When Does the Period Begin for Filing a CDP Request?

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I previously blogged the case of Weiss v. Commissioner in which the taxpayer argued that the date on the Collection Due Process (CDP) Notice controlled the period for making a CDP request. Les provided an update on the case that included the oral argument and the briefs. The D.C. Circuit issued its opinion, an unpublished per curiam, on May 22, 2018, affirming the decision of the Tax Court but not without some criticism of both parties.

As a reminder about the case and to set up the language of the Circuit decision, the taxpayer owes a substantial amount of tax for many periods. Three bankruptcy cases suspended the statute of limitations on collection. Near the end of the statute of limitations, a revenue officer made a personal visit to the home of Mr. Weiss to deliver the CDP Notice. The RO dated the notice he expected to deliver during the visit; however, the RO did not go up to the door and deliver the notice because a dog of sufficient size and ferocity made him think better of personal delivery. Instead, the RO returned to his office and mailed the notice. He did not get around to mailing the notice until two days after the date on the notice.

Mr. Weiss filed a CDP request within 30 days of the date on which the notice was actually mailed but more than 30 days after the date on the notice. He argued that his request should be treated as a request for an equivalent hearing which does not suspend the statute of limitations on collection and the IRS argued that the actual date of mailing controls which meant that his request for a CDP hearing was timely and suspended the statute of limitations on collection. The consequence of a statute suspension was that a suit brought by the IRS was timely filed. The Tax Court agreed with the IRS that the date of actual mailing controls but had some sharp words for both parties.

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When requesting a CDP hearing or an equivalent hearing, the IRS asks that the taxpayer file a Form 12153. The form contemplates that if filed within 30 days of the CDP notice the taxpayer will receive a CDP hearing with full rights and if filed after that time but within one year of the CDP notice the taxpayer will receive an equivalent hearing. Although the form does not contemplate the option, it seems possible that a taxpayer could make a request for an equivalent hearing during the first 30 days by stating that request. Because of the suspension of the statute of limitations that accompanies a CDP hearing and because of the low likelihood of success in court on those cases, good reason exists to want an equivalent hearing in some circumstances.

Here, the taxpayer argues that he wanted an equivalent hearing and he thought he would get one based on the timing of his request. In my experience the IRS regularly puts dates on its letters, not just CDP notice letters, that do not correspond to the date on which the IRS mails the letter. Weiss tells you not to rely on the date of the letter as the meaningful date. For taxpayers seeking an equivalent hearing in this context, it would seem that a clear statement that an equivalent hearing is sought plus waiting for a couple of weeks after the 30 day period ends from the date on the CDP notice would be the best practice. The D.C. Circuit, while agreeing that the language of the statute dictates using the date of mailing rather than the date on the letter, had some pretty sharp words for the IRS and its practice of putting a date on the letter that was not the actual date of mailing:

Nonetheless, in spite of the unappealing proposition that we must side either with a taxpayer deliberately attempting to manipulate the Code to prevent paying his own taxes or a government agency that seems not to care whether it provides the citizenry with notice of their rights and liabilities, we must decide whether the date on the notice or the date of mailing governs. The taxpayer’s position has the advantage of common sense. But the government’s position has the insurmountable advantage of compliance with the language of the statute. That is to say, what the statute requires is “the notice . . . shall be . . . sent by certified or registered mail, return receipt requested . . . not less than thirty days before the date of the first levy. . . .” (emphasis added). In this case, the undisputed evidence is that the notice was “sent,” that is mailed, no more than thirty days before Weiss’s March 14 mailing. Therefore the statute was tolled.

We note in parting the court’s hope that few taxpayers will be as anxious as Weiss to manipulate the law in order to attempt to extinguish tax liabilities. We further hope that few agencies will be as careless with dates and especially with the rights of the citizens as the IRS in this case. Nonetheless, unattractive as the position of the IRS may be, it does comport with the language of the statute and the apparent meaning of the word “send.” We therefore affirm the decision of the Tax Court.

Congress could fix this problem, and others regarding CDP notices, by requiring the IRS to put a date on the letter by which the taxpayer should file the request and providing that the taxpayer could rely on that date or on the later date of actual mailing. There were enough problems with notices of deficiency that Congress addressed the situation in that context in 1998 at the same time it created the CDP process; however, it failed to give taxpayers seeking CDP relief the same benefit as those seeking relief in the deficiency context.

 

Comments

  1. Norman Diamond says:

    “The D.C. Circuit, while agreeing that the language of the statute dictates using the date of mailing rather than the date on the letter, had some pretty sharp words for the IRS and its practice of putting a date on the letter that was not the actual date of mailing:”

    Interesting. The IRS isn’t the only US institution with that practice. The same sharp words should be directed at several US courts including Tax Court and others. In my experience the D.C. Circuit has been exceptional, being one of only two US courts that has consistently mailed notices on the dates they stated (and being the only US court that consistently affixed proper postage — even US Supreme Court doesn’t do that).

    Oh wait, there’s more.

    ‘That is to say, what the statute requires is “the notice . . . shall be . . . sent by certified or registered mail […]’

    Circuit split. The Federal Circuit and 9th Circuit upheld trial court rulings that the IRS’s practice of using uncertified unregistered mail (and sometimes with insufficient postage) complies with a statute requiring certified or registered mail.

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