Appeals collection developments.

• Author: Ely, Mark H.
• Position: IRS appeals

As part of the IRS reorganization, the Appeals organization has been restructured. It now has a different management configuration, new programs and streamlined processes. The new structure' includes three operating divisions--Large & Midsize Business (LMSB), Small Business/Self Employed-Tax Exempt/ Government Entities (SBSE-TEGE) and Wage and Investment (W&I). The Appeals organization assigns collection cases to SBSE-TEGE and W&I appeals officers.

Since the Internal Revenue Service Restructuring and Reform Act of 1998 (IRSRRA '98), Appeals has reported a steady increase in cases involving collection issues and processes. Presently, collection-related cases are 40% of Appeals' total caseload. This number represents an all-time high, and an exciting challenge and change from the historical focus on income-tax examination issues.

Background

Taxpayers gained new procedural rights and safeguards under the IRSRRA '98, called Collection Due Process (CDP). Taxpayers can appeal proposed levy actions and a filed Notice of Federal Tax Lien. When a taxpayer opposes the filed lien or proposed levy action, he can participate in a CDP hearing, in which he has protections similar to those in dealing with other creditors (Section 3401).

During the CDP hearing, taxpayers can propose alternatives to the collection process. Most taxpayers choose installment agreements and offers in compromise (OICs) as alternatives. The Service cannot take levy action while their CDP case is in Appeals--unless the Service can show that collection is in jeopardy.

Appeals Collection Workload

CDP cases have been the fastest-growing part of Appeals collection inventory. As of February 2001, CDP represented 62% of the total collection workload. The CDP receipts in March 2001 continue the trend. Exhibits 1 and 2 present data on collection inventory and receipts for CDP, OIC, Trust Fund Recovery (TFRP), Penalty Appeals (PENAP), Collection--Miscellaneous (CO-OTHER.) and the Collection Appeals Program (CAP).

Exhibit 1: Collection-type inventory(*) CDP 62% (11,136) PENAP 4% (754) OIC 25% (4,464) TFRP 6% (1,029) Co-Other 2% (368) CAP 0% (69) (*)Note: Percentages add only to 99% Exhibit 2: Collection-type receipts CDP 60% (7,761) PENAP 6% (718) OIC 23% (2,951) TFRP 4% (513) Co-Other 2% (202) CAP 5% (640) Note: Table made from a pie chart. OIC, PENAP and CAP cases have also been increasing. Appeals offices are preparing for increases in the OIC program because it is popular with the...