Taxpayer rights at an IRS CDP hearing

By | December 6, 2015

The issue of the taxpayer rights at a CDP hearing is very important and, in fact, if you look at Publication 1 now, which contains the Taxpayer Bill of Rights, then you will see that there are a number of rights – I counted five – that are implicated in the CDP proceedings.

  • Right three is the right to pay no more than the correct amount of tax;
  • Right four is the right to challenge the IRS’s position and to be heard;
  • Right five is the right to appeal an IRS decision in an independent forum;
  • Right seven is the right to privacy to make sure an action is no more intrusive than it should be; and
  • Right ten, of course, is the right to a fair and just tax system.


Other Taxpayer Rights

And, as we have said, you know, many of these rights are actually enshrined in statutes. So, if you look at what the appeals officer is required to do in a hearing, section 6630 will tell you, so this is all about taxpayer rights and it is all about, you know, correcting the previous lack of any kind of constraint on the government before it would levy on your property or put liens on your property (before 1998).


Fighting For Taxpayer Rights

So, what does this mean? It means that you have this whole basket of rights, of tools that you can use to help advance your client’s interest properly and so that you have – you can inform your taxpayers, your clients, that they do have these rights. And what is interesting about this is despite these rights, as Jill said at the outset of this, CDP determinations consistently appear in the National Taxpayer Advocate’s Annual Report to Congress as one of the most litigated issues. As you are talking to your taxpayers, remind them that they have rights, but it is also important for you to remember that there are timelines in these cases as well to which you need to adhere as that one case that you discussed showed. It is important, as we see in these cases that all the information be provided, so that the right determination can be made, so if the IRS is requesting information, for instance, documentation of an illness, documentation of a new expense, that that information be provided in a timely manner. You want to make sure that the facts are fully developed and that the correct collection alternative can be requested, but also granted by the appeals officer.


Administrative record and CDP Hearing

The other thing to remember as you are building your administrative record is that only the issues raised during the hearing may be brought up in litigation. Again, we keep referring to this idea of the administrative record, and this is why you want to make sure the administrative record is as complete as it can be. Do your case development before the CDP hearing happens. We talked earlier about making sure that the assessment statute is calculated correctly and the collection statute is calculated correctly. Make sure the notice of intent to levy or Notice of Federal Tax Lien is mailed properly. Determine whether you have defenses with regard to the underlying liabilities. Make sure if you are proposing a collection alternative, you can support the collection alternative