26.8 Appealing IRS Decisions
Key Takeaways
The "90-Day Letter" (Statutory Notice of Deficiency) is the "ticket to Tax Court."
Taxpayer has 90 days (150 if outside U.S.) to petition Tax Court.
Tax Court is the only court where you can litigate without paying first.
Collection Due Process (CDP) hearing allows appeal of liens/levies.
CDP request (Form 12153) must be filed within 30 days of notice.
Collection Appeal Program (CAP) is faster but has no judicial review.
Why This Matters for the Exam
The appeals process is heavily tested on Part 3. The exam tests your knowledge of the 90-Day Letter, Tax Court deadlines, and the difference between CDP and CAP for collection matters.
The "90-Day Letter" (Statutory Notice of Deficiency)
If a taxpayer disagrees with the IRS after receiving the 30-Day Letter (or ignores it), the IRS issues a Statutory Notice of Deficiency, commonly called the "90-Day Letter."
Key Facts:
| Characteristic | Detail |
|---|---|
| Deadline | 90 days (150 if outside U.S.) to petition Tax Court |
| Why It Matters | Last chance to challenge before paying |
| Also Called | "Ticket to Tax Court" |
| If Missed | Tax is assessed; collection begins; only option is pay and sue for refund |
Critical Point: Treat the 90-day deadline as strict. The Tax Court dismisses a late petition (even one day late) for lack of jurisdiction, although the Third Circuit (Culp v. Commissioner, 2023) has held the deadline non-jurisdictional and subject to equitable tolling.
Tax Court: The Only "Pre-Payment" Forum
The U.S. Tax Court is unique because it allows taxpayers to challenge a deficiency without paying the tax first.
| Court | Pay First? | Notes |
|---|---|---|
| U.S. Tax Court | No | File within 90 days of 90-Day Letter |
| U.S. District Court | Yes | Pay, file refund claim, wait, then sue |
| Court of Federal Claims | Yes | Pay, file refund claim, wait, then sue |
30-Day Letter vs. 90-Day Letter
| Factor | 30-Day Letter | 90-Day Letter |
|---|---|---|
| Official Name | Examination Report | Statutory Notice of Deficiency |
| Deadline | 30 days | 90 days (150 if abroad) |
| Action | Request Appeals | Petition Tax Court |
| Consequence of Inaction | 90-Day Letter issued | Tax assessed; collection starts |
| Missed deadline | Not fatal (a 90-Day Letter follows) | Tax Court dismisses a late petition (the Third Circuit allows equitable tolling) |
Collection Due Process (CDP)
CDP provides a formal process to challenge liens and levies before they become final.
When It's Triggered:
- Final Notice of Intent to Levy: IRS must notify taxpayer before levying.
- Notice of Federal Tax Lien Filing: IRS must notify taxpayer after filing a lien.
Form 12153: Request for Collection Due Process Hearing.
Deadline: 30 days from the date of the notice.
CDP Hearing Rights:
- Challenge the appropriateness of the collection action.
- Propose alternatives (Installment Agreement, Offer in Compromise, CNC status).
- Challenge the underlying liability if not previously contested.
Judicial Review: If you disagree with the CDP determination, you can petition the Tax Court.
Equivalent Hearing
If you miss the 30-day CDP deadline, you can request an Equivalent Hearing within 1 year of the notice.
| CDP Hearing | Equivalent Hearing |
|---|---|
| Within 30 days | After 30 days, within 1 year |
| Judicial review (Tax Court) | No judicial review |
| Collection suspended | Collection NOT suspended |
Collection Appeal Program (CAP)
CAP is a faster, less formal alternative to CDP. It applies to:
- Before or after a levy.
- Termination of an Installment Agreement.
- Rejection of an Installment Agreement request.
- Seizures.
Key Difference: CAP decisions are final within the IRS—you cannot go to Tax Court.
CDP vs. CAP Comparison
| Factor | CDP | CAP |
|---|---|---|
| Form | Form 12153 | Form 9423 (preferred for written requests; some CAP appeals can start by phone) |
| Deadline | 30 days | Before or after action |
| Judicial Review | Yes (Tax Court) | No |
| Suspends Collection | Yes | Normally yes (unless collection is at risk) |
| Formality | More formal | Less formal, faster |
Real-World Scenario
Scenario: Your client receives a Final Notice of Intent to Levy dated June 1, 2026. The client wants to propose an Installment Agreement instead of having their wages levied.
- Deadline: July 1, 2026 (30 days from June 1).
- Action: File Form 12153 (CDP Hearing Request) by July 1.
- Result: Collection is suspended during the CDP hearing. The client can propose an IA.
- If the IRS denies the IA: The client can petition Tax Court to review the determination.
On the Exam
Question types to practice on appeals:
- 90-Day Letter Questions: "How long does a taxpayer have to petition Tax Court?"
- Tax Court Questions: "What is unique about the U.S. Tax Court?"
- CDP Questions: "What form is used to request a CDP hearing?"
- CDP vs. CAP Questions: "Which collection appeal allows judicial review?"
The key is to remember: 90-Day Letter = 90 days to Tax Court. CDP = 30 days, Tax Court review available. CAP = faster, no Tax Court review.
What is a unique feature of the U.S. Tax Court?
It is only for criminal cases
You can litigate without paying the tax first
It has no judges
It handles only state tax issues
Which collection appeal option allows for judicial review (Tax Court)?
CAP (Collection Appeal Program)
CDP (Collection Due Process)
OPR Hearing
Refund Suit
How many days does a taxpayer have to request a CDP hearing after receiving a Final Notice of Intent to Levy?
10 days
30 days
90 days
1 year
Sections you finish are checked off in the contents.