IRS Appeals Archives

IRS Notice of Determination…Now What?

Receiving an IRS Notice of Determination can be intimidating, but don’t panic—it’s just a step in the IRS process that requires your attention. This notice typically means the IRS has decided on a tax matter you’ve been involved in, such as a request for an Offer in Compromise, a Collection Due Process (CDP) hearing, or another dispute resolution. Let’s walk through what it means and what steps you can take.

1. What is an IRS Notice of Determination?

An IRS Notice of Determination is a formal letter to inform you of the agency’s decision after reviewing a tax-related issue. It commonly follows an appeal or request for review, often related to collections, levies, or liens. In a Collection Due Process hearing, for example, the notice signifies the conclusion of your appeal. The IRS outlines whether they’ll continue with collection actions or if you have some relief, such as a new payment arrangement.

2. What’s in the Notice?

The Notice of Determination will summarize the IRS’s findings and explain their decision regarding your case. It will also include information about your rights and what steps you can take next, whether accepting their decision, appealing it further, or taking action to prevent enforcement measures like levies or liens.

3. What Are Your Next Steps?

Depending on your situation, you may have several options:

Accept the Determination: If you agree with the IRS’s findings, you can accept the outcome and follow any instructions. For example, if the IRS approves a payment plan, you would begin making those payments.
File a Petition in Tax Court: If you disagree with the IRS decision, you can petition the U.S. Tax Court. You have 30 days from the date of the notice to file, so time is of the essence. Tax Court offers an independent review of your case, possibly leading to a different outcome.
Negotiate or Take Action: Depending on your situation, you may want to negotiate further with the IRS or submit additional documentation to support your case. This could include applying for another IRS collection option, such as an Offer in Compromise, Installment Agreement, or Currently Not Collectible (CNC) status.

4. Why Timing Matters

Timing is critical when dealing with a Notice of Determination. The IRS gives you a limited window to respond—usually 30 days—to either comply with their decision or challenge it. Failing to act in time could result in enforced collection actions, like wage garnishments or bank levies.

Bottom Line

Getting an IRS Notice of Determination doesn’t have to be overwhelming. It’s a crucial step in the process, and knowing your options—whether to accept, appeal, or negotiate—can help you make the right move. Remember to act quickly and keep all communications with the IRS in writing to protect your rights.

The Role of Tax Compliance in IRS Appeals

When navigating a dispute with the IRS, one of the best moves you can make is taking your case to the Office of Appeals. It’s a chance to resolve disagreements without the expense and stress of court. However, one critical factor that can greatly influence the success of your appeal is your level of tax compliance. Maintaining compliance isn’t just about filing returns—it’s about showing the IRS that you’re serious about resolving your tax matters fairly.

Why Tax Compliance Matters

The IRS is more likely to negotiate with taxpayers with a history of complying with tax obligations. Being up to date with your filings and payments signals that you’re acting in good faith, which can work in your favor during the Appeals process. Conversely, if you have a history of non-compliance, it can be a major obstacle. Even if you have a legitimate argument, non-compliance can make the IRS less willing to work with you.

What Does “Being in Compliance” Mean?

For IRS purposes, compliance usually means that you’ve filed all required tax returns for at least six years. The IRS uses this key benchmark to assess whether you’re meeting your obligations. So, if you’re missing returns from earlier years, they generally won’t be a problem as long as the most recent six years are fully filed.

Being in compliance also means you’re making any required tax payments on time, including estimated payments if you’re self-employed. Even if you can’t pay off everything you owe, showing a commitment to keeping current with new obligations can help your case.

Compliance in Collection Appeals

Your current compliance status is even more critical if your appeal involves collection actions—like disputing a lien or levy. The IRS is less likely to grant relief if you still miss recent tax returns or fail to make payments on time. In fact, the IRS often views non-compliance as a sign that the appeal is more about delaying collections than resolving the dispute.

Compliance is non-negotiable for taxpayers seeking relief through an Offer in Compromise or Currently Not Collectible (CNC) status. The IRS will not even consider these options unless you’re fully current with your tax filings for the past six years.

How to Get Compliant Before Appeals

If you’re not currently compliant, here are some steps you can take before your Appeals conference:

File Any Outstanding Tax Returns for the Past Six Years: Even if you can’t pay the full amount owed, it’s crucial to file all required returns.
Set Up a Payment Plan: If you owe back taxes, consider entering into an installment agreement. Showing that you’re working toward paying your tax debt helps demonstrate good faith.
Make Your Estimated Payments: If you’re required to make estimated payments, ensure they are current. This is especially important for self-employed individuals.

Final Thoughts

Tax compliance is key in determining how the IRS Appeals Office approaches your case. The goal of Appeals is to reach a fair settlement, but your compliance history plays a big role in building trust and credibility. By ensuring you’re fully compliant with your tax filings for the last six years and staying on top of current obligations, you’ll put yourself in a much stronger position to achieve a favorable outcome.

Resolving Your Tax Case at Appeals

Dealing with a tax dispute can be stressful, but the IRS Office of Appeals offers a path to resolve issues without needing a court battle. If you’ve received an IRS decision you disagree with—whether it’s about an audit, penalties, or collection actions—you might find that Appeals is a smoother, less formal way to get things settled. Let’s break down how the process works and what you can expect.

What is the IRS Office of Appeals?

Think of the Office of Appeals as a neutral party within the IRS. Their job is to review tax disputes fairly, helping both sides—taxpayers like you and the IRS—find a middle ground. Importantly, Appeals officers are separate from the folks who made the original decision on your case. So, you’re getting fresh eyes to look at your situation.

When Should You Consider Going to Appeals?

If you’ve been audited, hit with penalties, or received a notice of collection actions like a lien or levy, and you don’t agree with the IRS’s decision, you might be eligible to take your case to Appeals. Typically, this starts when you get what’s called a 30-day letter. This notice allows you to challenge the decision before it becomes final. You must submit a written protest within 30 days if you want your case to be reviewed.

What Happens Once You Request Appeals?

Once you’re in the Appeals process, you’ll work with an Appeals officer who will review your case. The process is usually pretty flexible—you might have a phone conference, exchange letters, or even meet in person. The goal here isn’t just to rehash the facts but to figure out a resolution that works for everyone.

Appeals officers are allowed to consider more than just strict legalities—they’ll weigh things like the risk the IRS would face if the case went to court. This opens the door to potential compromises, like reducing what you owe, arranging payment plans, or finding other creative solutions.

How Can You Prepare?

Being prepared is key. Here are a few tips:

Know Your Stuff: Brush up on the tax laws and guidelines relevant to your situation. It helps to know the rules inside and out.
Gather Your Proof: Collect all the documents and records that back up your position. The more organized and clear you are, the better.
Be Clear About Your Disagreement: In your protest letter and during your conference, make sure you explain clearly and confidently why you disagree with the IRS’s decision.

Wrapping It Up

The IRS Appeals process is there to help you resolve your tax dispute without the hassle of going to court. It’s a less formal, more taxpayer-friendly way to address disagreements. If you feel like the IRS has gotten something wrong or just want to avoid the stress and expense of litigation, Appeals could be the right move for you. Just make sure you’re prepared, know what you’re arguing for, and are ready to negotiate toward a fair solution.

Collection Appeals: Why You Must File Your CDP Request

When the IRS sends you a notice about a lien or levy, time is of the essence. You have only 30 days to file a Collection Due Process (CDP) request. Missing this deadline can lead to serious consequences. You could lose protections and your chance to challenge the IRS’s actions. Here’s why it’s crucial to file your CDP request on time.

1. Immediate Protection from IRS Actions

Filing your CDP request forces the IRS to pause collection actions. This includes levies on your bank account or wages. This pause gives you time to address your tax situation. Without it, the IRS can seize your assets. However, this protection only applies if you file within the 30-day window. Miss the deadline, and the IRS can move forward with their plans.

2. Your Right to Be Heard

A CDP hearing is your chance to present your case. You’ll meet with an independent Appeals Officer who wasn’t involved in the initial decision. This is your opportunity to explain why the IRS’s actions are unfair. You can suggest alternative solutions or dispute the tax debt itself. But you only get this chance if you file your CDP request on time.

3. Negotiating Better Terms

The hearing also lets you negotiate more favorable terms. You might secure an installment agreement or an Offer in Compromise. If you’re struggling financially, you can request temporary relief. The hearing is your opportunity to discuss these options. But to negotiate, you must file your CDP request promptly.

4. Preventing Further Financial Damage

Ignoring the IRS’s notice won’t make the problem disappear. If you don’t file a CDP request, the IRS can continue its collection actions. This could lead to severe financial consequences, like extra penalties, interest, and the loss of assets. Filing your CDP request is a critical step in protecting yourself from these outcomes.

5. Preserving Your Legal Rights

Filing a CDP request also keeps your right to take your case to court. If you don’t agree with the outcome of the hearing, you can appeal in the U.S. Tax Court. This legal option is only available if you file on time. Miss the deadline, and you lose this important right.

Act Now—Don’t Miss the Deadline

If you miss the 30-day deadline to request a Collection Due Process (CDP) hearing but file within one year, you can still request an “Equivalent Hearing.” This allows you to present your case and discuss your situation with the IRS. However, unlike a timely CDP hearing, an Equivalent Hearing does not automatically stop collection actions, and you lose the right to appeal the decision in the U.S. Tax Court. While you can still negotiate payment arrangements or alternative resolutions, the absence of judicial review and other protections means acting within the initial 30-day window is crucial whenever possible.

What is a CDP Hearing and Why You Should Use It

Dealing with the IRS can be stressful, especially when facing liens or wage garnishments. But there’s a process that can help: the Collection Due Process (CDP) hearing. It’s a way to protect your rights and give you a fair chance to resolve your tax issues.

What is a CDP Hearing?

A CDP hearing allows you to challenge certain IRS collection actions, like a tax lien or a levy on your bank account. The IRS must send you a notice before taking these actions. Here are the main triggers that allow you to request a CDP hearing:

Notice of Federal Tax Lien (NFTL): This notice tells you the IRS has filed a federal tax lien against your property.
Notice of Intent to Levy: This Final Notice of Intent to Levy and Notice of Your Right to a Hearing alerts you that the IRS plans to seize your assets or wages.
Notice of Levy on Your State Tax Refund: If the IRS plans to take your state tax refund to cover a federal tax debt, they will send this notice.
Notice of Levy on a Federal Contractor Payment: If you’re a federal contractor and the IRS plans to levy payments owed to you, they will issue this notice.

When you receive one of these notices, you have 30 days to request a CDP hearing by filing Form 12153. During this period, the IRS must generally stop collection activities, giving you time to respond.

Why Should You Request a CDP Hearing?

Temporary Relief from Collection: Requesting the hearing stops the IRS from taking immediate action against you, like levying your bank account or garnishing your wages. This pause provides you with some breathing room.
A Fair Chance to Be Heard: The CDP hearing allows you to present your case to an independent IRS Office of Appeals officer. You can explain your situation, propose alternative payment options, or even challenge the tax amount if you haven’t done so before.
Explore Negotiation Options: The hearing is your chance to negotiate. You might secure an installment agreement, request an Offer in Compromise, or ask the IRS to mark your account as Currently Not Collectible (CNC) if you face financial hardship.
Prevent Further Penalties: Resolving your issues during the CDP hearing can help you avoid additional penalties and interest, which can add up quickly if the IRS continues collecting.
Keep Your Right to Go to Court: If the CDP hearing doesn’t favor you, you can still take your case to the U.S. Tax Court. This means an impartial judge will review your case.

In short, a CDP hearing is a powerful tool. It gives you a fair shot to protect your assets and resolve your tax issues on better terms. If the IRS is coming after you with liens or levies, requesting a CDP hearing could be a smart move.