Collection Due Process Hearing. A taxpayer is entitled to a Collection Due Process Hearing to determine if the IRS may correctly proceed with collection of tax or a notice of federal tax lien. The Collection Due Process Hearing is held before a settlement officer of the IRS Independent Office of Appeals. In a Collection Due Process Hearing, the settlement officer reviews the file to determine if the IRS action was correct.
Appeal of Collection Due Process Hearing. The taxpayer is entitled to appeal the Settlement Officer’s determination. On appeal to federal Tax Court, the Tax Court’s review is based on whether the Settlement Officer abused his or her discretion in sustaining the IRS’s collection action. When the Tax Court reviews a matter for abuse of discretion, the Court considers whether the Settlement Officer:
(1) properly verified that the requirements of any applicable law or administrative procedure have been met, (2) considered any relevant issues petitioners raised, and
(3) determined whether “any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of * * * [petitioners] that any collection action be no more intrusive than necessary.”
See sec. 6330(c)(3).
Thus, on an appeal of a Notice of Determination issued by IRS Appeals during a Collection Due Process Hearing, it is incumbent on the taxpayer to show that the Settlement Officer failed in these three items and thus abused his or her discretion.
Practice Point. The taxpayer needs to begin a tax court appeal with the end in mind: What must the taxpayer prove to win the appeal? In the case of a Collection Due Process Hearing, the Tax Court’s standard of review is typically “abuse of discretion” by the Settlement Officer. Thus, the Taxpayer needs to demonstrate that the Settlement Officer failed in the review and must carefully pinpoint the ways the IRS has abused its discretion in determining whether notices of levy and tax liens are enforceable by the IRS.
Taxpayers that have received adverse determinations from the IRS Independent Office of Appeals may contact Jared Le Fevre to analyze the appeal and determine if good cause exists to challenge an Appeals determination in Tax Court.
About the Author. Jared M. Le Fevre is a tax attorney and received a Tax LLM degree from the University of Alabama College of Law and a Juris Doctorate from the University of Utah College of Law. Mr. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal, state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
Date of information: March 1, 2023.
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 Garcia v. Comm’r of Internal Revenue, T.C.M. (RIA) 2021-072 (T.C. 2021).