Dealing with the IRS is never enjoyable, especially when the IRS is trying to collect unpaid taxes. If you agree that you owe the IRS money, you can either pay the balance in full or make other arrangements with the IRS to settle the unpaid tax bill. But what if you disagree with the IRS’s collection attempts, such as a lien or levy?
One option is to file an appeal. Depending on the nature of your appeal, you may have several options, the two most prominent being the Collection Due Process (CDP) hearing and the Collection Appeals Program (CAP). The following guide will focus on the CAP by providing an overview of what it is, how to use it with Form 9423, and what to expect once you do. If you want to learn more about your right to appeal, contact Wiggam Law to speak with a tax professional.
Key Takeaways
- Collection Appeals Program (CAP) – an appeal option for taxpayers who disagree with an IRS collection action.
- CAP process – contact the IRS about the disagreement, request a manager conference, and file Form 9423 for a final decision.
- CAP vs. Collection Due Process hearing – CAP is faster and available in more situations.
- CAP drawback – judicial review is typically unavailable if the taxpayer disagrees with the Independent Office of Appeals decision.
When To Use the Collection Appeals Program
The CAP process is available in the following situations:
- A proposed or current levy action.
- A proposed or current Notice of Federal Tax Lien.
- The modification, rejection, or termination of an installment agreement.
- The seizure of assets.
- The rejection of a taxpayer or property owner’s request for the return of levied property.
- The rejection of the request for the issuance of lien certificates.
One thing to keep in mind is that there are limits to what you can challenge on appeal. For example, if your reason for appealing is based on moral, religious, political, or philosophical grounds, then the Collection Appeals Program won’t work. Your appeal must be based on grounds relating to the IRS misapplying the law, misinterpreting the law, misunderstanding the facts of the case, or relying on the wrong information to make its decision.
The Differences Between the CAP and a CDP Hearing
One major difference between the CDP and CAP processes relates to timing. Specifically, CAP is usually an option earlier in a collection action, and a CDP Hearing may only be available after the IRS has sent specific collection notices to the taxpayer. As a result, the CAP is often an option in a larger number of collection actions.
Another key difference is that a CAP appeal can pause the IRS’s collection efforts until the appeal is resolved. One reason this is possible is that the IRS will process CAP appeals much faster than a CDP Hearing appeal.
The last major difference is that taxpayers can’t typically seek judicial review if the CAP process doesn’t turn out the way they’d hoped.
How to File a CAP Appeal With the IRS
The exact process for filing a CAP appeal depends on your prior interactions with the IRS and whether your tax case has involved an IRS revenue officer. If the IRS has only contacted you via mail or by phone, and that contact hasn’t involved a revenue officer, then you’ll use the following process:
- Step 1: Identify the basis for your disagreement and gather all relevant information that can support your contentions.
- Step 2: Call the IRS using the telephone number provided on the IRS notice and have your support information nearby.
- Step 3: Discuss your case with the IRS employee by explaining why you disagree with the collection action and that you’re formally appealing it.
- Step 4: If the IRS employee can’t resolve your case to your satisfaction and you want to take the next step in the appeals process, you need to first talk to a Collection Manager. This requirement doesn’t apply if you’re appealing a decision concerning an installment agreement, although it’s still recommended to talk to a Collection Manager whenever possible.
- Step 5: If you disagree with the Collection Manager, you can escalate your appeal by completing IRS Form 9423, Collection Appeals Request.
If you’ve been in contact with an IRS revenue officer during the tax collection process, you’ll follow the same steps listed above with one difference. When calling the IRS, instead of speaking to a random IRS employee, you’ll talk to the revenue officer. If the revenue officer can’t resolve your dispute, then you’ll ask to speak to the Collection Manager in Step 4.
Completing IRS Form 9423
This is the form you’ll use to escalate your appeals to the IRS Independent Office of Appeals. Until you’ve discussed your appeal with the collections department or revenue officer handling your case, the Independent Office of Appeals won’t be involved in your appeal.
If you want the Independent Office of Appeals to get involved, you must act quickly. You have just two business days after the conference with the Collection Manager to inform them of your intent to file Form 9423. The 9423 form must be postmarked within three business days of the Collection Manager conference. If you miss this deadline, the IRS may resume its tax collection efforts.
Filling out Form 9423 is fairly straightforward, but Block 15 is where you explain your reasons for the appeal. One thing to understand is that not only do you need to identify the points of disagreement and the proof you have in support of your arguments, but you also need to propose a solution to resolving the tax problem.
If you’re dealing with a complex tax collection matter, it might not be clear exactly what solution to propose or what information you’ll need to provide to support your arguments. This is where the services of a tax professional experienced in handling IRS collection cases can come in handy.
Where To Send From 9423
After signing this form and swearing that the information provided is true to the best of your belief and knowledge, you’ll submit Form 9423 to the Collection office indicated in the seizure, lien, or levy action paperwork.
What To Expect After Filing Form 9423
Unless the IRS believes you will do something to transfer or hide assets, you can expect the IRS collection activities to temporarily stop until the CAP process ends. During the Collection Manager conference, you can represent yourself or have a tax lawyer or other tax professional represent you.
When the Independent Office of Appeals receives Form 9423, it will discuss the matter with the collection department and/or the revenue officer previously handling your case. If the Independent Office of Appeals receives additional information or comments about the matter, you’ll be contacted to provide a response.
The CAP decision from the Independent Office of Appeals is final and binding on both the IRS and you. Generally speaking, there’s no right to judicial review of the CAP decision. In limited circumstances, judicial or administrative review is possible of specific issues or concerns that arose during the CAP process.
Wiggam Law Can Help With the CAP and Form 9423
One of the nice things about the Collection Appeals Program is that it’s fairly straightforward and quick, at least as far as IRS procedures go. However, you could still probably benefit from talking to a tax pro, especially if you’re dealing with a complicated tax situation or can’t decide whether you need to file an appeal through the CAP or CDP Hearing process.
There might also be other options to consider that you didn’t know about. Whether additional tax guidance is a must or you simply want peace of mind, don’t hesitate to contact Wiggam Law for possible tax matter representation. You can reach us online or by calling (404) 233-9800.
CAP and IRS Form 9423 FAQs
How much time do I have to appeal a property seizure?
If the IRS has taken your property, you must file your appeal with the Collection Manager within 10 business days after the Notice of Seizure has been given to you or left at your home or business address.
What if I can’t schedule a conference with the Collection Manager?
The IRS is supposed to have the Collection Manager or their designee contact you within two business days of your request to set up the conference. If this doesn’t happen, you can either contact the Collection Manager again or skip the conference and submit Form 9423. If you choose this latter option, in Block 15 of the 9423 form, you’ll need to provide the date you requested a conference and explain that the Collection Manager or their designee never got back to you.
Should I use Form 9423 and the CAP if my only issue is that I can’t afford to pay my tax bill?
No, filing an appeal is probably not going to help. Instead, you’ll need to look into other ways of resolving your tax debt, such as Currently Not Collectible (CNC) status, offer in compromise (OIC), penalty abatement, or an installment agreement/payment plan.
Sources
https://www.irs.gov/appeals/preparing-a-request-for-appeals
