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The CAP Provides Inadequate Review and Insufficient Protections for Taxpayers Facing Collection Actions

TAS Recommendations and IRS Responses



Revise the policies and procedures governing CAP to allow Hearing Officers the expanded authority, and where necessary, the additional time to review Collection alternatives and remand cases to Collection for consideration of those alternatives.

IRS RESPONSE TO RECOMMENDATION: CAP is designed to deliver a prompt response regarding the appropriateness of the action proposed or taken based on law, regulations, policy and procedures after considering all of the relevant facts and circumstances (see IRM With a turnaround goal of 5 business days, CAP provides taxpayers with an immediate decision and helps avoid inconveniencing third parties longer than is necessary when they are holding property subject to levy. The Appeals hearing officer is allowed to exercise judgment and consider if any new taxpayer information should be reviewed by Collection or if the current facts and circumstances (as provided by the taxpayer to Collection and forwarded to Appeals) are sufficient for Appeals to determine the appropriateness of the issue under appeal. See IRM

Other Appeals programs offer taxpayers the benefit sought by this recommendation. Taxpayers have the opportunity to raise collection alternatives in an Offer in Compromise, Installment Agreement or a CDP hearing if they file a timely appeal (see IRM, Summary of CDP Process). In addition, if they miss the deadline, taxpayers still have one year to submit a request for an Equivalent Hearing (beginning the day after the date of the CDP levy notice and beginning the day after the end of the five-business-day period following the filing of the Notice of Federal Tax Lien) and raise collection alternatives.


TAS RESPONSE: CAP’s primary weakness is its inflexibility, expressed in terms of a lack of substantive review and a prohibition against the consideration of alternative Collection options. CAP’s rigidity and limited parameters are partially explained by Appeals’ laudable desire to hasten review and provide an expedited decision. Nevertheless, an incomplete or ill-considered decision is not made better for having been reached more quickly. While speed is an important priority, Appeals should also focus on allowing a robust review and dialogue with taxpayers so that CAP proceedings can reach the best decision for all concerned at the earliest possible stage.

CAP hearings and CDP appeals will, of necessity, involve different degrees of substantive review. Nevertheless, CAP hearings could still include a meaningful level of inquiry sufficient to allow for the consideration of collection alternatives and a quality answer based on the existing facts after remand to Collection when the circumstances dictate. This can be done without significantly altering timeframes. Without such a capacity, CAP will continue to be a narrow program of limited use to both taxpayers and the IRS.


OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A



Issue guidance specifying that taxpayers’ use of CAP will no longer preclude them from receiving an independent reconsideration via a CDP appeal based on either issue preclusion or pro forma adoption of the prior CAP decision.

IRS RESPONSE TO RECOMMENDATION: ​While the Appeals hearing officer may adopt a persuasive decision made in a prior CAP proceeding as part of a CDP determination, the hearing officer independently reaches the determination, which is subject to an abuse of discretion review by the U.S. Tax Court. The hearing officer can consider any additional documentation, facts or changes regarding the taxpayer’s circumstances and decide whether the same proposal, previously rejected by Collection and sustained in a CAP hearing, merits another look.


TAS RESPONSE: If a taxpayer proceeds with a CAP hearing and if that proceeding concludes before a CDP appeal is lodged, then the issue raised and considered in the CAP hearing may be precluded from consideration in a subsequent CDP appeal. This risk exists because the completed CAP hearing could be treated as a “previous administrative proceeding” under IRC § 6330(c)(4). In this event, the taxpayer would lose the additional benefits provided by a CDP appeal such as substantive review, consideration of Collection alternatives, application of the balancing test, and judicial oversight of the outcome.

Even if the issue is not precluded from a subsequent decision in a CDP appeal, the Hearing Officer conducting the CDP appeal still has the option of adopting the decision made in the procedurally- focused CAP hearing. This adoption would in effect also deprive the taxpayer of many of the benefits conferred by a robust CDP appeal, including substantive review, consideration of Collection alternatives, and application of the balancing test. Hearing Officers are allowed to take this approach as long as the taxpayer does not present any new information or arguments in the CDP appeal regarding the issue raised in CAP. A CDP review would be appropriate if a taxpayer raised collection alternatives, but the risk remains in the present AJAC environment that a Hearing Officer might mistakenly or precipitously invoke issue preclusion or adopt the prior CAP decision. Thus, under a variety of circumstances, taxpayers availing themselves of the attractive aspects of CAP could unwittingly forfeit their ability to seek a CDP appeal.

This approach by the IRS unnecessarily and unjustifiably jeopardizes the right to appeal an IRS decision in an independent forum, the right to challenge the IRS’s position and be heard, and the right to privacy. Further, it acts as an affirmative deterrent to the use of an already underused program.


OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A



After implementing the improvements in CAP discussed above, make a concerted effort to publicize the benefits of CAP and ensure that Hearing Officers and all IRS employees with taxpayer contact more effectively inform taxpayers and their representatives about the availability of CAP hearings.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. Although no additional action is being taken on recommendations 9-1 and 9-2, Appeals has updated videos explaining collection alternatives and is planning a presentation for the 2016 Nationwide Tax Forums to help practitioners understand what is needed for a successful appeal.


TAS RESPONSE: The National Taxpayer Advocate commends Appeals for updating the videos on collection alternatives and presenting at the Nationwide Tax Forums. Nevertheless, TAS recommends that CAP be revised as described in the ARC to make it more fair and effective for taxpayers. Then these expanded uses and benefits can be extensively publicized to taxpayers and their representatives. Likewise, IRS personnel can be educated regarding the revised program and required to consistently and affirmatively make taxpayers aware of its offerings and advantages.


OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A