Controversy Resolution

To assist you in understanding where your case is in the controversy process, this outline is provided.

I. Conceptual Foundations

  • FIFTH AMENDMENT
  • I.R.S. POSITION

Fifth Amendment to U.S. Constitution

“No person shall be…deprived of life, liberty or property without due process of law

Internal Revenue Service Position

“An exaction by the United States Government, which is not based upon law, statutory or otherwise, is taking property without due process of law, in violation of the Fifth Amendment to the United States Constitution.

II. Administrative Review

(Procedural Due Process)

  • THE AUDIT
  • THE 30-DAY LETTER

II.A. The Audit

Types of Audit

  • Selection for Audit
  • Correspondence of Audit
  • Office Audit
  • Field Audit

Authority of Examinig Revenue Agent

  • Treasury Regulations
  • Revenue Rulings
  • I.R.S. Manual

Review by Examining Agent Supervisor

II.B. Administrative Review

The Administrative 30-Day Letter (Pre-assessment)

The proposed deficiency 30-Day letter

  • Not a statutory notice
  • Several other 30-Day letters

Reasons for receipt of 30-Day letter

  • Disagree with findings of auditor
  • Ignore contact

Content of 30-Day letter

  • Pay proposed deficiency
  • Request conference

Form of response

  • Up to $2,500 of liability – Oral request
  • Over $2,500 of liability – Respond on form
  • Over $10,000 – Formal protest

Mission of Appeals office

  • Resolve controversy without litigation
  • Fair and impartial: two hats
  • Enhance voluntary compliance
  • Generally new issues not raised
  • Hazards of litigation

Jurisdiction of Appeals Office

  • Generally exclusive and final authority
  • Exceptions
    • Docketed cases
    • Religious, political, moral, etc.
    • Criminal fraud
    • Refunds Exceeding $1,000,000
    • Certain Bankruptcy

III. Judicial Review – U.S. Tax Court

  • NOTICE OF DEFICIENCY
  • INNOCENT SPOUSE NOTICE OF DETERMINATION
  • NOTICE OF LIEN
  • NOTICE BEFORE LEVY

Statutory Notices

  • Notice of Deficiency (90-day letter) – § 6112
  • Innocent Spouse Relief (90-day letter) – § 6015
  • Notice of Lien (30-day letter) – § 6320
  • Notice Before Levy (30-day letter) – §6330

Pre-Trial Settlement Opportunities

  • I.R.S. Appeals
  • I.R.S. Chief Counsel’s Office

Small Case Procedure

  • Less formal trial
  • No appeal

IV. The Collections Process

  • PREREQUISITES FOR COLLECTION
  • TIME TABLE
  • ENFORCEMENT ACTION PERMITTED
  • INSTALLMENT AGREEMENTS
  • OFFERS IN COMPROMISE
  • EXEMPTIONS FROM LEVY

Pre-requisites for Collection

  • Assessment of Tax – § 6201
  • Notice and Demand for payment – § 6303
  • Notice of Lien – § 6320
  • Notice before Levy – § 6330

Time Table

  • Notice and Demand
  • 10 Days later enforcement authority
  • Four more notices
  • Notice of Lien
  • Notice before Levy
  • Levy

Enforcement Action Permitted

  • Seizure and Sale of Property
  • Backup withholding
  • Garnishment of wages and other
  • Payments

Installment Agreements

  • Fee often required
  • Suspends collection action

Offers in Compromise

  • Fee required
  • Suspends collection action
  • Doubt as to liability
  • Doubt as to collectibility
  • Effective Tax Administration

Exemption from Levy

  • Unemployment benefits
  • Certain disability benefits
  • Minimum weekly wage exemption
 

V. Taxpayer Advocacy Office

  • EXHAUST REMEDIES
  • RESTRAINT ORDERS

Taxpayer Assistance under (TAO)

  • Significant Hardship
  • Release of Liens

Significant Hardship

  • Exceptional emotional stress
  • Pending eviction
  • Possible loss of job
  • Imminent bankruptcy

Terms of TAO

  • Release of property levied upon
  • Cease any action
  • Refrain from taking any action