part8-59

8.21.5 
Appeals Collection Statutes

8.21.5.1 
(06-01-2007)
General Overview of Collection Statutes

  1. This section provides guidance to Appeals employees by defining responsibility
    for verifying, updating, and monitoring statutes on Collection cases.

  2. The procedures presented represent the minimum standard that each employee
    is expected to follow when handling Collection cases in Appeals.

  3. Principal responsibility for monitoring the statute of limitations on
    Collection cases rests with the Collection function. However, Appeals employees
    have the duty to monitor the statute on Collection cases in their inventories
    to ensure the statute is suspended, when suspension is applicable, or to note
    short statute cases and inform Collection of that status.

  4. By definition, a short statute case is one with 12 months or less remaining
    on the Collection Statute Expiration Date (CSED).

8.21.5.1.1 
(06-01-2007)
All Employees Responsibility

  1. All employees should be alert to possible statute situations or problems
    and take action, whenever possible, to prevent barred assessments.

  2. Within five (5) workdays from receipt of the case, the employee will
    review the file to determine that all statute dates are correctly shown on
    Appeals Centralized Database System (ACDS).

  3. An entry must be made in the Case Activity Record (CAR) to indicate
    that the statute date was verified. An explanation of any unusual considerations
    pertaining to the statute of limitations should also be included in the CAR.

  4. Employees should always be aware of the statutes on cases in their physical
    possession. They must continue to monitor the statute as long as the case
    is in their possession.

8.21.5.1.2 
(06-01-2007)
(CSED)

  1. Internal Revenue Code Section (IRC) 6502 provides that the length of
    period for collection after assessment of a tax liability is 10 years. Each
    tax assessment has a Collection Statute Expiration Date (CSED).

  2. Any tax assessed on or after November 6, 1990, is collectible for 10
    years from the date of assessment. Previously, the collection statute ran
    for a 6 year period. Any tax assessed on or before November 5, 1990, on which
    the former 6 year statute of limitations had not expired on November 6, 1990,
    is collectible for 10 years from the date of assessment.

  3. Once a tax liability is assessed, the statute of limitations for collection
    begins to run. The expiration of the collection statute ends the Government’s
    right to pursue collection of a liability.

8.21.5.1.3 
(06-01-2007)
RRA98 Section 3461 Procedures Relating to the Extension of Statute
of Limitations by Agreement

  1. Effective January 1, 2000, the Service and the taxpayer cannot agree
    to extend the period of limitations on collection except in conjunction with
    installment agreements and releases of levy. Extensions of the period of limitations
    on collection in effect on December 31, 1999, expired no later than December
    31, 2002.

  2. The IRS will only extend the period of limitations on collection in
    conjunction with Partial Payment Installment Agreements (PPIA) in limited
    situations. See IRM 5.14.2, Collection Statute Expiration Date (CSED), and
    Partial Payment Installment Agreements, for limitations and examples of appropriate
    situations to extend the period of limitations on collection.

8.21.5.2 
(06-01-2007)
Collection Cases Not Accepted by Appeals

  1. Most Collection cases can now be appealed per statutory provisions.
    Those provisions may suspend or extend the statute for timely responses, or
    otherwise have unique provisions. However, if an Appeals Processing Services
    (APS) employee receives any of the following cases for carding in, flag the
    case, noting the untimely appeal, for the hearing officer to verify and, if
    appropriate, return the case to Compliance as a premature referral:

    1. Trust Fund Recovery Penalty (TFRP) case where there is less than a year
      remaining on the Assessment Statute Expiration Date (ASED) and the taxpayer
      failed to file the appeal of the proposed assessment within 60 days after
      the mailing or delivery of the proposed assessment unless a waiver extending
      the statutory period was secured.

    2. Offer in compromise (OIC) cases where the taxpayers appealed too late.

      If a request for an appeal is received that is postmarked after
      the 30th day following the date of the rejection letter, return the case as
      a premature referral. Limitation periods on untimely appeals are not suspended.

8.21.5.3 
(06-01-2007)
Transaction Codes That Carry Their Own CSED

  1. In addition to Transaction Code (TC) 150 – Tax Assessed, there
    are certain other TC codes with specific reference numbers that carry their
    own CSEDs. As of February 28, 2004, these TC codes will display their own
    CSEDs on the Integrated Data Retrieval System (IDRS). A table of these TC
    codes follows:

    TC 160 Failure to File – Manually Computed Delinquency Penalty
    TC 166 Computer Generated Failure to File Delinquency Penalty
    TC 170 Estimated Tax Penalty
    TC 176 Computer Generated Estimated Tax Penalty
    TC 180 Manually Assessed Failure to Deposit (FTD) Penalty
    TC 186 Computer Generated Federal Tax Deposit Penalty
    TC 234 Daily Delinquency Penalty (if it is the only CSED in the module)
    TC 238 Daily Delinquency Penalty
    TC 240 Miscellaneous Penalty (all except for Reference Codes 697 and 699)
    TC 246 Computer Generated 8752 or 1065 Penalty
    TC 290 Additional Tax Assessment
    TC 294 Additional Tax Assessment with Interest Computation Date
    TC 298 Additional Tax Assessment with Interest Computation Date
    TC 300 Additional Tax or Deficiency Assessment by Examination or Collection
    TC 304 Additional Tax or Deficiency Assessment by Examination or Collection
    TC 308 Additional Tax or Deficiency Assessment by Examination with Interest
    Computation Date
    TC 320 Fraud Penalty
    TC 340 Restricted Interest (with Doc Code 47 for 9603 and subsequent)
    TC 350 Negligence Penalty

8.21.5.4 
(06-01-2007)
Suspension and Extension of the Statute of Limitations

  1. A number of conditions can suspend or extend the general statute of
    limitations for collection. In the following sections, we will briefly discuss
    the most common conditions which influence the Collection Statute of Limitations.

    1. Suspension stops the running of the statute for a period of time. This
      action results in an extension beyond the general CSED.

    2. An extension does not suspend or otherwise affect the general 10-year
      period. It simply adds additional time to the end of the period.

8.21.5.4.1 
(06-01-2007)
Bankruptcy

  1. Generally, when a taxpayer files bankruptcy, the CSED is suspended by
    the length of time the taxpayer is in bankruptcy, plus 6 months.

  2. A TC 520 is input, with the appropriate closing code, on the date the
    bankruptcy is filed.

  3. A TC 521 is input as of the date the case is discharged or dismissed
    from bankruptcy. The CSED is suspended for this period of time plus 6 months
    in most cases. See IRM 5.9.5.6.1, Closing Codes and IRM 5.9.5.6.2, Reversing
    the Bankruptcy Indicator.

8.21.5.4.2 
(06-01-2007)
Judgment/Litigation

  1. The CSED is suspended in respect of any penalty under IRC 6700, 6701
    or 6702 for the period during which the Agency is prohibited from collecting
    by levy or a proceeding in court. When a suit to extend the collection statute
    is in the Government’s interest, it must be filed prior to the statue
    expiration. The filing of a suit to reduce the tax claim to judgment will
    suspend the collection statute during litigation.

  2. TC 520 with closing codes 70 through 75 does not suspend the CSED.

  3. TC 520 with closing codes 76 through 81 and closing code 84 suspends
    the CSED, unless a TC 550 (new CSED) is posted with a later transaction date.

8.21.5.4.3 
(06-01-2007)
Offer in Compromise (OIC)

  1. Computing the CSED on an OIC case requires the application of several
    rules, depending on when the OIC was filed and/or accepted.

  2. The Form 656, Offer in Compromise, waiver of the collection statute
    used prior to January 1, 2000, provided for a CSED suspension for a pending
    OIC plus 1 year. The CSED was suspended by contract.

  3. Several legislative changes have provided or revoked the Services ability
    to suspend the statutory period of collection for Offers in Compromise.

    Law Change
    The IRS restructuring and Reform Act of 1998 (RRA 98) Section 3461 of RRA 98 eliminated the Services ability to extend
    the CSED after December 31, 1999. Therefore, the CSED was only extended while
    the offer is pending: during the 30-day period following the rejection of
    the offer or during the time an appeal of the offer rejection is under consideration.
    The waiver provision is applicable for all offers submitted before December
    31, 1999. All statute extensions secured prior to December 31, 1999 and extended
    beyond December 31, 2002 expired on December 31, 2002 or the original CSED
    date whichever is longer.
    Community Renewal Tax Relief Act dated December 21, 2000 The CSED was not suspended for pending offers for the period of December
    21, 2000 to March 09, 2002.
    The Job Creation and Worker Assistance Act of 2002 Effective March 09, 2002 and forward, input of the TC 480 suspends
    the CSED period during the time an offer is pending, during the thirty days
    following rejection of an offer and for any period when a timely filed appeal
    from the rejection is being considered by Appeals. That is for the period
    of time between the TC 480 and the TC 481, TC 482 or TC 780 only (do not add
    a year to this suspension). This law change is not retroactive.

  4. Now, by signing the Form 656, the taxpayer waives the statutory period
    for assessment for periods included in the offer (See Form 656, Sections V
    (a) and V (k) beginning on the date the offer is deemed pending. The taxpayer
    can no longer extend the CSED.

  5. TC 480 suspends the CSED.

  6. Use the table below as a guide to determine the CSED suspension periods:

    If Then Limited to:
    The offer was pending on or after 03/09/2002 The statute is suspended while levy is prohibited. Levy is prohibited
    during the period the offer is pending and for an additional 30 days if the
    offer is rejected. If the taxpayer appeals rejection of the offer in a timely
    manner, levy is further prohibited during the period the appeal is pending.
    IRC 6331 (k). The appeal is considered pending until the ATM signs the Form
    5402.     		The number of days the statute was suspended. Upon acceptance, the
    statute begins running again.
    The offer was submitted on or after 01/01/2000 and closed on or after
    12/21/2000 but before 03/09/2002     		The statute is suspended until 12/21/2000. The days the offer was pending prior to 12/21/2000.
    The offer was submitted and pending prior to 01/01/2000 and closed
    on or after 12/21/2000 but before 03/09/2002     		The statute is suspended while the offer was pending up to 12/21/2000
    and extended for an additional year.     		To the time the offer was pending. Upon acceptance, the statute begins
    running again.
    The offer was submitted and pending prior to 01/01/2000 and closed
    between 01/01/2000 and 12/21/2000     		The statute is suspended for the period the offer was pending to the
    date of acceptance and extended an additional year.     		To the original CSED or 12/31/2002 whichever is later.
    The offer was submitted, pending and accepted prior to 01/01/2000 The statute is suspended for the period the offer is pending, during
    the time the terms are monitored and extended for an additional year     		To the original CSED or 12/31/2002 whichever is later.

8.21.5.4.4 
(06-01-2007)
Installment Agreements with Form 900 Tax Collection Waiver

  1. Effective March 9, 2002, the CSED is suspended during:

    1. the time the proposed installment agreement is pending,

    2. 30 days following the rejection of an installment agreement,

    3. 30 days following termination of an installment agreement, and,

    4. during any appeal of the termination or rejection of the installment agreement.

  2. Although the Service can accept agreements to extend the period of limitations
    on collection in conjunction with installment agreements, the Service will
    do so only in limited situations. IRM 5.14.2, Collection Statute Expiration
    Date (CSED), and Partial Payment Installment Agreements, provides examples
    of appropriate situations to accept statute extension requests.

  3. Appeals Officers/Settlement Officers (AOs/SOs) have the authority
    to secure a Form 900, Collection Statute Extension, in limited situations
    in conjunction with a PPIA. The waiver period should be determined based upon
    the situation, but should not exceed 5 additional years plus 1 year to provide
    for other administrative actions, and the AO/SO should follow IRM 5.14.2 in
    considering whether an extension is appropriate.

    1. There is an asset that will come into existence after the CSED and the
      liquidation of that asset would offer the best case resolution in lieu of
      liquidating existing assets to partially pay the liability.

      Example 1:: The taxpayer owes individual
      income tax and is the beneficiary to a trust. The taxpayer will receive a
      monthly distribution from the trust which is used to fund the PPIA. The taxpayer
      will not be entitled to the principal of the trust for two more years. The
      CSED will expire in 1 year. The only other asset is the taxpayer’s primary
      residence. The equity in the property is less than the net value of the trust
      but is available for immediate collection action. The taxpayer has been unable
      to secure a loan against the equity of the property due to numerous factors
      such as limited income and poor credit. The risk analysis was completed by
      the revenue officer and the taxpayer offered to extend the statute to liquidate
      the trust in 2 years. The waiver was secured for 2 additional years plus 1
      additional year.

      Example 2: A corporation taxpayer cannot
      pay it’s payroll tax liability within the statute. They can make partial
      payments for the remaining life of the statute. The corporation is current
      with their federal tax deposits. The corporation has an interest in vacant
      real property which is under development and will be completed in 2 years.
      The land once developed would increase significantly in value and will be
      immediately sold. The CSED will expire in 1 year. Seizing and selling the
      assets of the business which would include the vacant land and other construction
      equipment would not significantly reduce the liability and would impact the
      business’ ability to complete the development of the property. The corporate
      officers offer to extend the statute to provide the opportunity to complete
      the development and pay the taxes along with other business debts. The TFRP
      would be addressed per IRM procedures.

      Example 3: The taxpayer cannot pay the liability
      within the CSED but can make monthly payments. The statute will expire in
      12 months. The taxpayer has no distrainable assets. The taxpayer owes $1,800
      and it is determined that they can pay $100 per month. A waiver is not secured.
      The statute would be allowed to expire.

  4. The processing of Form 900 generates a TC 550 extending the CSED.

8.21.5.4.5 
(06-01-2007)
Collection Due Process (CDP)

  1. On timely filed CDP requests, Appeals is responsible for providing the
    TC 521 date, which is the date the collection statute will start running again.
    A TC 520 with a closing code of 76 or 77 reflects the date of receipt of a
    CDP request for hearing, which is the beginning date of the collection statute
    suspension. The TC 521 is then input when the Appeals determination and any
    additional appeal period becomes final.

    Note:

    The Equivalent Hearing and Retained
    Jurisdiction cases do not have a TC 520 input and are not subject to a suspension
    of the statute.

  2. The date the Appeals determination becomes final is determined as follows:

    1. The date the 30-day period within which the taxpayer could appeal to the
      Tax Court or District Court expires, if the taxpayer does not exercise his/her
      right to judicial review.

    2. The date upon which judicial review including any appeals to higher courts
      is completed (if the taxpayer timely begins the review process to the Tax
      Court or to a Federal District Court). The time for appeal from the Tax Court
      is 90 days and the time for appeal to District Court is 60 days. These periods
      must be added to the decision/dismissal date for the updated statute. Should
      the taxpayer go to Appeals Court, the time to request a writ of certiorari
      to the Supreme Court is 90 days and that period should be added to any case
      that went to the Appeals Court.

  3. If the re-computed CSED is less than 90 days from the TC 521, the CSED
    is extended to equal 90 days. The exception to the systemic update of the
    CSED is IMF accounts involving joint income tax liabilities where only one
    spouse has requested the hearing. For MFT 30 accounts, input the appropriate
    Internal Revenue Manual (IRM) CSED Taxpayer Identification Number (TIN) indicator
    with the TC 520. The indicators are as follows:

    1. “P”
      – CSED suspended only for the primary TIN spouse.

    2. “S”
      – CSED suspended only for the secondary TIN spouse.

    3. “B”
      – CSED suspended on both primary and secondary
      TINS. The CSED is systemically updated when the CSED indicator is”
      B”
      .

      Note:

      If Appeals secures the signature/validation of a non-signing
      spouse after contact, the CSED TIN indicator needs to be corrected to “B”
      to ensure no levy action is taken on the original non-signing
      spouse. See IRM 8.7.2.3.2(8), Case Receipt Review and Controls under Collection
      Due Process Appeals, for more information.

  4. The CSED is still suspended for the particular spouse when the CSED
    indicator is “P”
    or “S”
    However, the
    module will reflect the earliest CSED. When needed, the CSED reflected on
    the module can be updated by inputting a TC 550 with action code 10 reflecting
    the new CSED date. For multiple assessment tax periods, update the latest
    CSED.

    Note:

    A CDP Proceeding concerning a partnerships liability suspends
    the CSED for the liability without the need to determine separate CSEDs for
    the individual partners.

  5. Because the statute will be computed by the system, it is vital that
    the correct TC 520 and TC 521 dates are reflected.

    1. The TC 520 date must reflect the beginning date of the statute suspension
      period, which is the receipt date, unless this date is after the 30 days on
      a CDP request that is postmarked timely.

    2. If the receipt date is after the 30 days but the postmark date is before
      the 30 days, the TC 520 date should be the postmark date. The postmark date
      will be used to show that the CDP hearing request was filed timely. This is
      to ensure that taxpayers receive a CDP hearing when they are entitled to one.
      Timely mailed constitutes timely filing if the taxpayers request for a CDP
      hearing is correctly addressed to the IRS office listed in the CDP hearing
      notice, or if that address is not known, to the Compliance Area Director serving
      the location of the taxpayers residence or principal place of business. When
      the postmark is illegible or the envelope is missing, ascertain a reasonable
      period for mail delivery from the origin of the request to the receiving office
      and deduct that amount of time from the received date. If the 30th day is
      a Saturday, Sunday, or federal holiday, and the postmark is for the next business
      day, it is timely. The envelope in which the hearing request was mailed should
      be kept to assist in verifying timeliness.

    3. No TC 520 is entered if both postmark and received date are after 30 days.
      This is an Equivalent Hearing (EH) case. See IRM 8.7.2.3.15, Equivalent Hearings,
      for statute discussion and EH cases.

8.21.5.4.6 
(06-01-2007)
Taxpayer Living Outside the United States

  1. The period of limitations on collection after assessment is suspended
    while the taxpayer is outside the U.S. if the absence is for a continuous
    period of at least 6 months pursuant to IRC 6503(c).

  2. To ensure the Government has an opportunity to collect the tax after
    the taxpayer’s return, the period of limitations does not expire (where
    the taxpayer has been out of the country for 6 months or more) until 6 months
    after the taxpayer’s return to the country.

8.21.5.4.7 
(06-01-2007)
Relief from Joint and Several Liability on Joint Returns/Innocent
Spouse

  1. Collection activity is suspended for the requesting spouse when he or
    she makes an election under IRC 6015(b) and/or (c). Collection activity against
    the nonrequesting spouse is not prohibited and should continue.

    Note:

    The
    IRS may rely on the requesting spouses election on Form 8857, Request for
    Innocent Spouse Relief, for purposes of determining whether the CSED is suspended
    even in those circumstances where the requesting spousess election is improper
    on its face.

  2. The collection period is suspended from the filing of the claim until
    a waiver is filed, or until expiration of the 90 day period for petitioning
    the Tax Court, or if a Tax Court petition is filed, 90 days from when the
    Tax Court decision becomes final, plus 60 days.

    Note:

    Although collection
    of the liability from the requesting spouse may resume, in the absence of
    the filing of an appeal bond, on the date the requesting spouse files a notice
    of appeal of an adverse Tax Court decision, the Service will not resume collection
    activity unless the CSED is imminent or collection will be
    jeopardized by the delay.

  3. Although a request for relief made solely under IRC 6015(f) or IRC 6013(e)
    does not suspend the period of limitations on collection, the Service will
    delay enforcement actions to collect the tax during the pendency of the claim unless the CSED is imminent.

  4. If a request for relief is made in response to the Collection Due Process
    procedure, there is also a suspension of the collection activity during the
    period provided for by IRC 6330(e) for the pending of any administrative hearing
    and appeals therein regarding the levy.

    1. The rules for suspension under IRC 6330 differ from IRC 6015. In general,
      the latest suspension of collection and the collection period should control,
      which may require analyzing the suspension under both sections where relief
      from joint and several liability is requested as part of an IRC 6330 hearing.

  5. If the requesting spouse signs a waiver of the restrictions on collection,
    the suspension of the period of limitation on collection against the requesting
    spouse will terminate 60 days after the waiver is filed with the Agency, limiting
    the CSED extension to the period from when the claim was filed to the time
    the waiver was signed, plus 60 days.

8.21.5.4.8 
(06-01-2007)
Taxpayer Assistance Order (TAO)

  1. IRC 7811(d) requires the suspension of the applicable statutes of limitations
    (collection and assessment) on Forms 911, Application for Taxpayer Assistance
    Order (ATAO), signed by the taxpayer or duly authorized representative when
    the request for relief involves an action described in IRC 7811(b). The suspension
    applies to all periods the application for relief relates.

    • Example: If the taxpayer is requesting relief from
      a levy, then the collection statute of limitations is suspended for the periods
      identified in the levy.

  2. The suspension begins on the date the written application for a TAO
    is received and ends on the date a decision is made with respect to the application.
    The date the decision is made on the application will either be:

    1. the date the TAO is issued (or the date the review is completed by the
      party or parties capable of rescinding or modifying the TAO);

    2. the date the ATAO is denied, or

    3. the date an agreement is reached with the involved function as to what
      should be done with the assistance request.

      Note:

      In counting the number of
      days for the suspension, include all calendar days except the day the application
      is received.

  3. Due to system programming limitations, Taxpayer Advocate Service (TAS)
    employees currently do not input the appropriate IDRS codes to reflect the
    suspension of the statute of limitations. TAS employees will input the appropriate
    IDRS codes to show the correct suspension periods once programming enhancements
    are completed.

8.21.5.4.9 
(06-01-2007)
Military Deferment

  1. The collection of income tax on the income of a service member falling
    due before or during military service shall be deferred for a period not more
    than 180 days after termination of or release from military service, if the
    service members ability to pay the income tax is materially affected by his/her
    military service.

  2. The accrual of interest, penalties, and other additional amounts will
    resume 180 days after termination of, or release from, military service, but
    enforcement actions to collect the amounts due may be deferred for an additional
    90 days.

  3. TC 500 with Closing Code 50 suspends the CSED for Military Deferment.
    See IRM 5.1.7.9, Accounts of Taxpayers Who Serve in Combat Zones, and IRM
    5.1.7.9.3, Combat Zone Freeze Codes. Closing Code 51 suspended the CSED for
    Military Deferments prior to January 1, 2004.

8.21.5.4.10 
(06-01-2007)
Accounts of Taxpayers Who Serve in a Combat Zone

  1. Individuals who serve in an officially designated combat zone will have
    payment and collection of any federal tax liability suspended during the period
    of the individual’s service in the combat zone, plus any period of continuous
    hospitalization outside the United States as a result of injury received while
    serving in the combat zone, plus the next 180 days thereafter See IRM 5.1.7.9,
    Accounts of Taxpayers Who Serve in a Combat Zone. For exceptions see IRC 7508(e).

  2. The combat zone freeze code suspends CSED and can be set in two ways.
    See IRM 5.1.7.9.3, Combat Zone Freeze Codes.

    1. Processing of a tax return where the taxpayer has written ”
      Serving in Desert Storm/Shield”
      , “Serving in Bosnia”
      ,”Serving in Former Yugoslavia”
      , “Serving in Allied
      Force”
      , “Serving in Afghanistan”
      , or ”
      Serving in Enduring Freedom.”

    2. Manual input of TC 500 with Closing Code

    • 52 for the Desert Storm Combat Zone

    • 54 for Bosnia or Former Yugoslavia or Allied Force

    • 56 for Afghanistan or Enduring Freedom Iraq

  3. TC 502 releases hold established by TC 500 and new CSED date is input
    by TC 550.

  4. For more information see IRM 5.19.1.7.10, Combat Zone Accounts.

8.21.5.4.11 
(06-01-2007)
Wrongful Levy (Seizure)

  1. A wrongful levy suspends the running of the period of limitation on
    collection, See IRC 6503(f)(1)). The collection statute is suspended from
    the date property (including money) of a third party was wrongfully seized
    or received, to the date the property is administratively returned pursuant
    to IRC 6343(b), or to the date on which a wrongful levy judgment with respect
    to such property becomes final, and 30 days thereafter.

  2. When the period of limitation is suspended under this provision, it
    is suspended only for the amount of money or value of specific property which
    initially has been wrongfully taken from a third party and subsequently returned.
    This amount or value is determined as of the date the property was returned.
    See IRM 5.17.3, Levy and Sale.

8.21.5.4.12 
(06-01-2007)
Wrongful Lien

  1. A wrongful lien suspends the running of the period of limitation on
    collection. See IRC 6503(f) (2). The collection statute is suspended from
    the date any person becomes entitled to a certificate of discharge of lien
    under IRC 6325(b) (4) until the earlier of the earliest date on which the
    Agency no longer holds any amount as a deposit or bond under IRC 6325(b) (4)
    or the date on which a judgment under IRC 7426(b) (5), concerning the amount
    deposited or used as a bond, becomes final.

  2. When the period of limitation is suspended under this provision, it
    is suspended only for the value of the interest to the United States in the
    property plus interest, penalties and additions to tax and additional amount
    attributable thereto. See IRM 5.17.2, Federal Tax Liens.

8.21.5.4.13 
(06-01-2007)
Estate Tax Lien

  1. When payment of the estate tax is deferred under IRC section 6166, the
    executor may grant the Agency a lien under IRC section 6324A instead of the
    bond provided for under IRC section 2204 or IRC section 6165.

  2. It attaches specifically to the IRC section 6166 lien property or to
    other pledged property of equivalent value. The deferral period and subsequent
    installment agreement may last up to 15 years.

  3. The statue of limitations for collection of estate tax is suspended
    for the period of any extension of time to pay granted under IRC section 6166
    (for the amount of extension only).

    Note:

    IRC section 6503(d) also provides
    for the suspension of the statute of limitations on collection for any extension
    of time for payment granted under IRC sections 6161(a)(2), (b)(2) or 6163.

    1. The executor and all parties having any interest in the property must
      agree, in writing, to the filing of the IRC section 6324A lien.

    2. The estate is permitted to substitute an IRC section 6324A lien for the
      performance bond otherwise required prior to approving the IRC section 6166
      extension. See IRM 5.5.6.2, Service Actions to Ensure Payment When Granting
      Installment Privileges.

    3. Compliance Area Technical Support files Form 668J (Notice of Federal Estate
      Tax Lien Under Internal Revenue Laws) for IRC 6324A cases when all required
      signatures have been secured agreeing to the lien. See IRM 5.5.6, Estate Tax
      Installments, and IRM 5.5.8, Estate Tax Liens.

8.21.5.4.14 
(06-01-2007)
Pending, Rejected, Terminated or Appeal of Installment Agreements

  1. The IRS is restricted from issuing a levy while an installment agreement
    is pending for 30 days after rejection or termination, and during any appeal.
    See IRC 6331(k)(2)(A-D. The period of limitations on collection is suspended
    during this time.

    Note:

    Pending Installment Agreement, from the time of the
    input of TC 971, Action Code 043 until input of TC 971, Action Code 063 or
    TC 972, Action Code 043, suspends the CSED. In addition, the period from an
    active installment agreement termination to the taxpayer’s appeal suspends
    the CSED.

  2. Although the IRS is prohibited from issuing a levy while an installment
    agreement is in effect, the period of limitations on collection is not suspended
    during this time.

8.21.5.5 
(06-01-2007)
Equivalent Hearing Cases (EH)

  1. In the event an EH case is received with insufficient time to schedule
    and conduct a hearing and issue a decision letter before the CSED will expire,
    the Appeals technical employee must notate the ACDS case history with the
    facts as to why his or her inventory situation or other factors will prevent
    completion of the case before the CSED expires and notify his or her ATM immediately.

  2. The ATM will review the facts, and consider reassignment of the case
    to another Appeals technical employee who will be able to complete the case
    before the CSED expires. If the case cannot be reassigned or otherwise completed
    in time, the ATM will annotate the ACDS case history regarding his or her
    review of the facts.

  3. If the case came from the field, the hearing officer is to notify either
    the Revenue Officer or the Revenue Officer’s Group Manager when a year
    or less remains on the CSED. If the case came from ACS, do not notify ACS
    about the pending CSED date. There is nothing ACS can do to protect the CSED
    nor are they required to remove it from their inventory. ACS requests that
    when the CSED has expired, the case be returned to them as quickly as possible
    so that they may close it out of inventory.

  4. Even if the CSED is expiring soon, the taxpayer must still be offered
    an EH. However, a withdrawal should be solicited from the taxpayer when all
    balance due periods that are the subject of the EH request have an expired
    CSED.

    Note:

    The withdrawal in an EH case should not be a Form 12256, which
    is applicable only to CDP cases.

8.21.5.6 
(06-01-2007)
Effects of Taxpayers Bill of Rights II (TBOR II) on Assessment
of Trust Fund Recovery Penalties (TFRP)

  1. On July 30, 1996, Congress passed the “Taxpayer Bill of
    Rights II”
    . TBOR II contains more than 40 provisions. Title IX –
    Modifications to Penalty and Failure to Collect and Pay Over Tax (IRC Section
    6672), Section 901 requires the Agency to:

    1. notify the taxpayer, in writing by mail to an address as determined under
      IRC section 6212(b) that the taxpayer shall be subject to an assessment under
      IRC section 6672.

    2. the mailing of above-mentioned notice, Letter 1153 (DO), shall precede
      any notice and demand of same penalty by at least 60 days.

    3. if the notice described in paragraph (a) is mailed before the expiration
      of the period provided by IRC 6501 for the assessment of such penalty (determined
      without regard to this paragraph), the period provided by such section for
      the assessment of such penalty shall not expire before the later of –

    • the date 90 days after the date on which such notice was mailed, or

    • if there is a timely protest of the proposed assessment, the date 30 days
      after Appeals makes a final administrative determination with respect to such
      protest.

    Note:

    A timely protest of a proposed TFRP assessment is one that
    is mailed within 60 days after the Letter 1153 (DO) is mailed or delivered
    in person.

  2. If the Agency deems the collection of the TFRP to be in jeopardy, then
    Section 901 will not apply.

    Note:

    For a more comprehensive discussion see
    IRM 5.7.6.1, Taxpayers Response to Letter 1153 (DO).

  3. Appeals has the responsibility of verifying and protecting the ASED(s)
    in each TFRP Case.

  4. Appeals employees working TFRP cases should follow the guidelines in
    IRM 8.1.4.3.1, Assignment and Control of Work – General, and IRM 8.2.1.2.3(1),
    Acknowledging Receipt of Cases, with respect to the Uniform Acknowledgement
    Letter (UAL).

  5. In addition, Appeals employees must verify receipt of the TFRP case
    by:

    1. Making a case history entry on the Integrated Collection System (ICS)
      verifying receipt of the case from Collection; and

    2. Making a history entry on ACDS verifying the timeliness of the protest.
      If the Appeals employee determines the ASED is not protected by TBOR II, then
      the actual ASED must be verified and noted on ACDS.

  6. A quick assessment of a proposed TFRP assessment will become necessary
    when the Form 5402 (Appeals Transmittal and Case Memo) is signed and the thirty-day
    ASED begins to run. This only occurs when the ASED would have expired while
    the TFRP appeal was under consideration had it not been for the impact of
    TBOR II.

    1. When the ATM signing the Form 5402 and APS are in separate offices, the
      ATM will take actions as necessary to ensure the TFRP documents (Forms 5402
      and 2749) required for assessment are provided immediately to the responsible
      Collection Function, Technical Services. In these cases, the ATM will advise
      APS in writing of the actions taken to protect the assessment.

  7. Where a taxpayer appeals a proposed TFRP beyond the 60 day period, the
    normal ASED is applicable and TBOR II provisions do not apply. The statute
    on untimely appeals is not suspended and can only be extended by a potentially
    responsible person and the Service.

    1. The law does not impose a maximum limit on the time period the assessment
      limitation period for the TFRP may be extended by a potentially responsible
      person and the Service.

    2. In the case of approved and adhered to business installment agreements
      and bankruptcy payment plans, it is ordinarily Service policy to withhold
      TFRP assertion recommendations if there are no statute considerations. If
      there are statute concerns, Form 2750 (Waiver Extending Statutory Period for
      Assessment of Trust Fund Recovery Penalty) can be secured to extend the assessment
      limitation period beyond the projected length of the business installment
      agreement or bankruptcy payment plan. See IRM 5.9.8.3.4(6), Trust Fund Considerations
      in Chapter 11.

    3. Unless there are unusual circumstances, the Service ordinarily should
      not seek extension dates of the TFRP assessment period beyond December 31st
      of the year following the year in which the statutory period will expire (e.g.,
      1 year and 260 days after the April 15th statutory due date of the Form 941
      returns for statute of limitation period purposes).

Law Offices of Darrin T. Mish, PA

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