Tax Notes logo

Fair Tax Collection Practices – How Does 6304 Impact the Timing of Letters to Taxpayers and Their Representatives?

Posted on May 4, 2016

Usually, we write about cases or other tax procedure items we see reported elsewhere.  Today, I write about a notice I received on a case in the clinic.  The timing of the correspondence sending the notice to me bothers me from a couple of perspectives.  In a post about Godfrey v. Commissioner, I discussed the impact of sending a represented taxpayer a notice of intent to levy and not sending a copy of that notice to the representative as required by IRS administrative rules in the manual and by IRC 6304 which sets out the Fair Tax Collection Practices provisions.

In the recent case in my office the IRS action involved a twist on the circumstances in Godfrey.  The IRS did send a copy of the Notice of Federal Tax Lien Filing to me as the representative but sent that letter nine days after sending the letter to my client giving notice of the filing.  In the context of the need to exercise Collection Due Process (CDP) rights with 30 days, nine days is a significant number.  That number is magnified by the number of days it takes for mail delivery.  I received the letter fifteen days after the date on the letter to my client.  I realize that the date on the letter to my client does not mean that the IRS actually mailed the letter on that date.  The date on IRS correspondence and the date of mailing do not always match.  Still, getting the letter fifteen days after the date of the letter to my client for a letter that has a short fuse puts undo pressure on getting the CDP request filed timely.  As a student run clinic, our ability to move quickly may not equal the ability of offices where the workers are full time which makes the delay one that concerns me more than it may concern others.

What is the duty of the IRS in collection cases to inform representatives?  The pertinent part of the statute is 6304(a)(2) which provides that if the IRS “may not communicate with a taxpayer in connection with the collection of any unpaid tax… if [it]knows the taxpayer is represented [by a person authorized to do so].”  The sending of the notice of filing a federal tax lien which triggers CDP rights seems like it is communication in connection with the collection of unpaid taxes.  The IRS in its regulations concerning the trigger for the innocent spouse time to request relief takes the position that filing the notice of federal tax lien is not collection activity; however, I do not think that transforms the CDP notice here into something other than a communication in connection with collection.   If the CDP notice is a communication in connection with collection, how does the IRS justify sending out the notice to the representative later than it sends the notice to the taxpayer?

Because of the requirement of the statute to give the taxpayer the CDP notice, I understand sending the taxpayer the CDP notice and do not intend to suggest that the language of IRC 6304 removes the requirement to do so.  At the same time, I think that language requires that the notice to the representative not occur later and certainly not nine days later than the notice to the represented party regarding a process that only lasts 30 days.  The right that IRC 6304 seeks to protect requires that the representative have the opportunity to protect the client to the fullest extent.  That right loses force where the time within which the representative can operate is less than the time provided by the statute.  The IRS should send the notice to the representative at the same time it sends the notice to the taxpayer and should afford both the opportunity to fully participate in the CDP process.  Failing to send the notice, as in Godfrey, or delaying significantly in sending the notice, as happened to me, denies or severely impinges on this right.  If the notice sent to me represents the normal time frame for sending out a notice to a representative in the notice of federal tax lien CDP context, the IRS should adjust its practices to conform to a practice that I think IRC 6304 requires.  If the delay in sending me the notice represents an aberration, then perhaps my concerns are overstated.  I have not observed the same problem in CDP notices concerning levy but will watch closer after this experience.

The one bright spot here is that we submitted an offer in compromise shortly before the IRS filed the filed the notice of federal tax lien.  The CDP notice will allow us to proceed on the offer in the context of a CDP case.  I much prefer to make offers in the CDP context because of the opportunity for Tax Court review in the event of rejection of the offer.  That aspect of the case is a positive development despite the timing of the sending of the CDP notice to me as a representative.

Copy RID