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MSP #14: Collection Due Process Notices

Despite Recent Changes to Collection Due Process Notices, Taxpayers Are Still at Risk for Not Understanding Important Procedures and Deadlines, Thereby Missing Their Right to an Independent Hearing and Tax Court Review.

TAS Recommendations and IRS Responses

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1.

TAS RECOMMENDATION #14-1

Include the exact date on the Notices of Determination by which the taxpayer must file a petition in Tax Court.

IRS RESPONSE TO RECOMMENDATION: Appeals recently revised Letter 3193, Notice of Determination, to reduce potential confusion about how to calculate the petition deadline. We initiated the change in response to  stakeholder feedback, including concerns raised by some tax practitioners and the National Taxpayer Advocate. After considering a number of options, we determined that the most efficient and effective   approach would be to use the same language that is used in other Appeals letters to explain the deadline.  We are unaware of any taxpayer complaints related to the language in the revised letter.

TAS RESPONSE: The current version of Letter 3193 reads “If you want to dispute this determination in court, you must file a petition with the United States Tax Court within 30 days from the date of this letter.”  TAS acknowledges that this is an improvement from the previous version, which read “If you want to dispute this determination in court, you must file a petition with the United States Tax Court  within a 30-day period beginning the day after the date of this letter.” However, the revised language may still confuse taxpayers. For instance, what does the term “within” mean to the non-expert taxpayer? Is the date of the letter day one or day zero? The best way to protect taxpayer rights is to include a specific date by which taxpayers must file their petition in Tax Court.

Unlike a notice of deficiency, which legally requires a specific date by which the taxpayer must file his or her petition in Tax Court, the IRS is not required to include a specific date in a notice of determination.  However, the process for including a date on the notice of deficiency is included in Internal Revenue Manual (IRM) 8.20.6.8.4, which Appeals employees follow. It is unclear from the IRS response why this process could not apply to the notice of determination given that it will eliminate a lot of uncertainty for taxpayers.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

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

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2.

TAS RECOMMENDATION #14-2

Work with TAS to redesign the CDP notices so that they reflect the principles of visual cognition and processing of complex information.  This will include changes such as:

(a) Putting clear explanations about the importance of these hearings in terms relating to taxpayer rights and protections;
(b) Highlighting deadlines early in the notices and in bold font; and
(c) Including references to TAS and the LITC program.

IRS RESPONSE TO RECOMMENDATION: ​The IRS will work with TAS to ensure the notices clearly explain the importance of Collection Due Process (CDP) hearings and emphasize deadlines. We are revising the LT11 CDP notice and plan  to pilot multiple versions of the new notice in the future.  TAS is participating in that process. One version to be tested will use the National Taxpayer Advocate’s suggested taxpayer rights framework. While the precise content of notices will vary, the most effective way to show the due date and other key information will be addressed in the revisions.  Similar revisions will be considered for Letter 1058. No revision is planned for Letter 3172, as it was recently redesigned to comply with plain-language standards and to highlight key response information.

CORRECTIVE ACTION: The IRS will work with TAS to ensure the notices clearly explain the importance of Collection Due Process (CDP) hearings and emphasize deadlines. We are revising the LT11 CDP notice and plan  to pilot multiple versions of the new notice in the future. TAS is participating in that process. One version to be tested will use the National Taxpayer Advocate’s suggested taxpayer rights framework. While the precise content of notices will vary, the most effective way to show the due date and other key information will be addressed in the revisions.

TAS RESPONSE: TAS was not included in the process to develop the notices for the LT 11 pilot. We did offer responses once the notices were provided for review. As far as TAS is aware, no TAS notices were included with the study. The pilot notices do include a specific date by which the taxpayer must request a CDP hearing. However, the emphasis of these notices is nonetheless on collection. The IRS’s taxpayer education focuses on timely payment and methods of payment, not on the right to request a CDP hearing.  If taxpayers do not find this information to be salient to them, they may not continue to the second page to find out about their CDP rights. Last, the use of plain language entails more than just simple word choice.  It encompasses notice design and the  placement of material. For instance, a notice dedicated to educating taxpayers on their CDP rights should include CDP information up front and in bold font.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

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

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3.

TAS RECOMMENDATION #14-3

Work with TAS to explore methods of more accurate notification of the due date for CDP hearing requests with respect to lien filings.

IRS RESPONSE TO RECOMMENDATION: Code section 6320(a)(2) requires that the CDP notice be provided to the taxpayer not more than five business days after the filing of the notice of lien. An NFTL is considered filed on the date the recording office receives the NFTL.  The practice of adding three business days to the mailing date of the NFTLs to calculate the receipt (filing) of the NFTLs is the same standard equally applied to the thousands of various recording offices.  The practice ensures fair treatment for all taxpayers as  it provides consistent calculations for CDP hearing request  deadlines.;

CORRECTIVE ACTION: N/A

TAS RESPONSE: The process adopted by the IRS may ensure consistent treatment among taxpayers but it does not ensure fair treatment. As the Most Serious Problem points out, the IRS considers the NFTL to  be filed on the date it should be received by the recording office.  There is no way to know when the recording office receives the NFTL until it is received. Untold circumstances could delay the receipt of an NFTL. Since the filing date is critical to the timeframe for requesting a CDP hearing, the taxpayer could have a longer period of time to request a CDP hearing than the NFTL letter indicates, but he or she would not know  it.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

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

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