 30 42 Vehicle Gasoline/Oil $ 31 43 Repairs & Maintenance $

32 $ 44 Insurance $ 33 45 Current Taxes5 $ 34 46 Other Expenses (Specify) $ 35 Total Income

(Add lines 25 through 34) 47 IRS Use Only

Allowable Installment Payments $ 48 Total Expenses

(Add lines 36 through 47) $ 1 Materials Purchased: Materials are items directly related to the production of a product or service. 2 Inventory Purchased: Goods bought for resale. 3 Supplies: Supplies are items used to conduct business and are consumed or used up within one year. This could be the cost of books, office supplies, professional equipment, etc.

4 Utilities/Telephone: Utilities include gas, electricity, water, oil, other fuels, trash collection, telephone and cell phone.

5 Current Taxes: Real estate, state, and local income tax, excise, franchise, occupational, personal property, sales and the employer’s portion of employment taxes.

Certification: Under penalties of perjury, I declare that to the best of my knowledge and belief this statement of assets, liabilities, and other information is true, correct, and complete.

Signature Title Date

Print Name of Officer, Partner or LLC Member

Assets - Statements from lenders on loans, monthly payments, payoffs, and balances, for all assets. Include copies of UCC financing statements and accountant’s depreciation schedules.

Attachments Required: Copies of the following items for the last 3 months from the date this form is submitted (check all attached items):

Banks and Investments - Statements for all money market, brokerage, checking/savings accounts, certificates of deposit, stocks/bonds.

Expenses - Bills or statements for monthly recurring expenses of utilities, rent, insurance, property taxes, telephone and cell phone, insurance premiums, court orders requiring payments, other expenses.

Other - credit card statements, profit and loss statements, all loan payoffs, etc.

Copy of the last income tax return filed; Form 1120, 1120S, 1065, 1040, 990, etc.

Additional information or proof may be subsequently requested.

FINANCIAL ANALYSIS OF COLLECTION POTENTIAL FOR BUSINESSES

(IRS USE ONLY)

Cash Available (Lines 15, 16d, 18f, 19c, and 20c) Total Cash $

Distrainable Asset Summary (Lines 21e, 22e, and 23e) Total Equity $

Monthly Income Minus Expenses (Line 35 Minus Line 48) Monthly Available Cash $

Privacy Act: The information requested on this Form is covered under Privacy Acts and Paperwork Reduction Notices which have already been provided to the taxpayer.

Form 433-B (Rev. 1-2008)

NAEA

Department of the TreasuryInternal Revenue Service

Your Rights as aTaxpayer

Publication 1(Rev. May 2005)

Catalog Number 64731W The first part of this publication explains some of your most important rights as ataxpayer. The second part explains the examination, appeal, collection, and refundprocesses. This publication is also available in Spanish.

I. Protection of Your Rights

IRS employees will explain and protectyour rights as a taxpayer throughout yourcontact with us.

II. Privacy andConfidentiality

The IRS will not disclose to anyone theinformation you give us, except asauthorized by law. You have the right toknow why we are asking you forinformation, how we will use it, and whathappens if you do not provide requestedinformation.

III. Professional andCourteous Service

If you believe that an IRS employee hasnot treated you in a professional, fair, andcourteous manner, you should tell thatemployee’s supervisor. If the supervisor’sresponse is not satisfactory, you shouldwrite to the IRS director for your area orthe center where you file your return.

IV. Representation

You may either represent yourself or,with proper written authorization, havesomeone else represent you in yourplace. Your representative must be aperson allowed to practice before theIRS, such as an attorney, certified publicaccountant, or enrolled agent. If you arein an interview and ask to consult such aperson, then we must stop andreschedule the interview in most cases.

You can have someone accompany youat an interview. You may make soundrecordings of any meetings with ourexamination, appeal, or collectionpersonnel, provided you tell us in writing10 days before the meeting.

V. Payment of Only theCorrect Amount of Tax

You are responsible for paying only thecorrect amount of tax due under thelaw—no more, no less. If you cannot payall of your tax when it is due, you may beable to make monthly installmentpayments.

VI. Help With UnresolvedTax Problems

The Taxpayer Advocate Service can helpyou if you have tried unsuccessfully toresolve a problem with the IRS. Yourlocal Taxpayer Advocate can offer youspecial help if you have a significanthardship as a result of a tax problem.For more information, call toll free1–877–777–4778 (1–800–829–4059 forTTY/TDD) or write to the TaxpayerAdvocate at the IRS office that lastcontacted you.

VII. Appeals and JudicialReview

If you disagree with us about the amountof your tax liability or certain collectionactions, you have the right to ask theAppeals Office to review your case. Youmay also ask a court to review your case.

VIII. Relief From CertainPenalties and Interest

The IRS will waive penalties whenallowed by law if you can show youacted reasonably and in good faith orrelied on the incorrect advice of an IRSemployee. We will waive interest that isthe result of certain errors or delayscaused by an IRS employee.

PROVIDE AMERICA’S

TAXPAYERS TOP QUALITY

SERVICE BY HELPING THEM

UNDERSTAND AND MEET

THEIR TAX RESPONSIBILITIES

AND BY APPLYING THE TAX

LAW WITH INTEGRITY AND

FAIRNESS TO ALL.

THE IRS MISSION

IRS

www.irs.gov

Declaration of Taxpayer Rights

NAEA

Examinations, Appeals, Collections,and Refunds

Examinations (Audits)We accept most taxpayers’ returns asfiled. If we inquire about your return orselect it for examination, it does notsuggest that you are dishonest. Theinquiry or examination may or may notresult in more tax. We may close yourcase without change; or, you may receivea refund.

The process of selecting a return forexamination usually begins in one of twoways. First, we use computer programs toidentify returns that may have incorrectamounts. These programs may be basedon information returns, such as Forms1099 and W-2, on studies of pastexaminations, or on certain issuesidentified by compliance projects.Second, we use information from outsidesources that indicates that a return mayhave incorrect amounts. These sourcesmay include newspapers, public records,and individuals. If we determine that theinformation is accurate and reliable, wemay use it to select a return forexamination.

Publication 556, Examination ofReturns, Appeal Rights, and Claims forRefund, explains the rules and proceduresthat we follow in examinations. Thefollowing sections give an overview ofhow we conduct examinations.

By MailWe handle many examinations andinquiries by mail. We will send you a letterwith either a request for more informationor a reason why we believe a change toyour return may be needed. You canrespond by mail or you can request apersonal interview with an examiner. If youmail us the requested information orprovide an explanation, we may or maynot agree with you, and we will explain thereasons for any changes. Please do nothesitate to write to us about anything youdo not understand.

By InterviewIf we notify you that we will conduct yourexamination through a personal interview,or you request such an interview, youhave the right to ask that the examinationtake place at a reasonable time and placethat is convenient for both you and theIRS. If our examiner proposes anychanges to your return, he or she willexplain the reasons for the changes. If youdo not agree with these changes, you canmeet with the examiner’s supervisor.

AppealsIf you do not agree with the examiner’sproposed changes, you can appeal themto the Appeals Office of IRS. Mostdifferences can be settled withoutexpensive and time-consuming courttrials. Your appeal rights are explained indetail in both Publication 5, Your AppealRights and How To Prepare a Protest IfYou Don’t Agree, and Publication 556,Examination of Returns, Appeal Rights,and Claims for Refund.

If you do not wish to use the AppealsOffice or disagree with its findings, youmay be able to take your case to the U.S.Tax Court, U.S. Court of Federal Claims,or the U.S. District Court where you live. Ifyou take your case to court, the IRS willhave the burden of proving certain facts ifyou kept adequate records to show yourtax liability, cooperated with the IRS, andmeet certain other conditions. If the courtagrees with you on most issues in yourcase and finds that our position waslargely unjustified, you may be able torecover some of your administrative andlitigation costs. You will not be eligible torecover these costs unless you tried toresolve your case administratively,including going through the appealssystem, and you gave us the informationnecessary to resolve the case.

CollectionsPublication 594, The IRS CollectionProcess, explains your rights andresponsibilities regarding payment offederal taxes. It describes:

● What to do when you owe taxes. Itdescribes what to do if you get a taxbill and what to do if you think your billis wrong. It also covers makinginstallment payments, delayingcollection action, and submitting anoffer in compromise.

on which the IRS first attempted to collectthe tax from you. For example, thetwo-year period for filing your claim maystart if the IRS applies your tax refundfrom one year to the taxes that you andyour spouse owe for another year. Formore information on innocent spouserelief, see Publication 971, InnocentSpouse Relief, and Form 8857.

Refunds

Tax InformationThe IRS provides the following sourcesfor forms, publications, and additionalinformation.

● Tax Questions: 1–800–829–1040(1–800–829–4059 for TTY/TDD)

● Forms and Publications:1–800–829–3676 (1–800–829–4059for TTY/TDD)

● Small Business Ombudsman: Asmall business entity can participatein the regulatory process andcomment on enforcement actions ofIRS by calling 1-888-REG-FAIR.

● Internet: www.irs.govYour collection appeal rights areexplained in detail in Publication 1660,Collection Appeal Rights.

● IRS collection actions. It covers liens,releasing a lien, levies, releasing alevy, seizures and sales, and releaseof property.

If you were due a refund but you did notfile a return, you generally must file yourreturn within 3 years from the date thereturn was due (including extensions) toget that refund.

You may file a claim for refund if you thinkyou paid too much tax. You mustgenerally file the claim within 3 years fromthe date you filed your original return or 2years from the date you paid the tax,whichever is later. The law generallyprovides for interest on your refund if it isnot paid within 45 days of the date youfiled your return or claim for refund.Publication 556, Examination of Returns,Appeal Rights, and Claims for Refund, hasmore information on refunds.

Potential Third PartyContactsGenerally, the IRS will deal directly withyou or your duly authorizedrepresentative. However, we sometimestalk with other persons if we needinformation that you have been unable toprovide, or to verify information we havereceived. If we do contact other persons,such as a neighbor, bank, employer, oremployees, we will generally need to tellthem limited information, such as yourname. The law prohibits us fromdisclosing any more information than isnecessary to obtain or verify theinformation we are seeking. Our need tocontact other persons may continue aslong as there is activity in your case. If wedo contact other persons, you have a rightto request a list of those contacted.

● Treasury Inspector General for TaxAdministration: You canconfidentially report misconduct,waste, fraud, or abuse by an IRSemployee by calling 1–800–366–4484(1–800–877–8339 for TTY/TDD). Youcan remain anonymous.

Innocent Spouse ReliefGenerally, both you and your spouse areeach responsible for paying the fullamount of tax, interest, and penalties dueon your joint return. However, if youqualify for innocent spouse relief, you maybe relieved of part or all of the jointliability. To request relief, you must fileForm 8857, Request for Innocent SpouseRelief no later than 2 years after the date

Repeat ExaminationsIf we examined your return for the sameitems in either of the 2 previous years andproposed no change to your tax liability,please contact us as soon as possible so

Printed on recycled paper

we can see if we should discontinue theexamination.

NAEA

Publication 594 (Rev. 7-2007) Cata log Number 46596B

IRS Mission: Provide America’s taxpayers top quality service

by helping them understand and meet their tax

responsibilities and by applying the tax law with

integrity and fairness to all.

The IRS Collection Process Publication 594 Keep this publication for future reference

This publication tells you the steps the Internal Revenue Service (IRS) may take to

collect your balance due account. We send this publication with your final bill if our

records show you owe overdue tax, penalty, or interest. We may:

● contact you by telephone,

● assign a revenue officer to resolve your account (the revenue officer may contact

you in person), and/or

● take enforced collection action to collect the amount you owe.

We urge you to resolve your account to prevent possible enforcement action.

● Please pay immediately if you owe the amount shown on the bill.

● Contact us now if you believe the bill is incorrect so that we may correct any

mistakes.

Page 2 of this publication provides information about how to contact us. We will

work with you to solve your tax problem.

A number of IRS forms and publications apply to various situations discussed in

this publication. To obtain these forms and publications, please visit our web site www.

irs.gov, call us at 1-800-TAX- FORM (1-800-829-3676), write to us, or visit your

local library or IRS office.

Please note that the information in this document applies to all taxpayers including

individuals who owe income tax and employers who owe employment tax. A separate

section on page 11 describes special rules that apply to employers only.

This document includes a summary of your rights and responsibilities concerning

paying Federal taxes, in addition to discussing the legal authority that allows the IRS to

collect taxes. Publication 594 is not a precise and technical analysis of the law; it is for

information only.

en español

Existe una versión de esta publicación en español, la Publicación 594SP, que puede

obtener en la oficina local del Servicio de Impuestos Internos.

NAEA

Information contained in this publication

Important Information You Should Know 4

What to Do When You Owe Taxes 5

Options to Pay Your Taxes 5

What If You Cannot Fully Pay Your Taxes? 5

About IRS Actions During the Collection Process 7

Offset 7

Liens 7

Levies 8

Summons 10

Collection of Employment Taxes 11

Referral to a Private Collection Agency 12

Boxed highlights

What to do when you receive a bill from the IRS 3

Avoid having overdue taxes next year 3

What if you believe your bill is wrong? 3

There is a special program to help you 5

Especially for employers 10

Some property cannot be levied or seized 11

We offer you a number of free publications and forms 12

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Avoid having overdue taxes next year

● If you owe taxes because you did not have enough

money withheld from your income, you should

claim a lower number of allowances on your Fof allowances on your Forormm

W-4 or Form W-4P. See Publication 919, How Do

I Adjust My Tax Withholding?

● Take advantage of the Electronic Federal Tax

Payment System. (See Publication 966, Electronic

Choices to Pay All Your Federal Taxes, check our

website at www.eftps.com, or call 1-800-555-

4477.)

● If you owe tax, you should increase your estimated

tax payments. See Publication 505, Tax

Withholding and Estimated Tax.

● If you are an employer, see Publication 15, Circular

E, Employer’s Tax Guide.

What if you believe your bill is wrong?

If you believe your bill is wrong, let us know as

soon as possible.

● write to the IRS office that sent you the bill,

● call the IRS office that sent you the bill, or

● visit your local IRS office.

To help us correct the problem, gather a copy of

the bill along with copies of any records, tax returns,

and canceled checks, etc., that will help us understand

why you believe your bill is wrong.

If you write to us, tell us why you believe your bill

is wrong. With your letter, include copies of all the

documents you gathered to explain your case. Please

do not send original documents. If we find you are

correct, we will adjust your account and, if necessary,

send you a corrected bill.

Important information you should know

You have the right to be treated professionally, fairly, promptly, and courteously by IRS employees and Private Collection Agencies (PCAs) contacting you on

behalf of the IRS. Among other rights, you have the right to:

● disagree with your tax bill,

● meet with an IRS manager if you disagree with the IRS employee who handles your tax case,

● appeal most IRS collection actions,

● have your case transferred to a different IRS office if you have a valid reason (such as if you move),

● be represented by someone when dealing with IRS matters, and

● receive a receipt for any payment you make.

For details about your rights, see Publication 1, Your Rights as a Taxpayer. You received a copy of it with your first bill.

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Important information you should know

If you want someone to represent you When dealing with the Internal Revenue Service

(IRS), you may choose to represent yourself,

or you may have an attorney, a certified public

accountant, an enrolled agent, or any person

enrolled to practice before the IRS represent you.

For example, you may want your representative to

respond to a tax bill that you believe is incorrect.

Also, you can be represented by a member of

your immediate family, or in the case of a business,

by regular full-time employees, general partners

or bona fide officers.

If you want your representative to appear

without you, and to receive or inspect confidential

material, you must file a Form 2848, Power of

Attorney and Declaration of Representative, with

the IRS. You may also authorize an individual to

receive or inspect confidential material, but not

represent you before the IRS, by filing a Form

8821, Tax Information Authorization.

Other items to note ● The IRS can share your tax information

By law, the IRS can share your tax information

with city and state tax agencies, and in some

cases with the Department of Justice, other

federal agencies, and people you authorize.

We can also share it with certain foreign

governments under tax treaty provisions.

● We may contact a third party

The law allows us to contact someone else,

such as neighbors, banks, employers, or

employees, to investigate your case. You

have the right to request a list of third parties

contacted with respect to your case.

● Low Income Taxpayer Clinics (LITCs)

LITCs are independent organizations

that provide low income taxpayers with

representation in federal tax controversies with

the IRS for free or for a nominal charge. The

clinics also provide tax education and outreach

for taxpayers with limited English proficiency

or who speak English as a second language.

Publication 4134, Low Income Taxpayer Clinic

List, provides information on clinics in your

area. It is available at www.irs.gov, your local

IRS office, or by calling 1-800-TAX- FORM

(1-800-829-3676).

● If you are involved in bankruptcy proceedings

Call the number on your tax bill or 1-800-829-

1040 if you cannot find the bill, or contact your

local IRS office. While the proceeding may not

eliminate your tax debt, it may temporarily stop

the IRS from collecting.

● Help for an innocent spouse

Generally, both you and your spouse are

responsible, jointly and individually, for paying

any tax, interest, or penalties due on your joint

return. In some cases, a spouse (or former

spouse) may be relieved of liability on a joint

return. For more information, see Publication

971, Innocent Spouse Relief. If you believe

you should not be held responsible for any joint

liability, you must file a claim for relief on Form

8857, Request for Innocent Spouse Relief.

You must file Form 8857 within 2 years after

the first date the IRS attempted to collect the

tax following July 22, 1998. Collection activity

that starts the two-year period includes:

● A refund offset notice dated March 7, 2005

or later. (A refund offset notice advises

you that the IRS applied your income tax

refund to an amount you owed on a joint

tax return.)

● A claim for the joint liability filed in a

proceeding which involves your property, for

example, a proof of claim in a bankruptcy

proceeding.

● The filing of a suit by the United States

against you to collect the joint liability.

● The issuance of a notice informing you of

the IRS’ intent to levy and your right to a

Collection Due Process (CDP) hearing with

respect to a joint liability.

● Appeal process

If you disagree with the decision of an IRS

employee at any time during the collection

process, you may ask that employee’s manager

to review your case.

When you ask for a review, the employee will

refer you to a manager. The manager will either

speak with you then or will return your call by the

next work day.

If you disagree with the manager’s decision,

you have the right to file an appeal under the

Collection Appeals Program. This program

enables you to appeal most collection actions

we may take, including filing a lien, placing a

levy on your wages or bank account, or seizing

your property. You also will have an opportunity

to request a CDP hearing with the IRS Office of

Appeals after the initial filing of a Notice of Federal

Tax Lien for each liability You also will have an

opportunity to request a CDP hearing prior to the

initial levy action, unless collection of the tax is in

jeopardy or the levy is on your state tax refund. In

these two cases, you may ask for a CDP hearing

after the levy. See Publication 1660, Collection

Appeal Rights, for more information.

● Time period for collecting taxes

By law, the IRS has the authority to collect

outstanding Federal taxes for 10 years from

the date your tax liability was assessed. The

10-year collection period is suspended:

● while the IRS and the Office of Appeals

consider a request for an installment

agreement or an offer in compromise.

● from the date you request a CDP hearing

until Appeals issues a CDP Notice of

Determination or, if you seek review in the

Tax Court, until the Tax Court’s decision

becomes final, including appeals to a United

States Court of Appeals.

● from the date you request innocent spouse

relief until a final Notice of Determination

is issued or, if you seek review in the Tax

Court, the date the Tax Court decision

becomes final and for 60 days thereafter.

If, however, you appeal the Tax Court’s

decision regarding your right to innocent

spouse relief to a United States Court of

Appeals, the collection period will begin to

run 60 days after the filing of the appeal

unless a bond is posted with the appeal.

● for tax periods included in a bankruptcy

while the automatic stay is in effect, plus an

additional six months.

● while you are residing outside the United

States, if you are absent for a continuous

period of at least six months.

The amount of time the suspension is in effect

will be added to the time remaining in the 10-

year period. For example, if the 10-year period

is suspended for six months, the time left in the

period we have to collect will increase by six

months.

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NAEA

There is a special program to help you with tax problems that cannot be resolved through normal IRS channels

The Taxpayer Advocate Service is an independent organization within the IRS whose employees

assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems

that have not been resolved through normal channels, or who believe that an IRS system or procedure

is not working as it should. You may be eligible for assistance if you:

● are experiencing economic harm or significant costs (including fees for professional representation),

● have experienced a delay of more than 30 days to resolve your tax issue, or

● have not received a response or resolution to the problem by the date promised by the IRS.

The service is free, confidential, tailored to meet your needs, and available for businesses as well

as individuals. There is at least one local taxpayer advocate in each state, the District of Columbia, and

Puerto Rico. Because advocates are part of the IRS, they know the tax system and how to navigate it.

If you qualify, you will receive personalized service from a knowledgeable advocate who will:

● listen to your problem,

● help you understand what needs to be done to resolve it, and

● stay with you every step of the way until your problem is resolved.

You may contact the Taxpayer Advocate Service by:

● calling their toll-free case intake line at 1-877-777-4778 or TTY/TTD 1-800-829-4059, or

● writing or calling your local taxpayer advocate, whose address and phone number are listed in

the government listings in your local telephone directory and in Publication 1546, The Taxpayer

Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems,

● filing Form 911, Application for Taxpayer Assistance Order, with the Taxpayer Advocate Service, or

● asking an IRS employee to complete Form 911 on your behalf.

To get a copy of Form 911 or learn more about the Taxpayer Advocate Service, go to www.irs.

gov/advocate.

What to do when you owe taxes

Options to Pay Your Taxes When you file your tax return, we check to

see if the math is accurate and if you have paid

the correct amount. If you have not paid all you

owe, we send a bill called a Notice of Tax Due

and Demand for Payment. The bill includes the

taxes plus interest and penalties. It is in your best

interest to pay your tax liability in full to minimize

the amount of interest and penalty charged. You

may pay your taxes by credit card, electronic

funds transfer, check, money order, or cash. Take

advantage of the Electronic Federal Tax Payment

System (EFTPS) to pay by electronic funds

transfer. See Publication 966, Electronic Choices

to Pay All Your Federal Taxes, access the website

at www.eftps.com, or call 1-800-555-4477.

Credit card options are available through two

service providers. The credit card payment service

providers will charge a fee for this service. Fees

are based on the amount of the payment and may

vary by service provider. Taxpayers may initiate a

credit card payment by contacting:

● Link2Gov Corporation at 1-888-PAY1040 (1-

888-729-1040) or online at www.pay1040.

com, or

● Official Payments Corporation at 1-800-

2PAYTAX (1-800-272-9829) or online at

www.officialpayments.com.

It may be to your advantage to pay by

borrowing. The interest rate your credit card issuer

or bank charges may be lower than the combi-

nation of interest and penalties imposed by the

Internal Revenue Code. For further information on

interest and penalty rates, see Notice 746, Infor-

mation About Your Notice, Penalty, and Interest.

What If You Cannot Fully Pay Your Taxes?

If you cannot pay all your taxes immediately,

pay as much as you can now because by paying

now, you will reduce the amount of interest and

penalty you will owe. Then immediately call,

write, or visit the nearest IRS office to explain your

situation.

After you explain your situation, we may

ask you to complete a Collection Information

Statement and provide documentation to substan-

tiate your information. Collection Information

Statements (Form 433-F, Collection Information

Statement (ACS), Form 433-A,Collection Infor-

mation Statement for Wage Earners and Self-

Employed Individuals, and Form 433-B,Collection

Information Statement for Businesses) help us

compare your monthly income with your monthly

expenses to determine the amount you can pay.

Based on your situation, we may work with you to

consider several different ways to pay:

● You may be able to make monthly payments

through an installment agreement. We can set

up a direct debit from your financial institution

or a payroll deduction from your wages or

salary. (See page 6.)

● You may qualify for a temporary delay if your

case is considered a hardship. (See page 6.)

● In some cases, you may qualify for an Offer in

Compromise. (See page 6.)

Request an Installment Agreement Installment agreements allow the payment of

your debt in smaller, more manageable amounts.

Installment agreements generally require equal

monthly payments that will result in full payment of

the tax you owe within the time left in the 10-year

period during which the IRS can collect the tax

from you. If you cannot pay your tax in full by the

end of the collection period, but can pay some

of the tax you owe, you may qualify for a partial

payment installment agreement. Go to www.irs.

gov for more information about partial payment

installment agreements.

For all installment agreements, the amount

of your installment payment will be based on

the amount you owe and your ability to pay that

amount within the time left in the 10-year period.

To be eligible for an installment agreement,

you must file all required returns. If you are an

employer, you must be current with federal tax

deposits.

If you owe less than $25,000, you may be

eligible to use our Online Payment Agreement

web application. To access the application, go

to www.irs.gov. Use the pull-down menu under

“I need to...” and select “Set Up a Payment

5

NAEA

Plan.” (The direct link to the Online Payment

Agreement is http://www.irs.gov/individuals/article/

0,,id=149373,00.html)

You may also request an installment agreement

using Form 9465, Installment Agreement Request,

or Form 2159, Payroll Deduction Agreement, by

calling the number on your bill, or 1-800-829-

1040 if you cannot find your bill or by visiting your

local IRS office. If you choose to complete one of

these forms to apply for an installment agreement,

you should mail the completed form to the

address listed on your bill.

When you arrange for an installment

agreement, it may be to your advantage to pay

by electronic funds withdrawal from your financial

institution (Line 13 of Form 9465) or payroll

deduction from your wages (Form 2159). These

two types of payment arrangements will help you

avoid termination of your installment agreement by

ensuring timely payments and preventing enforced

collection action. These types of agreements

will also reduce the burden of having to mail the

payments and will save you postage.

A user fee will be charged to set up your

installment agreement. The fee is $52 for direct

debit installment agreements, where payments are

deducted directly from your financial institution,

and $105 for other agreements. Taxpayers with

income at or below established levels, based on

the Department of Health and Human Services

Poverty Guidelines, may apply and be qualified to

pay a reduced user fee of $43 for establishing

new agreements, including direct debit installment

agreements.

We generally cannot levy against your property:

● while your request for an installment agreement

is being considered,

● while your agreement is in effect,

● for 30 days after your request for an

agreement has been rejected,

● for 30 days after our termination of an

installment agreement (due to your default of

the agreement), or

● while your appeal of the rejection or termi-

nation is being evaluated by the IRS Office of

Appeals..

However, a Notice of Federal Tax Lien may be

filed to secure the Government’s interest against

other creditors. (See page 7.)

If you already have an approved installment

agreement from a previous tax debt and your

financial situation has changed, we may be able to

modify your monthly amount. A reinstatement fee

of $45 will be charged, regardless of income level,

if we change the monthly amount at your request.

You may have to complete a Collection Information

Statement explaining your financial situation.

If you have requested an installment

agreement, and a decision to grant this agreement

is pending, it is recommended that you make

voluntary payments while approval is pending.

Acceptance of these interim payments by the

IRS should not be construed as acceptance of

the proposed installment agreement. You will

be notified in writing regarding the acceptance

or rejection of your request for an installment

agreement. You may ask the IRS Office of

Appeals to review our rejection of your installment

agreement. See Publication 1660, Collection

Appeal Rights, for more information.

Termination of your installment agreement

may cause the filing of a Notice of Federal Tax

Lien and/or an IRS levy action. You may ask the

IRS Office of Appeals to review our termination

of the installment agreement due to your default.

See Publication 1660, Collection Appeal Rights,

for more information. Either the filing of a lien

or a levy can be very damaging to your credit

worthiness and cause financial difficulties. If

a defaulted agreement is reinstated, the rein-

statement fee of $45 will be charged, regardless

of your income level.

Request a Temporary Delay in the Collection Process

If we determine that you cannot pay any of

your tax debt, we may temporarily delay collection

until your financial condition improves. You should

know that if we do delay collecting from you, your

debt will increase because penalties and interest

are charged until you pay the full amount. During

a temporary delay, we will again review your ability

to pay. We may also file a Notice of Federal Tax

Lien (see page 7) to protect the Government’s

interest in your assets.

Apply for an Offer in Compromise The IRS may accept an Offer in Compromise

(OIC) to settle unpaid tax accounts for less than the

full amount of the balance due. This applies to all

taxes, including any interest, penalties, or additional

amounts arising under the Internal Revenue laws.

The OIC program is an option for those taxpayers

who are unable to pay their tax account in a lump

sum or through an installment agreement and

have exhausted their search for other payment

arrangements.

The IRS may legally compromise a tax liability

for one of the following reasons:

● Doubt as to liability - there is doubt as to

whether or not the assessed tax is correct,

● Doubt as to collectibility - there is doubt

that you could ever pay the full amount of the

tax owed. In these cases, the total amount

you owe must be greater than the sum of your

assets and future income, or

● Promote effective tax administration - there is no doubt that the assessed tax is

correct and no doubt that the amount owed

could be collected, but you have an economic

hardship or other special circumstances which

may allow the IRS to accept less than the total

balance due.

For offers received after July 16, 2006, there

are three types of OIC payment terms that the

IRS and the taxpayer may agree to:

● Lump Sum Cash - must be paid within 5 or

fewer installments from notice of acceptance.

● Short Term Periodic Payment - must be

paid within 24 months (2 years) from the date

the IRS receives the OIC.

● Deferred Periodic Payment - must be paid

within 25 months or longer, but within the time

remaining on the 10-year period for collection.

An OIC submitted as a lump sum cash offer,

must include the $150 application fee and a

nonrefundable payment of 20 percent of the

offered amount, with the balance to be paid in

no more than 5 installments from the notice of

acceptance.

An OIC submitted as a periodic payment

offer (short term or deferred) must include the

$150 application fee and a nonrefundable initial

proposed periodic payment with the offer. The

remaining proposed periodic payments must

continue to be made while the offer is being

evaluated.

Taxpayers with income at or below established

levels, based on the Department of Health and

Human Services Poverty Guidelines, are not

required to submit the $150 application fee, 20%

of the amount of a lump sum cash offer, the first

installment of a periodic payment offer, or subse-

quent installment payments for a periodic payment

offer while that offer is being evaluated, as

described above. Until further guidance is issued,

you should use the worksheet to Form 656-A,

Income Certification for Offer in Compromise

Application Fee, to determine if you qualify as a

low-income taxpayer who is not required to make

these payments. The worksheet may be found in

Form 656, Offer in Compromise.

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You may submit an OIC by completing Form

656. If you are basing your offer on doubt

as to collectibility or promotion of effective tax

administration, you must also submit Form 433-A,

Collection Information Statement for Wage Earners

and Self-Employed Individuals or Form 433-B,

Collection Information Statement for Businesses,

with supporting documentation. There may be

instances where both a Form 433-A and Form

433-B must be submitted. After acceptance of

an offer, you must remain current with filing and

paying requirements for five years or until the

amount of the offer is paid in full, whichever is

longer. You may ask the IRS Office of Appeals to

review our rejection of your Offer in Compromise.


for more information.

For additional information about the OIC

program, visit www.irs.gov or see Form 656, Offer

in Compromise.

About IRS Actions During the Collection Process

Before we take any enforced collection action explained in this section, we will contact

you to give you a chance to voluntarily pay what

you owe. We will send you a Notice of Tax Due

and Demand for Payment, a bill that tells you how

much you owe in taxes. We may send you other

bills asking for payment. If you have an income

tax refund, we will offset the refund against your

tax liability. If you do not pay your taxes in full and

do not contact us to let us know why you cannot

pay or why you disagree with our decision to take

enforcement action, the law requires us to take

action. We may:

● File a Notice of Federal Tax Lien against

your property (make a legal claim to your

property as security for the payment of your tax

debt) (see the information below),

● Serve a levy on your property or salary (legally

seize your property to satisfy a tax debt) (see

page 8),

● Serve a Summons to secure information,

records, or testimony (see page 10), or

● Assess a trust fund recovery penalty for

the failure to pay withheld employment taxes or

collected excise taxes (see page 11).

These actions are the methods we can use

to enforce the Notice of Tax Due and Demand

for Payment. On the following pages, we explain

collection actions or information gathering tools,

and the rules that govern them.

Offset If you have overpaid your taxes for one tax

period, but owe taxes for another, the law allows

us to apply your refund to reduce the unpaid tax.

If you are a non-liable spouse and we offset a

Federal income tax refund belonging to you and

your liable spouse, you may request return of your

share of the refund by filing Form 8379, Injured

Spouse Allocation. See Publication 4183, Injured

Spouse Claims, for more information.

Liens Liens give us a legal claim to your property as

security for payment of your tax debt. The federal

tax lien arises when:

● we assess the liability,

● we send you a Notice and Demand for

Payment, and

● you neglect or refuse to fully pay the debt

within 10 days after we notify you about it.

We then may file a Notice of Federal Tax Lien

in the public records. By filing a Notice of Federal

Tax Lien, your creditors are publicly notified that

we have a claim against all your property, including

property you acquire after the lien was filed.

The lien attaches to all your property (such

as your house or car) and to all your rights to

property (such as the accounts receivable of your

business).

Once a lien is filed, your credit rating

may be harmed. A lien may affect your

ability to get a loan, buy a house or a

car, get a new credit card, or sign a

lease.

Releasing a lien Usually 10 years after a tax is assessed, a lien

releases automatically if we have not filed it again

or issued a Certificate of Release of Federal Tax

Lien.

We will issue a Certificate of Release of the

Federal Tax Lien:

● within 30 days after we determine that the tax

due (including accrued interest and penalties

and other additions) is satisfied by paying the

debt and/or by having it adjusted, or

● within 30 days after we accept a bond that you

submit, guaranteeing payment of the debt.

You must pay all fees that a state or other

jurisdiction charges the IRS to file and release the

lien. These fees will be added to the amount you

owe. See Publication 1450, Instructions on How

to Request a Certificate of Release of Federal Tax

Lien.

We will issue a Certificate of Release of Federal

Tax Lien within 14 days after we determine that

at the time the IRS filed the Notice of Federal

Tax Lien the taxpayer had no outstanding tax

liability due for the periods listed on the Notice,

the assessment was invalid, or the time period for

collecting the tax ended.

If we knowingly or negligently do not release

a Notice of Federal Tax Lien when it should be

released, you may be entitled to recover economic

damages. Some limitations may apply. You must

file an administrative claim with the IRS Technical

Services Advisory Group assigned to your state,

area or county where you live or in which the

Notice of Federal Tax Lien was filed. Mail your

written claim to the attention of the Advisory Group

Manager at the address listed in Publication 4235,

Technical Services (Advisory) Group Addresses.

If the claim is denied, you may sue the Federal

Government, but not IRS employees, for economic

damages.

Payoff amount The amount shown on the Notice of Federal

Tax Lien is the unpaid balance on the date the

Notice is created. The Notice will not be updated

to show changes in the amount you owe that

occur because of the accrued interest and

additions to tax or because of your payments.

However, at any time, you may request an updated

lien payoff amount to show the remaining balance

due by calling the toll-free customer service

telephone number at 1-800-913-6050. An IRS

employee will issue you a letter with the current

amount that must be paid before we release the

Notice of Federal Tax Lien.

Applying for a discharge of the tax lien from property

If you sell property subject to a tax lien, such

as your home, or pay your tax liability equal to the

value of the property secured by the tax lien, you

may apply for a Certificate of Discharge. Each

application for a Certificate of Discharge of a tax

lien requests release of the lien against one piece

of property. Note that when certain conditions

exist, a third party may also request a Certificate of

Discharge. For instructions regarding how to apply

for a certificate of discharge, see Publication 783,

Instructions on How to Apply for a Certificate of

Discharge of Property from Federal Tax Lien.

If you are selling your primary residence, you

may apply for a taxpayer relocation expense

allowance. In general, this allowance will be

granted if the IRS determines you are unable to

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pay relocating expenses, but certain conditions and

limitations apply. You may apply for the relocating

expense allowance by submitting Form 12451,

Request for Relocation Expense Allowance, to the

IRS.

Making the tax lien secondary to another lien

In some cases, a creditor may refuse to extend

credit to you unless their lien will be satisfied

before the tax lien. Subordination is the process

that can make a Federal tax lien secondary to

another lien. For example, you may ask for a

subordination of the tax lien to refinance the

mortgage on your house. For more information,

see Publication 784, How to Prepare an Appli-

cation for a Certificate of Subordination of Federal

Tax Lien.

Withdrawing a Notice of Federal Tax Lien We will withdraw a Notice of Federal Tax Lien if

the Notice was filed during a bankruptcy automatic

stay period.

We may withdraw a Notice of Federal Tax Lien

if we determine:

● the Notice was filed too soon or not according

to IRS procedures,

● withdrawal will allow you to pay your taxes

more quickly, or

● withdrawal would be in your best interest (as

determined by the National Taxpayer Advocate)

and the best interest of the Government.

We will give you a copy of the withdrawal, and

if you send us a written request, we will send a

copy to other institutions you name.

Appealing the filing of a Notice of Federal Tax Lien

We are required by law to give written notice

of your right to a Collection Due Process (CDP)

hearing not more than 5 business days after the

first filing of a Notice of Federal Tax Lien for each

tax liability. Normally, we will notify you by certified

mail sent to your last known address, although we

may give you this notice in person, or leave it at

your home or your usual place of business. You

may request a CDP hearing with the IRS Office

of Appeals by sending a request for a hearing to

the address shown on your notice. You must file

your request by the date shown on your notice.

Refer to Form 12153, Request for a Collection

Due Process or Equivalent Hearing, for more

information about filing a hearing request and for a

list of issues you may wish to discuss at your CDP

hearing.

At the conclusion of your CDP hearing, the

IRS Office of Appeals will issue a determination.

Appeals may determine that the Notice of Federal

Tax Lien should remain filed, or it may determine

that the Notice of Federal Tax Lien should be with-

drawn or the lien should be released, discharged

or subordinated. You will have 30 days after the

date of the determination, to seek review of the

determination in the United States Tax Court. In

addition, you may appeal under the Collection

Appeals Program (CAP), the proposed filing of a

Notice of Federal Tax Lien or the actual filing of

a Notice if CDP rights are not available. You may

also appeal, under CAP, our denial of your request

for withdrawal of the Notice of Federal Tax Lien

and our denial of your request for a Certificate

of Discharge or a Certificate of Subordination

of Federal Tax Lien. See Publication 1660,

Collection Appeal Rights, for more information.

If a Notice of Federal Tax Lien is filed to

collect your tax liabilities, call the number on the

notice informing you that a lien has been filed, or

1-800-829-1040 if you cannot find the notice.

The contact person listed on the notice or other

representative will answer your questions and

attempt to resolve your tax problem. You also may

ask the representative’s manager to review your

case. If the matter is still unresolved, the manager

can explain your rights to appeal to the IRS Office

of Appeals.

Levies A levy is a legal seizure of your property to

satisfy a tax debt. Levies are different from liens.

A lien is a claim used as security for the tax debt,

while a levy actually takes the property to satisfy

the tax debt.

If you do not pay your taxes (or make arrange-

ments to settle your debt):

● we could seize and sell property that you hold

(such as your car, boat, or house), or

● we could levy property that is yours but is

held by someone else (such as your wages,

retirement accounts, dividends, bank accounts,

rental income, accounts receivables, the cash

value of your life insurance, or commissions).

We usually levy only when the following three

conditions have occurred:

● we assessed the tax and sent you a Notice and

Demand for Payment,

● you neglected or refused to pay the tax, and

● we sent you a Final Notice of Intent to Levy and

Notice of Your Right to A Hearing (levy notice)

at least 30 days before the levy. We usually

send this notice to your last known address

by certified mail, return receipt requested, but

we may give this notice to you in person, or

leave it at your home or your usual place of

business. Please note: If we levy your state tax

refund, we may send you a Notice of Levy on

Your State Tax Refund - Notice of Your Right to

Hearing after the levy.

Appealing a levy You may request a CDP hearing with the Office

of Appeals by sending a request for a CDP hearing

to the address shown on your notice. You must

file your request within 30 days of the date on

your notice. Refer to Form 12153, Request for

a Collection Due Process or Equivalent Hearing,

for more information about filing a hearing request

and for a list issues you may wish to discuss at

your CDP hearing.

At the conclusion of your hearing, the Office

of Appeals will issue a determination. You will

have 30 days after the date of the determination

to seek review of the determination by the United

States Tax Court. In addition, you may appeal

a proposed or actual levy under the Collection

Appeal Program if CDP rights are not available.


for more information.

If your property is levied or seized, call the

number on the notice informing you that a levy or

seizure has occurred, or 1-800-829-1040 if you

cannot find the notice. The contact person listed

on the notice or other representative will answer

your questions and attempt to resolve your tax

problem. You also may ask the representative’s

manager to review your case. If the matter is still

unresolved, the manager can explain your rights to

appeal to the IRS Office of Appeals.

Levying your wages, or your bank account

A levy on your wages, salary, commissions, or

other payments for personal services does not

need to be served each time you are paid. Once

we serve a levy, the levy continues until your tax

debt is paid in full or other arrangements are made

to satisfy the debt, or the time period for collecting

expires.

If we place a levy on your bank account, the

levy attaches deposits that have cleared and funds

that are available for withdrawal when the levy is

received, up to the amount of the levy. The bank

must wait until 21 days after a levy is received

before sending the money. The holding period

allows you time to resolve any dispute about

account ownership. After 21 days, the bank must

send the money, plus, if applicable, any interest

earned on that amount.

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Filing a wrongful levy claim If your property has been levied to collect a tax

for which you are not liable, you may be entitled to

the return of the wrongfully levied property by filing

a claim pursuant to Internal Revenue Code (IRC)

section 6343(b). Instead of filing a claim with us,

you may file a suit for wrongful levy pursuant to

IRC section 7426. See Publication 4528, Making

an Administrative Wrongful Levy Claim under

Internal Revenue Code (IRC) Section 6343(b), for

more information.

For example, you may file an administrative

wrongful levy claim for a return of your share of

levied property if you are a non-liable spouse

and we levy a state income tax refund or a bank

account belonging to you and your liable spouse.

However, if you are a resident of, or if the property

is located in, a state with community property laws,

different rules will apply that may limit or eliminate

your claim. If you believe that you qualify, call the

number on the notice that informs you that a levy

has occured, or call 1-800-829-1040 if you

cannot find the notice.

Filing a claim for reimbursement when we made a mistake in levying your account

If you paid bank charges because of a

mistake we made when we levied your account,

you may be entitled to a reimbursement. To be

reimbursed, you must file a claim with us within

1 year after your bank charged you the fee. Use

Form 8546, Claim for Reimbursement of Bank

Charges Incurred Due to Erroneous Service Levy

or Misplaced Payment Check.

Levying your federal payments through the Federal Payment Levy Program

The following is a list of federal payments you

may receive that we can levy under the Federal

Payment Levy Program in order to pay your tax

debt.

● Federal retirement annuity income from the

Office of Personnel Management,

● Social Security benefits under Title II of the

Social Security Act (OASDI),

● Federal contractor/vendor payments, or

● Federal employee salary and travel payments.

This program electronically levies these federal

payments from the Department of the Treasury,

Financial Management Service. If we electronically

levy your federal payments, the levy will take 15%

(or the exact amount of taxes owed if less than

15%). For defense contractor payments, however,

the levy will take 100% (or the exact amount of

taxes owed). The levy will be continuous until your

tax debt is paid in full, other arrangements are

made to satisfy the debt, or in most instances, the

time period for collecting the tax expires.

If you are already working with an IRS

employee, call that employee for assistance. If you

are not working with an IRS employee and:

● you receive federal contractor/vendor

payments, please call 1-800-829-3903 for

assistance, or

● you receive any other federal payment, please

call 1-800-829-7650 for assistance.

Releasing a levy In general, we must release a levy if :

● you pay the tax, penalty, and interest you owe,

● we discover that the time period for collection

ended before the levy was served,

● we levied before we sent you the two required

pre-levy notices or before your time for

responding to them has passed (10 days for

the Notice and Demand for Payment; 30 days

for the Notice of Intent to Levy and the Notice

of Right to Hearing),

● the automatic stay during your bankruptcy is

in effect,

● the levy is on property that we are not allowed

to levy,

● we levy while the IRS is considering your

offer in compromise or installment agreement

request,

● we levy while the IRS Office of Appeals is

considering your appeal of our rejection of your

offer in compromise or installment agreement

request,

● we levy while you have an accepted periodic

payment offer in compromise or installment

agreement in effect,

● we levy while the IRS Office of Appeals is

considering your appeal of our termination of

your installment agreement.

● we levy while the IRS Office of Appeals

is conducting your timely requested CDP

hearing under IRC 6330 or during the United

States Tax Court review of the CDP determi-

nation (unless the Court has issued an order

permitting the levy),

We will release a levy if:

● we determine that the levy is creating an

economic hardship for you,

● we determine the fair market value of the

property exceeds the liability for which the levy

was made, and release of the levy on part of

the property can be made without hindering the

collection of the liability, or

● we determine the expense of selling

your property would be greater than the

Government’s interest in the property.

We may also release a levy if we determine

that releasing the levy will help us collect the tax.

In general, releasing a levy will help us collect the

tax if:

● you pay the amount of the Government’s

interest in the property,

● you enter into an escrow arrangement,

● you furnish an acceptable bond,

● you enter into an installment agreement (unless

the agreement says the levy does not have

to be released), or you make some other

acceptable agreement for paying the tax, or

● you agree to extend the 10-year period we

have to collect your tax (but you must agree

before the time period ends).

Returning levied property If you request the return of levied property

within nine months from the date of the levy, we

may consider returning the property if:

● at the time the levy was served, there existed

one of the conditions requiring us to release

the levy,

● we did not follow proper procedures,

● we agree to let you pay in installments, but we

still levy, and the agreement does not say that

we can do so,

● returning the property will help you pay your

taxes, or

● returning the property is in both your best

interest (as determined by the National

Taxpayer Advocate) and the Government’s best

interest.

If we decide to return your property but the

property has already been sold, we will give you

the amount of the money we received from the

sale. ● we levy while we, or the IRS Office of Appeals,

considers your timely request for innocent

spouse relief or during the timely requested

review by the Tax Court. Selling your property

9

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Especially for employers

Employment taxes are:

the amount you must withhold from your

employees for both income and Social

Security/Medicare tax, plus

the amount of Social Security/Medicare

tax you pay on behalf of each employee.

●

●

If you ignore the Federal tax deposit and filing require-ments, the amount you owe can increase drastically.

If you do not pay your employment taxes

on time, or you did not include the required

payment with your return, we will charge

you interest and penalties on any unpaid

balance. We may charge you penalties of

up to 15% of the amount not deposited,

depending on how many days late you are.

If you do not pay withheld trust fund

taxes, we may take additional collection

action. We may require you to:

file and pay your taxes monthly rather

than quarterly, and/or

open a special bank account for the

withheld amounts.

See Form 8109, Federal Tax Deposit

Coupon and Publication 15, Circular E,

Employer’s Tax Guide.

If we require you to create a separate

bank account for the employment taxes and

you fail to deposit your taxes in the account,

you may be subject to criminal prosecution.

We may charge you criminal penalties such

as a fine up to $100,000.00 and up to

one year in jail upon conviction.

See Publication 535, Business

Expenses, for information on how to deduct

interest paid as a business deduction.

●

●

We will give a public notice of a pending sale,

usually in local newspapers or by posting flyers in

the local post office or other public places. We will

deliver the original notice of sale to you or send it

to you by certified mail to your last known address.

After giving public notice of the sale, we must

wait at least ten days before conducting the sale,

unless the property is perishable and must be sold

immediately.

Before the sale, we will compute a minimum bid price and give you notice of our computation.

This bid price is usually 80% or more of the

forced sale value of the property, after subtracting

the value of the property secured by liens senior to

the tax lien.

If you disagree with this price, you may ask that

the price be computed again by either the IRS or a

private appraiser (at your expense).

You may also ask that we sell the seized

property within 60 days after the levy. For infor-

mation about how to do so, call the IRS employee

who made the seizure at the number listed on the

notice that informs you that the levy has occurred.

We will grant your request, unless it is in the

Government’s best interest to hold the property for

a later sale. We will send you a letter telling you of

our decision on your request.

After the sale, we first use the proceeds to pay

the expenses of the levy and sale. Then we use

any remaining amount to pay the tax bill.

● If the proceeds of the sale are less than the total of the tax bill and the expenses of levy and sale, you will still have to pay the

unpaid tax.

● If the proceeds of the sale are more than the total of the tax bill and the expenses of the levy and sale, we will notify you about

the surplus money and will tell you how to ask

for a refund. However, if someone, such as a

mortgagee or other lien holder, makes a claim

that is superior to yours, we will pay that claim

before we refund any money to you.

Redeeming your real estate You (or anyone with an interest in the property)

may redeem your real estate within 180 days after

the sale. You must pay the purchaser the amount

paid for the property, plus interest at 20% annually.

Filing a claim for damages caused by unauthorized collection

If we intentionally, recklessly, or negligently

disregard the Internal Revenue laws in connection

with the collection of your taxes or, if you are

not the taxpayer in connection with a wrongful

levy, you may be entitled to recover economic

damages. Some limitations may apply. You must

file an administrative claim with the IRS Technical

Services Advisory Group assigned to your state,

area or county. Mail your written claim to the

attention of the Advisory Group Manager at the

address listed in Publication 4235, Technical

Services (Advisory) Group Addresses. If the claim

is denied, you can sue the Federal Government,

not IRS employees, to recover economic

damages.

Summons A summons is an investigatory tool, similar to

a subpoena, that will compel you or a third party

to provide information, documents or testimony

that will enable us to determine or collect your tax

liability.

Taxpayer Summons We may serve a summons on you, as the

person responsible for the tax liability, to:

● compel testimony,

● bring in books and records to prepare a tax

return, or

● bring in documents and records to assist us in

preparing a Form 433, Collection Information

Statement.

Third-Party Summons In some cases, a third-party summons is

issued. Some examples of who could be issued a

third-party summons include:

● financial institutions,

● third-party record keepers,

● persons who are not available to cooperate on

an informal request, or

● any person with information that may be

relevant to your case.

IRC section 7609 authorizes the Service to

issue a third-party summons. If you are entitled

to notice:

● you will be given notice, usually by mail, within

3 days after the the summons is served,

● you have the legal right to file a petition to

quash the summons or to intervene in a suit to

enforce a summons to which the third party

failed to respond,

● you may file a petition to quash. If you choose

to file one, you must do so within 20 days after

notice is given (if notice was given by mail, the

petition to quash must be filed within 20 days

after notice of the summons was mailed), and

● the Service will not examine the summoned

10

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information or take summoned testimony until

23 days after the day notice was given.

You are not, however, entitled to notice of a

third-party summons we issue solely to aid in the

collection of an assessed liability or judgment. If

your liability is assessed and we issue a third-

party summons as part of our effort to collect that

assessed liability, you will not be given notice of

that summons, nor will you be allowed to file a

motion to quash or intervene in a suit to enforce

the summons.

Summons about a Trust Fund Recovery Penalty

Summonses are frequently served to enable

the Service to determine which individuals are

responsible for a trust fund recovery penalty.

Additional information on the trust fund recovery

penalty is provided in this publication.

Enforcement of Summons Failure or neglect to appear before the Service

after a summons is issued may result in further

legal actions against you. These actions may

include an enforcement suit, a contempt hearing,

and a contempt order.

If you are unable to appear before the Service

on the appointed day and time listed on your

summons, it is imperative that you contact the

office/individual issuing the summons. The phone

number and address will be on the summons.

Collection of Employment Taxes To encourage prompt payment of withheld

employment taxes and collected excise taxes,

Congress passed a law that provides for the

Trust Fund Recovery Penalty. (These taxes are

called Trust Fund taxes because the employer

actually holds the employee’s withheld taxes or the

collected excise taxes in trust until the employer

makes a federal tax deposit in the amount of the

withheld or collected taxes.)

If we plan to assess you for the trust fund

recovery penalty, we will send you a letter stating

that you are a responsible person. You have 10

days after we send our letter to tell us why you

disagree and 60 days after we send our letter to

appeal our proposed assessment to the IRS Office

of Appeals. If you do not respond to our letter, we

will assess the penalty against you and send you a

Notice and Demand for Payment. We may assess

this penalty against a responsible person whether

or not the company is still in business.

A responsible person is an individual or group

of people (there may be more than one respon-

sible person) who had the duty to perform and the

power to direct the collection and payment of trust

fund taxes. A responsible person may be:

● an officer or an employee of a corporation,

● a member or employee of a partnership,

● a corporate director or shareholder,

● a member of a board of directors of a nonprofit

organization, or

● another person with authority and power to

direct the disbursement of funds.

Assessing the Trust Fund Recovery Penalty

We may assess the penalty against anyone:

● who is responsible for collecting and paying

withheld income and employment taxes, or foforr

paying collected excise taxes, and

● who willfully fails to collect and pay them.

Willfulness exists if the responsible person:

● knew about the unpaid taxes, and

● used the withheld or collected funds to keep

the business going, allowed available funds to

be paid to other creditors other than the IRS,

or otherwise failed to pay over the taxes to the

IRS.

In addition to these civil penalties and remedies,

there are possible criminal ones, as well.

Figuring the Penalty Amount The amount of the penalty is equal to the

unpaid balance of the trust fund taxes. The penalty

is computed based on:

● the unpaid income taxes that should have been

withheld, or were withheld but not paid over,

plus

● the employee’s portion of the Social Security/

Medicare taxes that should have been withheld,

or were withheld but not paid over.

For collected excise taxes, the penalty is based

on the unpaid amount of collected excise taxes.

Once we assert the penalty, we

may take collection action against

your personal assets if you do not

pay the penalty after being sent

a Notice of Tax Due and Demand

for Payment. For instance, we

may file a Notice of Federal Tax

Lien against you, if you are a

responsible person.

Some property cannot be levied

By law, some property cannot be

levied or seized. We may not levy any of

your property unless we have determined

that we expect there to be net proceeds

to apply to the liability. In addition, we

may not levy your property on the day you

attend a collection interview in response

to a summons.

Other items we may not levy include:

● School books and certain clothing,

● Fuel, provisions, furniture, and personal

effects for a household totaling

$7,720,*

● Books and tools you use in your

trade, business, or profession, totaling

$3,860,*

● Unemployment benefits,

● Undelivered mail,

● Certain annuity and pension benefits,

● Certain service-connected disability

payments,

● Workers compensation,

● Salary, wages, or income included in

a judgment for court-ordered child

support payments,

● Certain public assistance payments, or

● A minimum weekly exemption for

wages, salary, and other income.

Use Publication 1494, Tables for

Figuring Amount Exempt from Levy on

Wages, Salary, and Other Income—

Forms 668-W(c) and 668-W(c)(DO), to

determine the amount of earned income

exempt from levy.

*These amounts are indexed annually

for inflation (these amounts are for

calendar year 2007).

Appealing the Decision You have the right to appeal a proposed

assessment of the Trust Fund Recovery Penalty.

See Publication 5, Your Appeal Rights and How to

Prepare a Protest if You Don’t Agree.

11

NAEA

Referral to a Private Collection Agency

To assist IRS in collecting unpaid taxes, the IRS

has entered into contracts with Private Collection

Agencies (PCAs). Your account may be assigned

to a PCA for resolution. The PCA has been

authorized by the IRS to assist you in making

full payment of the amount you owe. If you are

unable to pay the outstanding balance in full, the

PCA may establish an installment agreement for

you within IRS guidelines.

If your account is assigned to a PCA, the IRS

will send you a letter with the PCA contact infor-

mation. The PCA will also send you a letter. If you

are contacted by one of these agencies, they will:

● assist you in resolving payment of your tax

liability on behalf of the IRS,

● advise you of outstanding tax balances or

unfiled tax returns, and

● provide you with assistance for resolution of

these issues.

PCAs are not authorized to abate or adjust

tax, penalty, or interest owed, enter into Offers in

Compromise, or make other judgment decisions

regarding your account. This includes the filing

of federal tax liens, serving levies, or other actions

described in this publication. However, the IRS still

has the authority to take these types of actions to

collect an overdue account.

Your privacy will be fully maintained. Confiden-

tiality requirements and restrictions required by law

will be strictly enforced. To protect your privacy,

this means the PCA must verify your identity by

asking for certain personal information before

discussing your account. If unable to complete this

verification, the PCA may refer your account to the

IRS for further information or assistance necessary

to verify your identity.

Please refer to Publication 4518, What You

Can Expect When the IRS Assigns Your Account to

a Private Collection Agency, for more information.

If you do not wish to work with your assigned PCA

to settle your overdue account, you must submit

your request to that effect in writing to the PCA.

We offer you a number of free publications and forms

The IRS forms, notices, and publications

mentioned in this document give you more

information about the various situations

discussed. For copies of these documents,

call us at 1-800-TAX-FORM (1-800-829-

3676), write to us, visit the IRS office, or

visit our website at www.irs.gov. Additionally,

your local library may have some of these

publications and forms available.

12

NAEA

You may appeal many IRS collection actions to the IRS Offi ce of Appeals (Appeals). The two main procedures areCollection Due Process and Collection Appeals Program. Other procedures are described on page four of thispublication.

Collection Due Process (CDP) is available if you receive one of the following notices:

• Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320.• Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing.• Notice of Jeopardy Levy and Right of Appeal.• Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing.

Collection Appeals Program (CAP) is available for the following actions:

• Before or after the IRS fi les a Notice of Federal Tax Lien.• Before or after the IRS levies or seizes your property.• Termination of an installment agreement.• Rejection of an installment agreement.

CAP is generally quicker and is available for a broader range of collection actions. However, you can’t go to court if youdisagree with the CAP decision. CAP procedures are described on pages three and four of this publication.

You may represent yourself at CDP, CAP and other Appeals proceedings. Or, you may be represented by an attorney, certifi ed public accountant, or a person enrolled to practice before the IRS. Also, you may be represented by a member of your immediate family, or in the case of a business, by regular full-time employees, general partners or bona fi de offi cers.

A Low Income Tax Clinic may represent you if you qualify. A Low Income Tax Clinic is an independent organization that provides low income taxpayers with representation in federal tax controversies with the IRS for free or a nominal charge.Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area and is available at your local IRS offi ce, by calling 1-800-829-3676, or from www.IRS.gov.

If you want your representative to appear without you and to receive and inspect confi dential material, you must fi lea properly completed Form 2848, Power of Attorney and Declaration of Representative. You may also authorize anindividual to receive or inspect confi dential material but not represent you before the IRS, by fi ling a Form 8821, TaxInformation Authorization. These forms are available at your local IRS offi ce, by calling 1-800-829-3676, or fromwww.IRS.gov.

Collection Appeal Rights

HEARING AVAILABLE UNDER COLLECTION DUE PROCESS (CDP)For Lien and Levy Notices

By law, you have the right to a CDP hearing by Appeals for these collection actions:

• The fi rst time a Notice of Federal Tax Lien is fi led for a tax and period.• Before the fi rst levy on your property for a tax and period.• After levy on your state refund.• After levy when collection is in jeopardy.

You may contest the CDP determination in the United States Tax Court.

Lien Notice: The IRS is required to notify you the fi rst time a Notice of Federal Tax Lien is fi led for each taxand period. The IRS must notify you within 5 businessdays after the lien fi ling. This notice may be mailed,

given to you, or left at your home or offi ce. You then have 30 days, after that 5-day period, to request ahearing with Appeals. The lien notice you receive willindicate the date this 30-day period expires.

Levy Notice: For each tax and period, the IRS isrequired to notify you the fi rst time it intends tocollect a tax liability by taking your property or rightsto property. The IRS does this by issuing you a levynotice. The IRS can’t levy or seize your property within30 days from the date this notice is mailed, given toyou, or left at your home or offi ce. During that 30-dayperiod, you may request a hearing with Appeals. Thereare two exceptions to issuing this notice before levy:

(1) When collection of the tax is in jeopardy. (2) When IRS levies your state tax refund.

NAEA

You may request a hearing after the levy action in both of these instances.

If your request for a CDP hearing is not timely, you mayrequest an equivalent hearing. To receive an equivalent hearing, your request must be postmarked on or before theend of the one-year period after the date of the levy noticeor on or before the end of the one-year period plus fi vebusiness days after the fi ling date of the Notice of FederalTax Lien.

How do you request a CDP or equivalent hearing withthe Offi ce of Appeals?

Complete Form 12153, Request for a CollectionDue Process or Equivalent Hearing, or other writtenrequest with the same information and send it to theaddress shown on your lien or levy notice. To request an equivalent hearing, you must check the EquivalentHearing box on line 6 of Form 12153 or if you don’t useForm 12513 write that you want an equivalent hearingif the CDP hearing request is late. If you received botha lien and a levy notice, you may appeal both actions bychecking the boxes on line 5 of Form 12153 or if youdon’t use Form 12153 you may appeal both actions in onewritten request. You must identify your alternatives to,or your reasons for disagreeing with, the lien fi ling or the levy action. Alternatives or reasons for disagreeing mayinclude:

• Collection alternatives such as installment agreement or offer in compromise.

• Subordination or discharge of lien.• Withdrawal of Notice of Federal Tax Lien.• Appropriate spousal defenses.• The existence or amount of the tax, but only if

you did not receive a notice of defi ciency or did not otherwise have an opportunity to dispute the tax liability.

You may not raise an issue that was raised and considered at a prior administrative or judicial hearing,if you participated meaningfully in the prior hearing or proceeding.

Form 12153 is available at your local IRS Offi ce, bycalling 1-800-829-3676, or from www.IRS.gov. Includea copy of your lien and/or levy notice. List all taxes andtax periods for which you are requesting a hearing. You are entitled to only one hearing relating to a lien noticeand one hearing relating to a levy notice, for each taxableperiod. In general, the IRS will deny a hearing request thatmakes arguments identifi ed by the IRS as frivolous or that is made to delay collection.

To preserve your right to go to court, you must request aCDP hearing within the time period provided by law. Your request for a CDP hearing must be sent to the address onthe lien or levy notice and postmarked on or before thedate shown in the lien notice or on or before the 30th dayafter the date of the levy notice.

Before you formally appeal a lien or levy notice bysending us Form 12153, you may be able to work out asolution with the Collection offi ce that sent the notice. To do so, call the telephone number on the lien or levy noticeand explain to the IRS employee listed on the notice or other representative why you disagree with the action. If atelephone number is not shown on the notice, you can call1-800-829-1040. This contact, however, does NOT extend the 30-day period to make a written request for a CDP hearing.

What will happen when you request a CDP or equivalent hearing with the Offi ce of Appeals?

After you request a hearing, you may still discuss your concerns with the Collection offi ce that sent the lien or levy notice. If you are able to resolve the issues with thatoffi ce, you may withdraw your request for a hearing. If you are unable to, or do not care to, resolve the issueswith the Collection offi ce, your case will be forwarded immediately to Appeals.

Appeals will contact you to schedule a conference.Your hearing will consist of an in-person or telephone conference and one or more written or oralcommunications.

Unless the IRS has reason to believe that collection of the tax is in jeopardy, levy action is not permitted for thesubject tax and periods during the 30 days after the levynotice and during the timely-requested CDP hearing.Normally, there will be no levy action during the periodyou have to request a hearing from a lien notice and during the CDP hearing.

If your request for a CDP hearing is timely, the 10-year period the IRS has to collect your taxes will be suspended until the date the determination becomes fi nal or youwithdraw your request for a hearing in writing.

At the conclusion of the CDP hearing, Appeals will issuea determination letter. If you don’t agree with Appeals’determination, you may request judicial review of thedetermination by petitioning the United States Tax Court on or before the 30 th day after the date of Appeals’ determination.

Appeals will retain jurisdiction over its determination. You may return to Appeals if you believe that theCollection function did not carry out Appeals’determination as it was stated or if there is a change inyour circumstances that affects Appeals’ determination.However, you must fi rst try to work with Collection toresolve the problem.

If your request for a CDP hearing is not timely and yourequest an equivalent hearing, the law does not require thesuspension of collection action. Furthermore, you cannotgo to court if you disagree with Appeals’ decision.

NAEA

The CAP procedure is available under morecircumstances than Collection Due Process (CDP).Unlike CDP, you may not challenge in CAP the existenceor amount of your tax liability. You also cannot proceed to court if you don’t agree with Appeals’ decision in your CAP case. Collection actions you may appeal under CAP are:

Notice of Federal Tax Lien. You may appeal theproposed fi ling of a Notice of Federal Tax Lien (NFTL) or the actual fi ling of an NFTL. You are entitled to a CDP hearing after the fi rst fi ling of anNFTL. See the preceding information regardingHearing Available under Collection Due Process.You may also appeal denied requests to withdraw anNFTL, and denied discharges, subordinations, and non-attachments of a lien.

Notice of Levy. You may appeal before or after the IRS places a levy on your wages, bank account or other property. You may also have additionalCollection Due Process appeal rights. See thepreceding information regarding Hearing Availableunder Collection Due Process. You may also appealthe denial by the IRS of your request to have levied property returned to you.

Seizure of Property. You may appeal before or after the IRS makes a seizure.

Rejection or Termination of Installment Agreement. You may appeal when the IRS rejectsyour request for an installment agreement. You may also appeal when the IRS proposes to terminate or terminates your installment agreement.

How do you appeal a lien or levy action if your onlycollection contact has been a notice or telephonecall?

1. Call the IRS at the telephone number shown onyour notice. Be prepared to explain which action(s)you disagree with and why you disagree. You must also offer a solution to your tax problem.

2. If you can’t reach an agreement with the employee,tell the employee that you want to appeal his or her

For Liens, Levies, Seizures and Installment Agreements

decision. The employee must honor your request and will refer you to a manager. The manager will either speak with you then or will return your call within 24hours.

3. Explain to the manager which action(s) youdisagree with and why. The manager will makea decision on the case. If you don’t agree with themanager’s decision, your case will be forwarded to Appeals for review. You do not have to submit theappeal request in writing.

How do you appeal a lien, levy or seizure action if youhave been contacted by a Revenue Offi cer

1. If you disagree with the decision of the Revenue Offi cer, you must fi rst request a conference with theCollection manager.

2. If you do not resolve your disagreement with the Collection manager, you may submit a written request for Appeals consideration, preferably by completingForm 9423, Collection Appeal Request. This form isavailable at your local IRS offi ce, by calling 1-800-829-3676, or from www.IRS.gov. Check the action(s)you disagree with and explain why you disagree. You must also offer a solution to resolve your tax problem.

3. Submit the Form 9423 to that Collection offi ce.4. If you request an appeal after the IRS makes a seizure,

you must appeal to the Collection manager within 10business days after the Notice of Seizure is given toyou or left at your home or business.

5. Your request for an appeal of a lien, levy or seizuremust be postmarked on or before 2 days after the dateof your conference with the Collection manager, or theIRS will resume collection action.

How do you appeal the rejection of a proposed installment agreement?

1. Call the telephone number shown on the letter rejectingyour proposed installment agreement and explain thatyou want to appeal the rejection. Your appeal need not be in writing unless the rejection letter was sent bya Revenue Offi cer, in which case your request for anappeal must be in writing, preferably using Form 9423. You need not have a conference with a Collectionmanager before appealing the rejection of a proposedinstallment agreement.

HEARING AVAILABLE UNDER COLLECTION APPEALS PROGRAM (CAP)

NAEA

2. Your request for an appeal of the rejection of aproposed installment agreement must be made on or before the 30th day after the date of the rejection letter (the mailing of a written request, including a Form9423, must be postmarked on or before such day).

How do you appeal the termination of an installment agreement?

1. Call the telephone number shown on the notice thatindicates that the IRS intends to terminate your installment agreement. If you are unable to resolvethe matter, then explain that you want to appeal thetermination. Your appeal need not be in writing unlessthe notice of intent to terminate your installmentagreement was sent by a Revenue Offi cer, in whichcase your request for an appeal must be in writing,preferably using Form 9423. You need not have aconference with a Collection manager before appealingthe termination of an installment agreement.

2. You will have 76 days from the date of the noticeof intent to terminate in which to request an appeal. Unless you appeal within 30 days after the date of the notice, or cure your default of the installmentagreement, the installment agreement will terminateautomatically on the 46th day after the date of thenotice. After the 46th day, and the termination of your agreement, your right to appeal will continue for 30more days. Accordingly, your request must be madeon or before the 76th day after the date of the noticeof intent to terminate (the mailing of a written request,including a Form 9423, must be postmarked on or before such 76th day). You are only entitled to fi le one appeal during the 76-day period.

What will happen when you appeal your case?

Lien, Levy and Seizure: Normally, the IRS willstop collection action on the tax periods Appeals is considering, unless the IRS believes the collection of thetax is at risk.

Installment Agreements: IMPORTANT - The IRS can’t levy until 30 days after the rejection or termination of your agreement. If you appeal within the 30-day period,the IRS will be prohibited from levying until your appealis completed.

Once Appeals makes a decision regarding your case, thatdecision is binding on both you and the IRS. You cannot obtain judicial review of Appeals’ decision following aCAP hearing.

Note: Providing false information, failure to provide allpertinent information or fraud will void Appeals’ decision.

APPEAL OF OTHER COLLECTIONACTIONS

You may also appeal other collection actions: • Rejected Offer in Compromise. • Proposed Trust Fund Recovery Penalty. • Denied request to abate penalties (i.e., late payment, late fi ling, or deposit penalties).

To dispute a penalty in Appeals, follow the protest requirements in Publication 5, Your Appeal Rights and How To Prepare A Protest If You Don’t Agree. Also, thecorrespondence you receive on these types of cases willexplain where you should send your protest.

IRSDepartment of the TreasuryInternal Revenue Service

Publication 1660 (Rev. 03-2007)Catalog Number 14376Z

www.irs.gov

If you are experiencing economic harm or are seekinghelp in resolving a tax problem that has not beenresolved through normal channels or believe an IRSsystem or procedure is not working as it should, youmay be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TTD1-800-829-4059. TAS cannot extend the time you haveto request a CDP, equivalent or CAP hearing. The timeframes for requesting these hearings are explainedin this publication.

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