Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54681 

SUMMARY: This document corrects a 

notice of proposed rulemaking (REG104143–05) that was published in the 

Federal Register on Friday, August 26, 

2005 (70 FR 50228). The document 

contains regulations relating to 

payments made for service not in the 

course of the employer’s trade or 

business, for domestic service in a 

private home of the employer, for 

agricultural labor, and for service 

performed as a home worker within the 

meaning of section 3121(d)(3)(C) of the 

Internal Revenue Code. 

FOR FURTHER INFORMATION CONTACT: Paul 

Carlino, (202) 622–0047 (not a toll-free 

number). 

SUPPLEMENTARY INFORMATION: 

Background 

The notice of proposed rulemaking 

(REG–104143–05) that is the subject of 

this correction is under section 

3121(d)(3)(C) of the Internal Revenue 

Code. 

Need for Correction 

As published, REG–104143–05 

contains an error that may prove to be 

misleading and is in need of 

clarification. 

Correction of Publication 

Accordingly, the notice of proposed 

rulemaking (REG–104143–05), that was 

the subject of FR Doc. #05–16944, is 

corrected as follows: 

§ 31.3121(a)–2 [Corrected] 

On page 50231, column 2, 

§ 31.3121(a)–2, paragraph (d)(2), third 

line from the bottom of the paragraph, 

the language ‘‘paragraph (d)(2), see 

§ 31.3102–1 in’’ is corrected to read 

‘‘paragraph (d)(2), see § 31.3121(a)–2 

in‘‘. 

Cynthia Grigsby, 

Acting Chief, Publications and Regulations 

Branch, Legal Processing Division, Associate 

Chief Counsel (Procedure and 

Administration). 

[FR Doc. 05–18468 Filed 9–15–05; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[REG–150088–02] 

RIN 1545–BB96 

Miscellaneous Changes to Collection 

Due Process Procedures Relating to 

Notice and Opportunity for Hearing 

Upon Filing of Notice of Federal Tax 

Lien 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This document contains 

proposed amendments to the 

regulations relating to a taxpayer’s right 

to a hearing under section 6320 of the 

Internal Revenue Code of 1986 after the 

filing of a notice of Federal tax lien 

(NFTL). The proposed regulations make 

certain clarifying changes in the way 

collection due process (CDP) hearings 

are held and specify the period during 

which a taxpayer may request an 

equivalent hearing. The proposed 

regulations affect taxpayers against 

whose property or rights to property the 

Internal Revenue Service (IRS) files a 

NFTL on or after January 19, 1999. This 

document also contains a notice of 

public hearing on these proposed 

regulations. 

DATES: Written and electronic comments 

must be received by December 15, 2005. 

Outlines of topics to be discussed at the 

public hearing scheduled for 10 a.m. on 

January 19, 2006 must be received by 

December 29, 2005. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–150088–02), room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to CC:PA:LPD:PR (REG–150088–02), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at http://www.irs.gov/regs or via the 

Federal eRulemaking Portal at http:// 

www.regulations.gov (indicate IRS and 

REG–150088–02). The public hearing 

will be held in the IRS Auditorium, 

Internal Revenue Building (7th Floor), 

1111 Constitution Avenue, NW., 

Washington, DC. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, call 

Laurence K. Williams, 202–622–3600 

(not a toll-free number); concerning 

submissions and/or to be placed on the 

building access list to attend the 

hearing, call Robin Jones, 202–622–7180 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to the Regulations on 

Procedure and Administration (26 CFR 

part 301) relating to the provision of 

notice under section 6320 of the Internal 

Revenue Code to taxpayers of a right to 

a CDP hearing (CDP Notice) after the IRS 

files a NFTL. Final regulations (TD 

8979) were published on January 18, 

2002 in the Federal Register (67 FR 

2558). The final regulations 

implemented certain changes made by 

section 3401 of the Internal Revenue 

Service Restructuring and Reform Act of 

1998 (Pub. L. 105–206, 112 Stat. 

685)(RRA 1998), including the addition 

of section 6320 to the Internal Revenue 

Code. The final regulations affected 

taxpayers against whose property or 

rights to property the IRS files a NFTL. 

Section 3401 of RRA 1998 also added 

section 6330 to the Internal Revenue 

Code. That statute provides for notice to 

taxpayers of a right to a hearing before 

or, in limited cases, after levy. A 

number of the provisions in section 

6330 concerning the conduct and 

judicial review of a CDP hearing are 

incorporated by reference in section 

6320. On January 18, 2002, final 

regulations (TD 8980) under section 

6330 were published in the Federal 

Register (67 FR 2549) along with the 

final regulations under section 6320. 

Explanation of Provisions 

A taxpayer is entitled to one CDP 

hearing with respect to the tax and tax 

period covered by a CDP Notice 

concerning a levy or a CDP Notice 

concerning the filing of a NFTL. The IRS 

Office of Appeals (Appeals) has 

conducted over 92,000 CDP hearings 

and more than 30,000 equivalent 

hearings since sections 6320 and 6330 

became effective for collection actions 

initiated on and after January 19, 1999. 

In general, the experience of the past 

six years with CDP hearings has 

demonstrated that there is a need for 

changes to allow Appeals to effectively 

and fairly handle the cases of taxpayers 

who raise issues of substance. Appeals 

has instituted many improvements in its 

processing of CDP cases and has 

conducted extensive training in an effort 

to provide careful, but timely, review of 

CDP cases, which currently are filed at 

a rate of approximately 2,450 per 

month. The proposed regulations, if 

adopted as final regulations, will 

54682 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 

increase efficiency without 

compromising the quality and fairness 

of review. 

In many CDP cases, significant time is 

spent merely identifying the issues. 

Although the Form 12153 used to 

request a CDP hearing requires a 

taxpayer to state a reason or reasons for 

disagreeing with the NFTL filing, many 

taxpayers either do not supply that 

information, or raise new issues during 

the CDP hearing process not identified 

on the hearing request. Delays result 

while taxpayers provide new supporting 

documentation and Appeals personnel 

reconsider prior conclusions in light of 

the new information. Cases of other 

taxpayers pending in Appeals are 

delayed because other work must be 

constantly rescheduled. 

Cases are also delayed when 

taxpayers propose collection 

alternatives for which they are not 

eligible. The IRS does not consider 

offers in compromise or installment 

agreements from taxpayers who have 

failed to file required returns as of the 

date the offer or the proposed 

installment agreement is submitted. See 

Publication 594, ‘‘What You Should 

Know about the IRS Collection Process 

(Rev. 2–2004).’’ Similarly, the IRS will 

not consider an offer in compromise 

from an in-business taxpayer unless the 

taxpayer has timely filed all returns and 

timely made all Federal tax deposits for 

two consecutive quarters. See Form 656, 

‘‘Offer in Compromise (Rev. 7–2004).’’

The resources of Appeals are 

ineffectively utilized arranging and 

conducting face-to-face conferences 

requested by non-compliant taxpayers 

whose only complaint is the rejection of 

an offer to compromise or installment 

agreement for which they are not 

eligible. 

Frivolous cases also cause 

unnecessary delays. During fiscal year 

2004, 5.4 percent of the 32,226 CDP and 

equivalent-hearing cases Appeals 

handled involved taxpayers who were 

non-filers or raised only frivolous 

issues. Cases raising frivolous issues, in 

particular, consume a 

disproportionately large amount of time, 

because Appeals personnel must often 

read lengthy, frivolous submissions in 

search of any substantive issue buried 

within. Delays also result when 

taxpayers use face-to-face conferences as 

a venue for frivolous oration and 

harassment of Appeals personnel. 

The proposed regulations attempt to 

address these and other problems that 

have become apparent during the first 

six years of CDP practice. The proposed 

changes are aimed at creating a more 

focused procedure that will allow 

Appeals to continue to provide careful 

review of NFTL filings as the volume of 

cases increases. 

A taxpayer must request a CDP 

hearing in writing. The current 

regulations require that a request for a 

CDP hearing include the taxpayer’s 

name, address, and daytime telephone 

number, and that the request be dated 

and signed by either the taxpayer or the 

taxpayer’s authorized representative. 

Section 301.6320–1(c)(2), Q&A–C1. A 

Form 12153, ‘‘Request for a Collection 

Due Process Hearing,’’ is included with 

the CDP Notice sent to the taxpayer 

pursuant to section 6320. The Form 

12153 requests (1) The taxpayer’s name, 

address, daytime telephone number, 

and taxpayer identification number 

(SSN or EIN), (2) the type of tax 

involved, (3) the tax period at issue, (4) 

a statement that the taxpayer requests a 

hearing with Appeals concerning the 

filing of the NFTL, and (5) the reason or 

reasons why the taxpayer disagrees with 

the NFTL filing. Although taxpayers are 

encouraged to use a Form 12153 in 

requesting a CDP hearing, the current 

regulations do not require the use of 

Form 12153. 

Section 301.6320–1(c)(2), A–C1, of the 

proposed regulations requires taxpayers 

to state their reasons for disagreement 

with the NFTL filing whether or not a 

Form 12153 is used to request a CDP 

hearing. In addition, a taxpayer who 

fails to sign a timely CDP hearing 

request because the request is made by 

a spouse or other unauthorized 

representative must affirm in writing 

that the request was originally 

submitted on the taxpayer’s behalf. 

Failure to provide the written 

affirmation within a reasonable time 

after a request from Appeals will result 

in the denial of a CDP hearing for that 

taxpayer. 

A CDP hearing is to be conducted by 

an Appeals officer or employee who has 

had no ‘‘prior involvement’’ with 

respect to the tax for the tax periods to 

be covered by the hearing, unless the 

taxpayer waives this requirement. 

Section 301.6320–1(d)(2), A–D4 of the 

current regulations provides that ‘‘prior 

involvement’’ by an Appeals officer or 

employee includes participation or 

involvement in an Appeals hearing that 

the taxpayer may have had with respect 

to the tax and tax period shown on the 

CDP Notice, other than a CDP hearing 

held under either section 6320 or 

section 6330. It is important that ‘‘prior 

involvement’’ be construed in a manner 

that reasonably protects against 

predisposition but at the same time does 

not disqualify too broad a range of 

Appeals personnel. A broad standard of 

‘‘prior involvement’’ would lead to 

uncertain application, could result in 

the disqualification of an entire Appeals 

office, many of which have small staffs, 

and could make it difficult to conduct 

the CDP hearing. Section 301.6320–

1(d)(2), A–D4 of the proposed 

regulations provides that prior 

involvement exists only when the 

taxpayer, the tax liability and the tax 

period shown on the CDP Notice also 

were at issue in the prior non-CDP 

hearing or proceeding, and the Appeals 

officer or employee actually participated 

in the prior hearing or proceeding. 

Examples are provided in § 301.6320–

1(d)(3) of the proposed regulations. 

Section 301.6320–1(d)(2), A–D7, of the 

proposed regulations clarifies that a 

face-to-face conference is merely one 

aspect of a CDP hearing under section 

6320 and is not by itself the entire CDP 

hearing. 

A–D7 of the proposed regulations also 

provides that, in all cases, the Appeals 

officer or employee will review the 

taxpayer’s request for a CDP hearing, the 

case file, other written communications 

from the taxpayer, and any notes of oral 

communications with the taxpayer or 

the taxpayer’s representative. If no faceto-face or telephonic conference is held, 

review of those documents will 

constitute the CDP hearing for purposes 

of section 6320(b). 

A–D7 of the proposed regulations 

further clarifies that when a business 

taxpayer is offered an opportunity for a 

face-to-face conference it will be held at 

the Appeals office closest to the 

taxpayer’s principal place of business. 

The current regulations have been 

misinterpreted by some taxpayers as 

requiring the IRS to hold a face-to-face 

conference at the taxpayer’s principal 

place of business. Q&A–D8 of the 

proposed regulations is new. It 

describes specific circumstances in 

which Appeals will not hold a face-toface conference with the taxpayer or the 

taxpayer’s representative because a 

conference will serve no useful purpose. 

The experience of Appeals is that 

although most taxpayers request face-toface conferences, they are sometimes 

difficult to schedule on a date and at a 

time that is convenient for the taxpayer. 

In some of these cases, taxpayers or 

their representatives have used the 

scheduling of a face-to-face conference 

as a tactic to delay the IRS’s collection 

efforts. In other cases, taxpayers have 

requested a face-to-face conference 

merely to raise frivolous arguments 

concerning the Federal tax system or to 

request collection alternatives for which 

they do not qualify. Q&A-D8 of the 

proposed regulations provides that a 

face-to-face conference need not be 

offered if the taxpayer or the taxpayer’s 

representative raises only frivolous 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54683 

arguments concerning the Federal tax 

system. See the IRS Internet site, 

http://www.irs.gov/pub/irs-utl/ 

friv_tax.pdf, for examples of frivolous 

arguments. A face-to-face conference 

also will not be granted if the taxpayer 

proposes collection alternatives that 

would not be available to other 

taxpayers in similar circumstances. A 

face-to-face conference need not be 

granted if the taxpayer does not provide 

in the written request for a CDP hearing, 

as perfected, the required information 

set forth in A–C1(ii)(E) of paragraph 

(c)(2) of the proposed regulations. 

In addition, a face-to-face conference 

will not be held at the location closest 

to the taxpayer’s residence or principal 

place of business if all Appeals officers 

or employees at that location are 

considered to have prior involvement as 

provided in A–D4. In this case, the 

taxpayer will be offered a hearing by 

telephone or correspondence, or some 

combination thereof. The taxpayer may 

be able to obtain a face-to-face 

conference at the Appeals office closest 

to the taxpayer’s residence or principal 

place of business under these 

circumstances if the taxpayer waives the 

requirement of section 6320(b)(3) 

concerning impartiality of the Appeals 

officer or employee. Appeals will offer 

the taxpayer a face-to-face conference at 

another Appeals office if in the exercise 

of its discretion Appeals would have 

offered the taxpayer a face-to-face 

conference at the original location. 

With the foregoing exceptions, it is 

anticipated that a face-to-face 

conference will ordinarily be offered 

with respect to any relevant issues or 

collection alternatives for which the 

taxpayer qualifies. 

Sections 301.6320–1(e)(1) and 

301.6320–1(e)(3), A–E2 and A–E7 have 

been changed to more closely follow the 

language of section 6330(c)(2)(B), made 

applicable to section 6320 by section 

6320(c). These changes are necessary 

because these regulations have been 

misinterpreted as defining the 

underlying tax liability that may be 

considered at the CDP hearing under 

section 6330(c)(2)(B) to be the tax 

liability listed on the CDP Notice. The 

intent of the existing regulations, which 

refer to tax liability on the CDP Notice, 

is that taxpayers may only challenge 

taxes or tax periods listed on the CDP 

Notice, not to supply a substantive 

definition of underlying tax liability. 

Section 301.6320–1(e)(3), A–E6 has 

been amended to clarify that taxpayers 

who receive CDP hearings can only 

qualify for collection alternatives 

available generally to taxpayers in 

similar circumstances. 

The experience of the past six years 

has revealed that many taxpayers raise 

an issue with Appeals but fail to furnish 

any documentation or evidence with 

respect to the issue despite being given 

a reasonable period to do so. For 

example, a taxpayer may request an 

installment agreement, but when an 

Appeals officer or employee requests 

financial data necessary to determine 

eligibility for the installment agreement, 

the taxpayer may not comply with the 

request. Or a taxpayer may dispute 

liability for a tax period by claiming 

entitlement to deductions, but provide 

no substantiation for the deductions in 

response to requests from Appeals. 

Current § 301.6320–1(f)(2), A–F5 

provides that a taxpayer may not seek 

judicial review of an issue that he has 

not raised during the CDP hearing. A–

F5 is revised to clarify that in order to 

obtain judicial review, a taxpayer must 

not only bring the issue to the attention 

of Appeals but must also submit, if 

requested, evidence with respect to that 

issue. Under revised A–F5, if the 

taxpayer does not provide Appeals any 

evidence with respect to the issue after 

being given a reasonable opportunity to 

submit such evidence, then he may not 

ask a court to consider the issue. 

There has been some confusion about 

what documents Appeals should retain, 

and what notations the Appeals officer 

or employee conducting the hearing 

should make, in order to provide a 

judicially reviewable administrative 

record. A new Q&A–F6 has been added 

to specify the contents of the 

administrative record required for court 

review. 

The IRS receives a number of tardy 

requests for CDP hearings. The changes 

to § 301.6320–1(i)(2) explain how these 

requests will be treated. The proposed 

amendments to the regulations add a 

new Q&A–I1 to § 301.6320–1(i)(2) to 

explain that a taxpayer must request an 

equivalent hearing in writing. A 

taxpayer may obtain an equivalent 

hearing if the 30-day period described 

in section 6320(a)(3) for requesting a 

CDP hearing has expired. Unlike an 

Appeals determination in a CDP 

hearing, the Appeals decision in an 

equivalent hearing is not reviewable in 

court. Under new Q&A–I1, the IRS is 

not required to treat a late-filed CDP 

request as a request for an equivalent 

hearing. Section 301.6320–1(c)(2), A–C7 

has been amended to require that the 

taxpayer be notified of the right to an 

equivalent hearing in all cases in which 

a tardy request for a CDP hearing is 

received. It is expected that the IRS will 

either send the taxpayer a letter or orally 

inform the taxpayer that the CDP 

hearing request is untimely and ask if 

the taxpayer wishes to have an 

equivalent hearing. If the taxpayer elects 

to have an equivalent hearing, the IRS 

will treat the CDP hearing request as a 

request for an equivalent hearing 

without requiring the taxpayer to make 

an additional request written request. 

Current Q&A–I1 through I5 are 

renumbered Q&A–I2 through I6. The 

proposed regulations add Q&A–I7 to 

§ 301.6320–1(i)(2) to clarify that the 

period during which a taxpayer may 

obtain an equivalent hearing is not 

indefinite. The equivalent hearing 

procedure is not provided by statute 

but, consistent with the legislative 

history of RRA 1998, was adopted in 

order to accommodate taxpayers who 

failed timely to exercise their right to a 

CDP hearing. The equivalent hearing 

was meant to occur near the time a CDP 

hearing held pursuant to a timely 

request would have occurred, because it 

was meant to address the same matters 

that would have been addressed at a 

CDP hearing. The procedure was not 

meant to provide a hearing right that 

could be exercised months or years after 

the circumstances that precipitated the 

filing of the NFTL have passed. A 

hearing before Appeals at a later time 

may be obtained under the Collection 

Appeals Program. Therefore, proposed 

Q&A–I7 limits to one year the period 

during which a taxpayer may request an 

equivalent hearing. The period 

commences the day after the end of the 

five business day period following the 

filing of the NFTL, described in section 

6320(a)(2). 

Because the time for requesting an 

equivalent hearing will be limited, the 

proposed regulations add new Q&A–I8, 

Q&A–I9, Q&A–I10 and Q&A–I11 to 

§ 301.6320–1(i)(2) to provide the same 

rules governing mailing, delivery and 

determination of timeliness that apply 

to requests for CDP hearings. Unlike 

existing § 301.6320–1(c)(2), A–C6, new 

A–I10 does not identify the officials to 

whom to send an equivalent hearing 

request if the CDP Notice does not 

specify where to send the request. 

Because the identity and the address of 

the person to whom the request should 

be sent may change in the future, 

taxpayers will be able to obtain more 

current information by calling the 1–800 

number listed in A–I10. Section 

301.6320–1(c)(2), A–C6 also has been 

revised in the proposed regulations to 

provide that taxpayers should call the 

1–800 number to obtain the address to 

which the CDP hearing request should 

be sent. 

The proposed regulations are effective 

the date 30 days after final regulations 

are published in the Federal Register 

with respect to requests for CDP 

54684 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 

hearings or eqivalent hearings made on 

or after the date 30 days after final 

regulations are published in the Federal 

Register. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations, and because the 

regulations do not impose a collection 

of information on small entities, the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) does not apply. Pursuant to 

section 7805(f) of the Internal Revenue 

Code, this notice of proposed 

rulemaking will be submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business. 

Comments and Public Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

electronic and written comments that 

are submitted timely to the IRS. The IRS 

and Treasury Department specifically 

request comments on the clarity of the 

proposed regulations and how they may 

be made easier to understand. All 

comments will be available for public 

inspection and copying. 

A public hearing has been scheduled 

for January 19, 2006, at 10 a.m. in the 

IRS Auditorium, Internal Revenue 

Building (7th Floor), 1111 Constitution 

Avenue, NW., Washington, DC. All 

visitors must present photo 

identification to enter the building. 

Because of access restrictions, visitors 

will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. For 

information about having a visitor’s 

name placed on the building access list 

to attend the hearing, see the FOR

FURTHER INFORMATION CONTACT caption. 

An outline of the topics to be 

discussed and the time to be devoted to 

each topic must be submitted by any 

person who wishes to present oral 

comments at the hearing. Outlines must 

be received by December 29, 2005. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. A period of 10 

minutes will be allotted to each person 

for making comments. 

An agenda showing the scheduling of 

the speakers will be prepared after the 

deadline for receiving requests to speak 

has passed. Copies of the agenda will be 

available free of charge at the hearing. 

Drafting Information 

The principal author of these 

regulations is Laurence K. Williams, 

Office of Associate Chief Counsel, 

Procedure and Administration 

(Collection, Bankruptcy and 

Summonses Division). 

List of Subjects in 26 CFR Part 301 

Employment taxes, Estate taxes, 

Excise taxes, Gift taxes, Income taxes, 

Penalties, Reporting and recordkeeping 

requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 301 is 

proposed to be amended as follows: 

PART 301—PROCEDURE AND 

ADMINISTRATION 

Paragraph 1. The authority citation 

for part 301 continues to read, in part, 

as follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 2. Section 301.6320–1 is 

proposed to be amended as follows: 

1. Paragraph (c)(2) A–C1, Q&A–C6 

and A–C7 are revised. 

2. Paragraph (d)(2) A–D4 and A–D7 

are revised. 

3. Paragraph (d)(2) Q&A–D8 is added. 

4. Paragraph (d)(3) is added. 

5. Paragraph (e)(1) is revised. 

6. Paragraph (e)(3) A–E2, A–E6 and 

A–E7 are revised. 

7. Paragraph (f)(2) A–F5 is revised. 

8. Paragraph (f)(2) Q&A–F6 is added. 

9. Paragraph (i)(2) Q&A–I1 through 

Q&A–I5 are redesignated as Q&A–I2 

through Q&A–I6, a new paragraph (i)(2) 

Q&A–I1 and new paragraphs Q&A–I7 

through Q&A–I11 are added. 

10. Paragraph (j) is revised. 

§ 301.6320–1 Notice and opportunity for 

hearing upon filing of notice of Federal tax 

lien. 

* * * * * 

(c) * * * 

(2) * * * 

A–C1. (i) The taxpayer must make a 

request in writing for a CDP hearing. 

The request for a CDP hearing shall 

include the information specified in A–

C1(ii) of this paragraph (c)(2). See A–D7 

and A–D8 of paragraph (d)(2). 

(ii) The written request for a CDP 

hearing must be dated and must include 

the following information: 

(A) The taxpayer’s name, address, 

daytime telephone number (if any), and 

taxpayer identification number (SSN or 

EIN). 

(B) The type of tax involved. 

(C) The tax period at issue. 

(D) A statement that the taxpayer 

requests a hearing with Appeals 

concerning the filing of the NFTL. 

(E) The reason or reasons why the 

taxpayer disagrees with the filing of the 

NFTL. 

(F) The signature of the taxpayer or 

the taxpayer’s authorized representative. 

(iii) The taxpayer must perfect any 

timely written request for a CDP hearing 

that does not provide the required 

information set forth in A–C1(ii) of this 

paragraph within a reasonable period of 

time after a request from the IRS. 

(iv) Taxpayers are encouraged to use 

a Form 12153, ‘‘Request for a Collection 

Due Process Hearing,’’ in requesting a 

CDP hearing so that the request can be 

readily identified and forwarded to 

Appeals. Taxpayers may obtain a copy 

of Form 12153 by contacting the IRS 

office that issued the CDP Notice, by 

downloading a copy from the IRS 

Internet site, http://www.irs.gov/pub/irspdf/f12153.pdf, or by calling, toll-free, 

1–800–829–3676. 

(v) The taxpayer must affirm any 

timely written request for a CDP hearing 

which is signed or alleged to have been 

signed on the taxpayer’s behalf by the 

taxpayer’s spouse or other unauthorized 

representative by filing, within a 

reasonable period of time after a request 

from the IRS, a signed, written 

affirmation that the request was 

originally submitted on the taxpayer’s 

behalf. If the affirmation is not filed 

within a reasonable period of time after 

a request, the CDP hearing request will 

be denied with respect to the nonsigning taxpayer. 

* * * * * 

Q–C6. Where must the written request 

for a CDP hearing be sent? 

A–C6. The written request for a CDP 

hearing must be sent, or hand delivered 

(if permitted), to the IRS office and 

address as directed on the CDP Notice. 

If the address of that office does not 

appear on the CDP Notice, the taxpayer 

should obtain the address of the office 

to which the written request should be 

sent or hand delivered by calling, tollfree, 1–800–829–1040 and providing the 

taxpayer’s identification number (SSN 

or TIN). 

* * * * * 

A–C7. If the taxpayer does not request 

a CDP hearing in writing within the 30- 

day period that commences on the day 

after the end of the five business day 

notification period, the taxpayer 

foregoes the right to a CDP hearing 

under section 6320 with respect to the 

unpaid tax and tax periods shown on 

the CDP Notice. If the request for CDP 

hearing is received after the 30-day 

period, the taxpayer will be notified of 

the untimely request and of the right to 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54685 

an equivalent hearing. See paragraph (i) 

of this section. 

* * * * * 

(d) * * * 

(2) * * * 

A–D4. Prior involvement by an 

Appeals officer or employee includes 

participation or involvement in an 

Appeals hearing (other than a CDP 

hearing held under either section 6320 

or section 6330) that the taxpayer may 

have had with respect to the tax and tax 

period shown on the CDP Notice. Prior 

involvement exists only when the 

taxpayer, the tax liability and the tax 

period at issue in the CDP hearing also 

were at issue in the prior non-CDP 

hearing or proceeding, and the Appeals 

officer or employee actually participated 

in the prior hearing or proceeding. 

* * * * * 

A–D7. Except as provided in A–D8 of 

this paragraph (d)(2), a taxpayer who 

presents in the CDP hearing request 

relevant, non-frivolous reasons for 

disagreement with the NFTL filing will 

ordinarily be offered an opportunity for 

a face-to-face conference at the Appeals 

office closest to taxpayer’s residence. A 

business taxpayer will ordinarily be 

offered an opportunity for a face-to-face 

conference at the Appeals office closest 

to the taxpayer’s principal place of 

business. If that is not satisfactory to the 

taxpayer, the taxpayer will be given an 

opportunity for a hearing by telephone 

or by correspondence. In all cases, the 

Appeals officer or employee will review 

the case file, which includes the 

taxpayer’s request for a CDP hearing, 

any other written communications from 

the taxpayer or the taxpayer’s 

authorized representative, and any notes 

made by Appeals officers or employees 

of any oral communications with the 

taxpayer or the taxpayer’s authorized 

representative. If no face-to-face or 

telephonic conference or 

correspondence hearing is held, review 

of those documents will constitute the 

CDP hearing for purposes of section 

6320(b). 

Q–D8. In what circumstances will a 

face-to-face CDP conference not be 

granted? 

A–D8. A taxpayer is not entitled to a 

face-to-face CDP conference at a location 

other than as provided in A–D7 of this 

paragraph (d)(2) and this A–D8. If all 

Appeals officers or employees at the 

location provided for in A–D7 of this 

paragraph have had prior involvement 

with the taxpayer as provided in A–D4 

of this paragraph, the taxpayer will not 

be offered a face-to-face meeting at that 

location, unless the taxpayer elects to 

waive the requirement of section 

6320(b)(3). The taxpayer will be offered 

a face-to-face conference at another 

Appeals office if Appeals in the exercise 

of its discretion would have offered the 

taxpayer a face-to-face conference at the 

location provided in A–D7. A face-toface CDP conference concerning a 

taxpayer’s underlying liability will not 

be granted if the request for a hearing or 

other taxpayer communication indicates 

that the taxpayer wishes only to raise 

irrelevant or frivolous issues concerning 

that liability. A face-to-face CDP 

conference concerning a collection 

alternative, such as an installment 

agreement or an offer to compromise 

liability, will not be granted unless the 

alternative would be available to other 

taxpayers in similar circumstances. For 

example, because the IRS does not 

consider offers to compromise from 

taxpayers who have not filed required 

returns or have not made certain 

required deposits of tax, as set forth in 

Form 656, ‘‘Offer in Compromise,’’ no 

face-to-face conference will be offered to 

a taxpayer who wishes to make an offer 

to compromise but has not fulfilled 

those obligations. A face-to-face 

conference need not be granted if the 

taxpayer does not provide the required 

information set forth in A–C1(ii)(E) of 

paragraph (c)(2). See also A–C1(iii) of 

paragraph (c)(2). 

(3) Examples. The following examples 

illustrate the principles of this 

paragraph (d): 

Example 1. Individual A timely requests a 

CDP hearing concerning a NFTL filed with 

respect to A’s 1998 income tax liability. 

Appeals employee B previously conducted a 

CDP hearing regarding a proposed levy for 

the 1998 income tax liability assessed against 

individual A. Because employee B’s only 

prior involvement with individual A’s 1998 

income tax liability was in connection with 

a section 6330 CDP hearing, employee B may 

conduct the CDP hearing under section 6320 

involving the NFTL filed for the 1998 income 

tax liability. 

Example 2. Individual C timely requests a 

CDP hearing concerning a NFTL filed with 

respect to C’s 1998 income tax liability 

assessed against individual C. Appeals 

employee D previously conducted a 

Collection Appeals Program (CAP) hearing 

regarding a NFTL filed with respect to C’s 

1998 income tax liability. Because employee 

D’s prior involvement with individual C’s 

1998 income tax liability was in connection 

with a non-CDP hearing, employee D may not 

conduct the CDP hearing under section 6320 

unless individual C waives the requirement 

that the hearing will be conducted by an 

Appeals officer or employee who has had no 

prior involvement with respect to C’s 1998 

income tax liability. 

Example 3. Same facts as in Example 2, 

except that the prior CAP hearing only 

involved individual C’s 1997 income tax 

liability and employment tax liabilities for 

1998 reported on Form 941. Employee D 

would not be considered to have prior 

involvement because the prior CAP hearing 

in which she participated did not involve 

individual C’s 1998 income tax liability. 

Example 4. Appeals employee F is 

assigned to a CDP hearing concerning a NFTL 

filed with respect to a trust fund recovery 

penalty (TFRP) assessed pursuant to section 

6672 against individual E. Appeals employee 

F participated in a prior CAP hearing 

involving individual E’s 1999 income tax 

liability, and participated in a CAP hearing 

involving the employment taxes of business 

entity X, which incurred the employment tax 

liability to which the TFRP assessed against 

individual E relates. Appeals employee F 

would not be considered to have prior 

involvement because the prior CAP hearings 

in which he participated did not involve the 

TFRP assessed against individual E. 

Example 5. Appeals employee G is 

assigned to a CDP hearing concerning a NFTL 

filed with respect to a TFRP assessed 

pursuant to section 6672 against individual 

H. In preparing for the CDP hearing, Appeals 

employee G reviews the Appeals case file 

concerning the prior CAP hearing involving 

the TFRP assessed pursuant to section 6672 

against individual H. Appeals employee G is 

not deemed to have participated in the 

previous CAP hearing involving the TFRP 

assessed against individual H by such 

review. 

(e) Matters considered at CDP 

hearing—(1) In general. Appeals has the 

authority to determine the validity, 

sufficiency, and timeliness of any CDP 

Notice given by the IRS and of any 

request for a CDP hearing that is made 

by a taxpayer. Prior to issuance of a 

determination, Appeals is required to 

obtain verification from the IRS office 

collecting the tax that the requirements 

of any applicable law or administrative 

procedure have been met. The taxpayer 

may raise any relevant issue relating to 

the unpaid tax at the hearing, including 

appropriate spousal defenses, 

challenges to the appropriateness of the 

NFTL filing, and offers of collection 

alternatives. The taxpayer also may raise 

challenges to the existence or amount of 

the underlying liability for any tax 

period specified on the CDP Notice if 

the taxpayer did not receive a statutory 

notice of deficiency for that tax liability 

or did not otherwise have an 

opportunity to dispute the tax liability. 

Finally, the taxpayer may not raise an 

issue that was raised and considered at 

a previous CDP hearing under section 

6330 or in any other previous 

administrative or judicial proceeding if 

the taxpayer participated meaningfully 

in such hearing or proceeding. 

Taxpayers will be expected to provide 

all relevant information requested by 

Appeals, including financial statements, 

for its consideration of the facts and 

issues involved in the hearing. 

* * * * * 

(3) * * * 

54686 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 

A–E2. A taxpayer is entitled to 

challenge the existence or amount of the 

underlying liability for any tax period 

specified on the CDP Notice if the 

taxpayer did not receive a statutory 

notice of deficiency for such liability or 

did not otherwise have an opportunity 

to dispute such liability. Receipt of a 

statutory notice of deficiency for this 

purpose means receipt in time to 

petition the Tax Court for a 

redetermination of the deficiency 

determined in the notice of deficiency. 

An opportunity to dispute the 

underlying liability includes a prior 

opportunity for a conference with 

Appeals that was offered either before or 

after the assessment of the liability. 

* * * * * 

A–E6. Collection alternatives include, 

for example, a proposal to withdraw the 

NFTL in circumstances that will 

facilitate the collection of the tax 

liability, an installment agreement, an 

offer to compromise, the posting of a 

bond, or the substitution of other assets. 

A collection alternative is not available 

unless the alternative would be 

available to other taxpayers in similar 

circumstances. For example, the IRS 

does not consider an offer to 

compromise made by a taxpayer who, at 

the time of the CDP hearing, has not 

filed required returns or has not made 

certain required deposits of tax, as set 

forth in Form 656, ‘‘Offer in 

Compromise.’’ The collection 

alternative of an offer to compromise 

would not be available to such a 

taxpayer in a CDP hearing. 

* * * * * 

A–E7. The taxpayer may raise 

appropriate spousal defenses, 

challenges to the appropriateness of the 

NFTL filing, and offers of collection 

alternatives. The existence or amount of 

the underlying liability for any tax 

period specified in the CDP Notice may 

be challenged only if the taxpayer did 

not already have an opportunity to 

dispute the tax liability. If the taxpayer 

previously received a CDP Notice under 

section 6330 with respect to the same 

tax and tax period and did not request 

a CDP hearing with respect to that 

earlier CDP Notice, the taxpayer has 

already had an opportunity to dispute 

the existence or amount of the 

underlying tax liability. 

* * * * * 

(f) * * * 

(2) * * * 

A–F5. In seeking Tax Court or district 

court review of a Notice of 

Determination, the taxpayer can only 

ask the court to consider an issue, 

including a challenge to the underlying 

tax liability, that was properly raised in 

the taxpayer’s CDP hearing. An issue is 

not properly raised if the taxpayer fails 

to request consideration of the issue by 

Appeals, or if consideration is requested 

but the taxpayer fails to present to 

Appeals any evidence with respect to 

that issue after being given a reasonable 

opportunity to present such evidence. 

Q–F6. What is the administrative 

record for purposes of court review? 

A–F6. The case file, including written 

communications and information from 

the taxpayer or the taxpayer’s 

authorized representative submitted in 

connection with the CDP hearing, notes 

made by an Appeals officer or employee 

of any oral communications with the 

taxpayer or the taxpayer’s authorized 

representative and memoranda created 

by the Appeals officer or employee in 

connection with the CDP hearing, and 

any other documents or materials relied 

upon by the Appeals officer or 

employee in making the determination 

under section 6330(c)(3), will constitute 

the record in any court review of the 

Notice of Determination issued by 

Appeals. 

* * * * * 

(i) * * * 

(2) * * * 

Q–I1. What must a taxpayer do to 

obtain an equivalent hearing? 

A–I1. (i) A request for an equivalent 

hearing must be made in writing. A 

written request in any form that requests 

an equivalent hearing will be acceptable 

if it includes the information required in 

paragraph (ii) of this A–I1. 

(ii) The request must be dated and 

must include the following information: 

(A) The taxpayer’s name, address, 

daytime telephone number (if any), and 

taxpayer identification number (SSN or 

EIN). 

(B) The type of tax involved. 

(C) The tax period at issue. 

(D) A statement that the taxpayer is 

requesting an equivalent hearing with 

Appeals concerning the filing of the 

NFTL. 

(E) The reason or reasons why the 

taxpayer disagrees with the filing of the 

NFTL. 

(F) The signature of the taxpayer or 

the taxpayer’s authorized representative. 

(iii) The taxpayer must perfect any 

timely written request for an equivalent 

hearing that does not provide the 

required information set forth in 

paragraph (ii) of this A–I1 within a 

reasonable period of time after a request 

from the IRS. If the requested 

information is not provided within a 

reasonable period of time, the taxpayer’s 

equivalent hearing request will be 

denied. 

(iv) The taxpayer must affirm any 

timely written request for an equivalent 

hearing that is signed or alleged to have 

been signed on the taxpayer’s behalf by 

the taxpayer’s spouse or other 

unauthorized representative, and that 

otherwise meets the requirements set 

forth in paragraph (ii) of this A–I1, by 

the taxpayer’s spouse or any other 

representative, by filing, within a 

reasonable time after a request from the 

IRS, a signed written affirmation that 

the request was originally submitted on 

the taxpayer’s behalf. If the affirmation 

is not filed within a reasonable period 

of time, the equivalent hearing request 

will be denied with respect to the nonsigning taxpayer. 

* * * * * 

Q–I7. When must a taxpayer request 

an equivalent hearing with respect to a 

CDP Notice issued under section 6320? 

A–I7. A taxpayer must submit a 

written request for an equivalent 

hearing within the one-year period 

commencing the day after the end of the 

five-business-day period following the 

filing of the NFTL. This period is 

slightly different from the period for 

submitting a written request for an 

equivalent hearing with respect to a 

CDP Notice issued under section 6330. 

For a CDP Notice issued under section 

6330, a taxpayer must submit a written 

request for an equivalent hearing within 

the one-year period commencing the 

day after the date of the CDP Notice 

issued under section 6330. 

Q–I8. How will the timeliness of a 

taxpayer’s written request for an 

equivalent hearing be determined? 

A–I8. The rules and regulations under 

section 7502 and section 7503 will 

apply to determine the timeliness of the 

taxpayer’s request for an equivalent 

hearing, if properly transmitted and 

addressed as provided in A–I10 of this 

paragraph (i)(2). 

Q–I9. Is the one-year period within 

which a taxpayer must make a request 

for an equivalent hearing extended 

because the taxpayer resides outside the 

United States? 

A–I9. No. All taxpayers who want an 

equivalent hearing concerning the filing 

of the NFTL must request the hearing 

within the one-year period commencing 

the day after the end of the fivebusiness-day period following the filing 

of the NFTL. 

Q–I10. Where must the written 

request for an equivalent hearing be 

sent? 

A–I10. The written request for an 

equivalent hearing must be sent, or 

hand delivered (if permitted), to the IRS 

office and address as directed on the 

CDP Notice. If the address of the issuing 

office does not appear on the CDP 

Notice, the taxpayer should obtain the 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Proposed Rules 54687 

address of the office to which the 

written request should be sent or hand 

delivered by calling, toll-free, 1–800–

829–1040 and providing the taxpayer’s 

identification number (SSN or EIN). 

Q–I11. What will happen if the 

taxpayer does not request an equivalent 

hearing in writing within the one-year 

period commencing the day after the 

end of the five-business-day period 

following the filing of the NFTL? 

A–I11. If the taxpayer does not 

request an equivalent hearing with 

Appeals within the one-year period 

commencing the day after the end of the 

five-business-day period following the 

filing of the NFTL, the taxpayer foregoes 

the right to an equivalent hearing with 

respect to the unpaid tax and tax 

periods shown on the CDP Notice. The 

taxpayer, however, may seek 

reconsideration by the IRS office 

collecting the tax, assistance from the 

National Taxpayer Advocate, or an 

administrative hearing before Appeals 

under its Collection Appeals Program or 

any successor program. 

* * * * * 

(j) Effective date. This section is 

applicable 30 days after the date final 

regulations are published in the Federal 

Register with respect to requests made 

for CDP hearings or equivalent hearings 

on or after the date 30 days after final 

regulations are published in the Federal 

Register. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 05–18469 Filed 9–15–05; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[REG–150091–02] 

RIN 1545–BB97 

Miscellaneous Changes to Collection 

Due Process Procedures Relating to 

Notice and Opportunity for Hearing 

Prior to Levy 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This document contains 

proposed amendments to the 

regulations relating to a taxpayer’s right 

to a hearing before or after levy under 

section 6330 of the Internal Revenue 

Code of 1986. The proposed regulations 

make certain clarifying changes in the 

way collection due process (CDP) 

hearings are held and specify the period 

during which a taxpayer may request an 

equivalent hearing. The proposed 

regulations affect taxpayers against 

whose property or rights to property the 

Internal Revenue Service (IRS) intends 

to levy on or after January 19, 1999. This 

document also contains a notice of 

public hearing on these proposed 

regulations. 

DATES: Written and electronic comments 

must be received by December 15, 2005. 

Outlines of topics to be discussed at the 

public hearing scheduled for 10 a.m. on 

January 19, 2006 must be received by 

December 29, 2005. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–150091–02), Room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to CC:PA:LPD:PR (REG–150091–02), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the IRS Internet site 

at http://www.irs.gov/regs or via the 

Federal eRulemaking Portal at http:// 

www.regulations.gov (indicate IRS and 

REG–150091–02). The public hearing 

will be held in the IRS Auditorium, 

Internal Revenue Building (7th Floor), 

1111 Constitution Avenue, NW., 

Washington, DC. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, call 

Laurence K. Williams, 202–622–3600 

(not a toll-free number). Concerning 

submissions and/or to be placed on the 

building access list to attend the 

hearing, call Robin Jones, 202–622–7180 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains proposed 

amendments to the Regulations on 

Procedure and Administration (26 CFR 

part 301) relating to the provision of 

notice under section 6330 of the Internal 

Revenue Code to taxpayers of a right to 

a CDP hearing (CDP Notice) before levy. 

Final regulations (TD 8980) were 

published on January 18, 2002 in the 

Federal Register (67 FR 2549). The final 

regulations implemented certain 

changes made by section 3401 of the 

Internal Revenue Service Restructuring 

and Reform Act of 1998 (Pub. L. 105–

206, 112 Stat. 685) (RRA 1998), 

including the addition of section 6330 

to the Internal Revenue Code. The final 

regulations affected taxpayers against 

whose property or rights to property the 

IRS intends to levy. 

Section 3401 of RRA 1998 also added 

section 6320 to the Internal Revenue 

Code. That statute provides for notice to 

taxpayers of a right to a hearing after the 

filing of a notice of Federal tax lien 

(NFTL). A number of the provisions in 

section 6330 concerning the conduct 

and judicial review of a CDP hearing are 

incorporated by reference in section 

6320. On January 18, 2002, final 

regulations (TD 8979) under section 

6320 were published in the Federal 

Register (67 FR 2558) along with the 

final regulations under section 6330. 

Explanation of Provisions 

A taxpayer is entitled to one CDP 

hearing with respect to the tax and tax 

period covered by a CDP Notice 

concerning a levy or a CDP Notice 

concerning the filing of a NFTL. The IRS 

Office of Appeals (Appeals) has 

conducted over 92,000 CDP hearings 

and more than 30,000 equivalent 

hearings since sections 6320 and 6330 

became effective for collection actions 

initiated on and after January 19, 1999. 

In general, the experience of the past 

six years with CDP hearings has 

demonstrated that there is a need for 

changes to allow Appeals to effectively 

and fairly handle the cases of taxpayers 

who raise issues of substance. Appeals 

has instituted many improvements in its 

processing of CDP cases and has 

conducted extensive training in an effort 

to provide careful, but timely, review of 

CDP cases, which currently are filed at 

a rate of approximately 2,450 per 

month. The proposed regulations, if 

adopted as final regulations, will 

increase efficiency without 

compromising the quality and fairness 

of review. 

In many CDP cases, significant time is 

spent merely identifying the issues. 

Although the Form 12153 used to 

request a CDP hearing requires a 

taxpayer to state a reason or reasons for 

disagreeing with the proposed levy, 

many taxpayers either do not supply 

that information, or raise new issues 

during the CDP hearing process not 

identified on the hearing request. Delays 

result while taxpayers provide new 

supporting documentation and Appeals 

personnel reconsider prior conclusions 

in light of the new information. Cases of 

other taxpayers pending in Appeals are 

delayed because other work must be 

constantly rescheduled. 

Cases are also delayed when 

taxpayers propose collection 

alternatives for which they are not 

eligible. The IRS does not consider 

offers in compromise or installment 

agreements from taxpayers who have 

failed to file required returns as of the 

date the offer or the proposed