The Collection Appeals Program (CAP) was implemented in 1996 by the IRS as an administrative appeal process to appeal a notice of Federal Tax Lien, levies, seizures, and improper review, denial or termination of an installment agreement. There are different procedures that must be followed when filing a Collection Appeal request for appealing cases involving liens, levies, and seizures and when filing a Collection Appeal Request for rejections or terminations of installments.
After a Notice of Federal Tax Lien has been filed or before a levy has been made, a taxpayer is allowed a “hearing” under Collection due Process (CDP). There are two types of CDPs: a statutory CDP and an equivalency CDP. A statutory CDP is filed within thirty days of a tax lien being issued or within 30 days after a taxpayer receives a collection letter or form. If the CDP is filed within those 30 days, the taxpayer has the right to present their case for judicial review if they do not agree with the Appeals result. Under a statutory CDP, all IRS collection action is stopped, however the statute of limitations is tolled. The second type of CDP is called an equivalency CDP. An equivalency CDP is filed 31 days after a tax lien has been filed but before a one year period. In this case, the taxpayer has full administrative appeals rights however in the case that the case is rejected, the taxpayer cannot go to court. Another important fact to note is that in the case of an equivalency CDP, the statue of limitations is not tolled.
In the case that a taxpayer receives notification that the IRS improperly reviews, rejects or terminates an installment agreement request, a taxpayer may appeal the denial of the installment agreement by requesting an appeal under the Collection Appeals program (CAP). Another example of when a Collection Appeals Request can be filed is in the case where a taxpayer was paying under an installment agreement and missed a few payments. Should the IRS state that the taxpayer can no longer have the installment agreement and that the balance owed must be paid in full, the taxpayer may appeal the termination of the installment agreement by requesting an appeal under the Collection Appeals program (CAP). When a Collection Appeals request is filed, a response is issued more quickly than in the case of a CDP due to the 5 day turnaround goal. However, it is important to keep in mind that in the case of a CAP, the Appeal’s administrative decision is final.
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