CDP hearing procedures.

The IRS's Office of Chief Counsel released a significant notice, CC-2006-019 (8/28/06), updating and replacing CC-2003-016, the Collection Due Process (CDP) Handbook. The handbook provides guidance on the handling of CDP cases arising under Secs. 6320 and 6330.

The notice, posted on the Service's website at www.irs.gov/pub/irs-ccdm/ gcc-2006-019.pdf, outlines IRS practices regarding the CDP process, including the coordination of CDP cases with the IRS national office, CDP notice requirements, CDP hearing requirements and procedures taxpayers and the Service must follow during an appeal of a CDP hearing decision.

The 110-page notice incorporates and supersedes several Office of Chief Counsel notices issued between 2003 and 2006. The notice contains many court citations as support for its procedures.

Requirements: The notice lists requirements the IRS must meet when issuing levy and lien notices to taxpayers, including notices of a Federal tax lien, and Service actions necessary before the issuance of a levy. It also addresses jeopardy levies, state income tax refunds and the treatment of nominees and third parties. In addition, it provides administrative process procedures involved with CDP hearings, including:

* W-hen taxpayers have opportunities for such hearings;

* The role of face-to-face conferences;

* Conditions under which a CDP hearing may be recorded;

* Prohibitions on ex parte communications;

* Matters that may be considered at a hearing;

* Reconsideration of previously rejected offers-in-compromise during CDP hearings;

* The role of IRS appeals officers; and

* Justice Department jurisdiction in CDP hearings.

Judicial review: The notice also restates the IRS's authority to make determinations under Secs. 6320 and 6330; appeals team managers must approve those determinations. It lists the information appeals officers must consider when making such determinations. The notice also includes CDP litigation practices in Tax Court, including pretrial motions, trial preparation and appealing a decision.

The notice states that taxpayers have 30 days from the date of the notice of determination to appeal the decision to the Tax Court or, if the Tax Court does not have jurisdiction over the underlying tax liability, to a Federal district court.

It is possible a CDP hearing appeal will be subject to bifurcated judicial review, with segregated issues being considered by both the Tax Court and a district court.

The notice also states that IRS division counsel and its Appeals division should work to identify recurring legal issues in CDP hearings, to reduce CDP inventory.

Lesli S. Laffie, J.D., LL.M.