FACE TO FACE CDPH

IRS may claim for your CDPH that an in person hearing is not necessary unless you claim "collection alternatives" or other accepted reasons. No law exist that says you have to include ANY reasons for your request on the Form 12153. You just request the hearing on the form, be sure & sign and date the thing (very important)& type in something like "I reserve my right to bring up any relevant issue at the hearing."

However, the PN recommends that you include the words on your CDPH form : "I request collection alternatives...." See the following IRS memo: 200123060, June 8, 2001, Released CDP Procedures-Hearings by Mail March 23, 2001 REFERENCE: [*1] CC:PA:CBS:B01:SBWatson, GL-129111-00, UIL: 6330.00-00, 9999.98-00 TEXT:

MEMORANDUM FOR ASSOCIATE AREA COUNSEL,
SB/SE
LAS VEGAS OFFICE

Attn: Wendy Harris

FROM: Alan C. Levine,
Chief, Branch1 [*2]
CC:PA:CBS:B01
SUBJECT: CDP Procedures-Hearings by Mail.

You have asked for our review and comments with respect to a form "Hello" letter that Las Vegas Appeals intends to use in Collection Due Process (CDP) cases in which only frivolous or constitutional arguments are raised. You have indicated that the proposed letter will state that Appeals no longer plans to offer face-to-face or telephone CDP conferences to taxpayers who indicate in their request for a CDP hearing that they are raising only frivolous or constitutional arguments to the proposed collection action.

Las Vegas Appeals plans to send the form letter advising the taxpayers that unless they raise a relevant issue within 15 days from the date of the "Hello" letter, the appeals officer will issue a Notice of Determination sustaining the proposed collection action.

For the reasons set forth below, it is our view that the CDP hearing envisioned by this letter does not satisfy the statutory requirements of I.R.C. § 6330(b). The form "Hello" letter (copy attached) invites the taxpayer to present additional information that would be relevant to an issue upon which Appeals can grant relief.

The letter states that if no further information [*3] is received, the CDP hearing will consist of a review of the taxpayer's correspondence and other information in Appeals' possession. Nowhere does the letter offer the taxpayer a face-to-face CDP hearing on relevant issues nor does it offer the taxpayer the alternative of a telephone conference.

Section 6330(b)(1) provides that if a taxpayer timely requests a CDP hearing, Appeals must hold the hearing, but neither the statute nor the Treasury Regulations explicitly define what a CDP hearing is.

However, it was the consensus of the Service in interpreting the statute and drafting the regulations that Congress meant for CDP hearings to be held in Appeals' normal, informal manner. Appeals has traditionally held hearings in person, by telephone, or by correspondence.

At a meeting with the Department of Justice, Appeals, and Chief Counsel, it was decided that Appeals would strive to grant, at a minimum, face-to-face conferences to all requesting taxpayers. Conferences by other means, such as by telephone or correspondence, are also acceptable provided the taxpayer has consented to this procedure, has been offered the opportunity for a face-to-face conference, and the basis for this type [*4] of conference is documented in the file. Konkel v. Commissioner, 86 AFTR2d 5545 (M.D. Fla. 2000) is instructive.

In Konkel, a taxpayer who explicitly stated that he wanted all communication with Appeals regarding his CDP hearing to be by correspondence argued in his district court complaint that he did not receive a face-to-face hearing. At the suggestion of a Magistrate Judge during the course of the proceedings, Appeals offered the taxpayer a face-to-face hearing, but the taxpayer did not respond. The court granted the Government's motion for summary judgment.

More importantly, a taxpayer is entitled to a CDP hearing even if he will raise only frivolous or constitutional arguments because the appeals officer must cover the statutory requirements of sections 6330(c)(1) and (3)(C) of verification and balancing.

Section 6330(c) (1) requires an appeals officer to "obtain verification from the Secretary that the requirements of any applicable law or administrative procedures have been met."

Section 6330(3)(C) requires the appeals officer to "balance the need efficient collection of taxes with the legitimate concern of the person that any collection action [*5] be no more intrusive than necessary."

In order to create an adequate record for the court, Appeals should grant face-to-face CDP hearings to taxpayers who request them. The appeals officer should inquire whether the taxpayer has any collection alternatives or other relevant issues.

The word "relevant" is the key. I.R.C. § 6330(c)(2)(A) permits the taxpayer to raise any relevant issues relating to the unpaid tax or the proposed levy. This could include spousal defenses, collection alternatives, and challenges to the appropriateness of the collection actions. Frivolous arguments and worn constitutional arguments are not relevant issues.

In our view, the appeals officer can conclude the CDP hearing if the taxpayer has no relevant issues to raise. The appeals officer is not required to spend much time beyond the minimum outlined here.

We appreciate the need to expedite these cases and to conserve both administrative and judicial time and resources. We suggest that appeals officers make use of the recent case of Pierson v. Commissioner, 115 T.C. No. 39 (filed Dec. 14, 2000). In that case, the Tax Court held that the taxpayer had instituted or maintained his [*6] frivolous and groundless case primarily, if not exclusively, as a protest against the Federal income tax.

While, the Court declined to impose the penalty provided by I.R.C. § 6673 > because the Tax Court's jurisdiction in CDP matters > has been > relatively short, the court, citing White v. Commissioner, 72 T.C. 1126 (1979), warned that it was providing "fair warning to those taxpayers who, in the future, institute or maintain a lien or levy action primarily for delay or whose position in such proceeding is frivolous or groundless."

The court has stated emphatically that it will henceforth impose sanctions pursuant to section 6673 in CDP cases. Therefore, we encourage appeals officers to inform taxpayers of the Pierson case at the CDP hearing. They may want to provide taxpayers with a copy of the opinion. Accordingly, Appeals must offer an opportunity for a face-to-face hearing to all taxpayers, regardless of what arguments they raise.

Taxpayers may choose a telephone or correspondence alternative. Appeals should rely strongly on the Pierson case, and those cases that will, undoubtedly, follow Pierson, to impress on taxpayers the importance of [*7] raising relevant issues in a CDP hearing.

We have met with Appeals Headquarters about this issue and they concur with our opinion. Your local Appeals office should tailor their "Hello" letters to incorporate the advice given in this memorandum.

If you have any questions, please call Susan Watson at 202-622-3409.