Today we celebrate the 7th anniversary of procedurally taxing. As we have mentioned before, the idea of the blog was the brainchild of Les Book. Les, Steve and I were, and are, working on the treatise “IRS Practice and Procedure” that Les edits. From the work we did keeping that treatise updated we decided to put up occasional posts on the new blog site. From rather modest expectations the blog has grown well beyond our vision of the blog in 2013. Thank you for joining us in talking, writing and thinking about tax procedure and trying to improve the way we navigate the tax system. The blog is approaching 3000 subscribers. Because of tax procedure issues raised by the pandemic, the blog has had many more visits in 2020 than any previous year.
In SBSE-05-0720-0049 the IRS announces changes to IRM 220.127.116.11.2 regarding the receipt of a request for a CDP hearing. The changes result from Chief Counsel technical advice memorandum PMTA-2020-02, dated December 12, 2019. The changes in the IRM take a narrow view of the timeliness of request for a CDP hearing and leave out broader issues of jurisdiction as well as of best practices.
At one point the IRS took the position that in order to timely request a CDP hearing, the taxpayer had to mail the request to the proper address for requesting a CDP hearing as listed in the CDP notice. One of the problems with this position stemmed from the CDP notice, which generally contained two or more addresses. Because the CDP notice serves as much or more as a collection notice demanding payment as it does as a notice of legal rights to a hearing, the notice featured an address where the recipient could mail their payment. Taxpayers regularly mailed their CDP request to the office listed for mailing payment instead of the office listed for sending the request as discussed here. Although IRS employees were instructed to quickly resend the request to the appropriate office, this did not always happen. When the notice reached the correct office after the 30-day period, the IRS argued that the taxpayer should receive only an equivalent hearing.
The PMTA and the changes to the IRM reflect a relaxation of the rule regarding receipt and allow as a timely request the mailing to any address on the CDP notice with a postmark by the 30th day after the notice. This IRM provision, however, adheres to the narrowest interpretation of the PMTA. It’s a good first step, but many taxpayers will send their requests to some other address or send it after the 30 days while having a good excuse. The IRM also allows as timely CDP requests those requests that taxpayers timely fax to a fax number when the CDP request form provides such a number.
Taxpayers should make every effort to mail or fax their CDP request to the proper address or fax number on the CDP notice; however, if the CDP request did not get sent to an address or fax number on the CDP notice by the 30th day, the taxpayer should still consider arguing a timely mailed or faxed notice to the IRS should trigger a CDP hearing rather than an equivalent hearing. Because the timely CDP request provides one step in the path to jurisdiction of the Tax Court in a CDP petition, the taxpayer should consider making equitable tolling arguments in appropriate circumstances.
The new IRM provisions will allow taxpayers who timely mail their CDP request to an address on the CDP notice; however, we know that many additional permutations exist that could cause late receipt of a CDP request by the IRS. Because the making of a late CDP request to the IRS should not create a jurisdictional basis for barring a CDP hearing, taxpayers with a good excuse for lateness should seek to preserve their right to a CDP hearing by explaining to the IRS the reason for the late submission of the CDP request. If the IRS persists in denying a CDP hearing and issues a decision letter rather than a determination letter, the taxpayer should file a petition with the Tax Court within 30 days of the decision letter seeking a determination from the Tax Court regarding the timeliness of the CDP request. Assuming that the Tax Court agrees with the basis for the late CDP request, the Tax Court can determine that the taxpayer has met the criteria for making a CDP request and remand the case to Appeals for a CDP hearing.
The recent change to the IRS offers a good first step toward improvement of the process of obtaining a CDP hearing. Taxpayers should continue pushing to make the process even better.