Ask The California Employment Tax And Payroll Tax Attorney – Cdp Hearing Success Means Doing Your Part

By Robert S. Schriebman

2023

Introduction

For over twenty years taxpayers who owe the IRS can take advantage of the Collection Due Process (CDP) proceedings. A CDP hearing is available to work out a collection resolution and avoid enforced collection action by the timely filing of a CDP petition. A CDP hearing is also available for those seeking relief from the filing of a Notice of Federal Tax Lien (NFTL). Filing a timely petition means that the IRS will not engage in collection activity while the taxpayer attempts to work out a solution to satisfying a tax debt owed to the IRS. Once a petition is filed, the matter is assigned to the IRS’ Independent Office of Appeals.

Filing a petition is only the beginning. The taxpayer must be prepared to convince the IRS that a workable solution is possible to resolve the collection issue. The solution may be a negotiated installment payment arrangement, offer in compromise, or the suspension of all collection activity due to economic hardship.

The job of Appeals is to balance the need for efficient collection action with the taxpayer’s legitimate concern that any collection action be no more intrusive than necessary.

What is the taxpayer’s job? The taxpayer is responsible for timely and completely furnishing Appeals with whatever documentation and information is necessary to arrive at a mutually desirable solution. If a taxpayer does not cooperate, Appeals has the right to reject any possible solution, close the books on the taxpayer’s case, and leave the taxpayer to resolve the matter in the courts.

Recently, the Tax Court decided the case of M.G. Plokin who wanted collection suspended due to economic hardship without doing his part.

The Plokin Case
M.G. Plokin, TC Memo, 2023-125, Dec. 62,288(M)

The US Tax Court’s decision in Plokin was very short. The Court found that Plokin failed to communicate with the assigned Settlement Officer (SO) and failed to submit financial information. In order to successfully resolve a CDP hearing the taxpayer must convince the SO of the merits of the desired result. If the taxpayer feels that the IRS should suspend collection efforts due to financial hardship, the taxpayer has the burden of proving his/her hardship. The same applies where a taxpayer seeks an installment payment arrangement or an offer in compromise. You will not get any sympathy from the Tax Court if the record shows you have not done your part.

Conclusion

A successful CDP resolution means both sides have to do a balancing act. The IRS Appeals Officer is there to work out a manageable installment payment arrangement, hardship suspension, or an offer in compromise. The IRS has to balance the need for the efficient collection of taxes in light of the taxpayer’s legitimate concerns that any collection action be no more intrusive than necessary. The taxpayer’s job is to fully cooperate by supplying the documentation and the information necessary to resolve the taxpayer’s problem.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.  Mr. Schriebman is in private practice.  He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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