I've called the Internal Revenue Service or Filed Form 9465 to request an installment agreement for my client and they have denied my request or the IRS has modified my client's installment agreement based on financial information and my client can't meet the terms. What do I do now? What recourse remains? Can I appeal?
The reason for the denial can be any of a number of things including a request to "pyramid" installment agreements or a request for a term that doesn't liquidate the debt before the collection statute of limitations expires. In the case of a modification, the IRS may have based the modification on incorrect information or disregarded financial information that should be reconsidered. ("Pyramiding" refers to a common problem where a taxpayer has an unpaid installment agreement from a prior year and cannot pay their taxes in the current year, requiring another or a combination of installment agreements).
The taxpayer has well documented appeal rights in all of these cases under the Collection Appeals Program (CAP). According to the IRS the "Collection Appeals Program is available for the following:
1. Modification or proposed modification of an installment agreement
2. Rejection of an installment agreement
3. Termination or proposed termination of an installment agreement
4. Before or after the IRS files a Notice of Federal Tax Lien
5. Before or after the IRS levies or seizes your property"
(We will only discuss items 1 through 3 in this article. See the supplemental material below for information on items 4 and 5.)
The CAP usually takes less time than other appeal paths but there is one important downside: by using the CAP the taxpayer cannot go to court if they disagree with the result of the appeal process. Taxpayers can represent themselves in the CAP or they may be represented under a Form 2848 Power of Attorney by an attorney, CPA, Enrolled Agent, a member of the taxpayer's immediate family or partners, full-time employees, or officers, in the case of a business.
If you're on the telephone with an agent and they deny your request, you should request to speak to the Collection Manager, but this is not mandatory in cases 1 through 3 above. (See the instructions for Form 9423 for details concerning liens and levies.) The manager may take a couple of days to return your call. Try to work the problem out at that level, if possible. The taxpayer is not entitled to a face-to-face meeting under the CAP but does have a statutory right to appeal.
If an agreement can't be worked out with the Collection Manager, the taxpayer has 30 days to file Form 9423, Collection Appeal Request. State your case in detail on Form 9423 and file by certified U.S. Mail and fax, if possible, with the office or Revenue Officer that took the adverse action on your case. Do not file your Collection Appeal Request directly with appeals.
IRS publications 594, The IRS Collection Process, Publication 1660, Collection Appeal Rights, and the instructions for Form 9423 all contain additional very important information
Jim Beddow, PC, works with individuals and business clients and offers QuickBooks training, outsourced accounting, tax services and profit improvement for his business clients.