The IRS recently released a program manager technical assistant (PMTA) memo entitled Treatment of Incorrectly-addressed CDP Hearing Requests. This memo reverses the advice of a similar memo written in 2013. The issue concerns the fate of taxpayers seeking to obtain a Collection Due Process (CDP) hearing who timely mail their CDP hearing request to what the IRS considers to be the wrong office. In the 2013 advice the IRS took the position that if the “wrong” IRS office got the request to the “right” IRS office before the end of the CDP request period (which differs slightly depending on whether it is a lien or levy case but in both instances is a short window of approximately 30 days from the date the IRS sends the notice), then the taxpayer could have a CDP hearing. If, however, the wrong office did not get the notice to the right office within the 30-day period, the taxpayer lost the right to have a CDP hearing and would receive only an equivalent hearing.
I wrote an article about this issue in Tax Notes in November of 2018 available here. The article builds on the work of the tax clinic at Harvard concerning jurisdiction and explains that the 30-day time period to request a CDP hearing is not a jurisdictional time period. We discussed this issue previously here, here and here. In the PMTA the IRS essentially agrees with the conclusion that the notice need not be received in the “right” IRS office within the 30-day window, though the PMTA does not address the issue using jurisdictional language in the portion of the PMTA made available to the public. Perhaps the IRS is concerned that taxpayers might litigate about this issue. Imagine.
One of the biggest hurdles facing taxpayers seeking a CDP hearing is the CDP notice. Not only is the notice that the IRS sends generally not well-designed to give someone notice of an impending deadline impacting their right to go to court, but the notice provided affirmatively confusing instructions concerning where to send the request for a CDP here. The IRS acknowledged in the PMTA that the notice was not a model of clarity:
This CDP notice can take many forms depending on, for example, the type of collection action (NFTL filing, levy), the issuing component (Automated Collection, Field Collection), and the type of levy (Federal Payment Levy Program, State Income Tax Levy Program). Some notices, like the LT11, serve the dual purpose of informing the taxpayer of their CDP rights and soliciting payment. To facilitate this dual purpose, the notices have one address for submitting the hearing request printed at the top of the first page, and another address for submitting payment printed on a removable payment voucher at the bottom of the first page. These notices are printed double-sided, and the payment address is printed to appear through the cellophane window on the envelope enclosed with the letter. Because the notices are printed double-sided, in addition to appearing on the top of the first page, the mailing address for the CDP hearing request may also be printed on the reverse side of the payment voucher. The payment voucher and CDP hearing request addresses may be the same, but often times they are not. Thus, for this type of notice, the taxpayer can inadvertently mail the CDP hearing request to the payment voucher address simply by inserting the voucher in the envelope backwards. In addition to the LT11, the CP92, CP77/78, and CP90/297 have the payment address printed on one side of the voucher and the mailing address for the CDP hearing request printed on the other side. Other notices, like the Letter 3172, do not solicit payment, but they do have the originating address at the top of the page and the mailing address for a CDP hearing request at the bottom of the page.
So, the IRS suggested giving taxpayers a CDP hearing if the request for the hearing is mailed to the IRS within the appropriate time frame:
Because of the confusion caused by including multiple addresses on current versions of the CDP notices, we recommend that the Service determine timeliness based on the date the request was mailed to the wrong office, so long as the address of the wrong office was shown on the CDP notice (such as the payment voucher address on the LT11 or the originating office on the Letter 3172). This recommendation does not conflict with Treas. Reg. §§ 301.6320-1(c)(2) Q&A-C6 & 301.6330-1(c)(2) Q&A-C6, which state that taxpayers must send the CDP hearing request to “the IRS office and address as directed on the CDP notice.” Any addresses on the notice should be deemed the “address as directed on the CDP notice.” The June 2013 PMTA should no longer be followed.
This change in advice should open up the CDP process for a number of taxpayers who send their request to the wrong place. This is not necessarily the end of the story about timeliness and the CDP request. Certainly, if a taxpayer mails the request late but has a good reason for doing so, the late mailing of the CDP request should not act as an automatic bar to obtaining a CDP hearing. Taxpayers in this situation should look to the arguments regarding jurisdiction and equitable tolling to fine situations in which even a late mailed request could still result in a CDP hearing.
The PMTA is welcome news. The CDP summit work, described in prior posts here and here, deserves credit for engaging the IRS to make improvements in this area. I hope that this is one of many improvements that the IRS can make administratively. I also hope this effort also suggests that the IRS will take a hard look at the CDP notices that it issues and the location for making a CDP request. The notices need significant restructuring to make them more appropriate vehicles for informing taxpayers of their right to a CDP hearing. The current notices place far too much emphasis on seeking payment and too little information on the right to request a hearing. I know that members of the CDP summit would be happy to work with the IRS to help to write more effective notices that protect and preserve taxpayer rights.
Additionally, the IRS could make it much easier to make the request by picking a single point of contact for the nation. It could create a single fax number such as the one used by the CAF unit. It could create a single mailing address. The process of making the request does not need to be complicated. The IRS can move the information around from the single point of contact to the offices that need the information. It does this regularly with Tax Court petitions, powers of attorney and other documents. Doing so would also be consistent with the practices of other federal agencies who have similar types of hearing requests being received.
Kudos to the IRS for taking this step. Let’s work together to keep up the momentum.