CTRS CTRS IRS Collections and Enforcement 2 — Questions and Answers
Question 1: Under IRC §6343, the IRS must release a levy if which condition is met?
- The taxpayer enters into an installment agreement (Correct answer)
- The taxpayer files a new tax return
- The taxpayer requests an extension of time to pay
- The taxpayer submits a power of attorney
Correct answer: The taxpayer enters into an installment agreement
IRC §6343 requires the IRS to release a levy when, among other conditions, the taxpayer enters into an installment agreement that prohibits levying during its term.
Question 2: What is the Collection Due Process (CDP) hearing and when must it be requested?
- An administrative hearing before the IRS Office of Appeals that must be requested within 30 days of the final levy notice (Correct answer)
- A tax court proceeding that must be filed within 90 days of an assessment
- An audit reconsideration request filed within 60 days
- A penalty appeal filed within 45 days of assessment
Correct answer: An administrative hearing before the IRS Office of Appeals that must be requested within 30 days of the final levy notice
A CDP hearing is an administrative proceeding before the IRS Office of Appeals that taxpayers may request within 30 days of receiving a Final Notice of Intent to Levy.
Question 3: What is a 'pyramiding' tax problem in the context of IRS enforcement?
- A pattern where a business continues to accumulate new payroll tax liabilities while existing ones remain unpaid (Correct answer)
- A scheme to hide assets across multiple entities
- A fraudulent transfer of assets to related parties
- A tax shelter that uses multiple pass-through entities
Correct answer: A pattern where a business continues to accumulate new payroll tax liabilities while existing ones remain unpaid
Pyramiding occurs when a business consistently fails to deposit payroll taxes and continues to incur new liabilities, causing the debt to grow rapidly.
Question 4: Which IRS form is used to request a Collection Due Process hearing?
- Form 12153 (Correct answer)
- Form 9465
- Form 433-A
- Form 2848
Correct answer: Form 12153
Form 12153 (Request for a Collection Due Process or Equivalent Hearing) is used to formally request a CDP or Equivalent hearing with the IRS Office of Appeals.
Question 5: What is the purpose of the IRS's Taxpayer Bill of Rights as it relates to collections?
- It enumerates 10 fundamental rights taxpayers have when dealing with the IRS, including the right to a fair and just tax system (Correct answer)
- It automatically stops all IRS collection actions upon filing
- It guarantees taxpayers a refund of all penalties assessed
- It requires the IRS to accept all Offers in Compromise
Correct answer: It enumerates 10 fundamental rights taxpayers have when dealing with the IRS, including the right to a fair and just tax system
The Taxpayer Bill of Rights (TBOR), codified in IRC §7803(a)(3), identifies 10 fundamental rights that apply throughout the collection process.
Question 6: When can the IRS issue a jeopardy levy without providing the standard 30-day advance notice?
- When the IRS believes collection is in jeopardy because the taxpayer is placing assets beyond reach or leaving the country (Correct answer)
- When the taxpayer has filed multiple tax returns late
- When the taxpayer owes more than $100,000
- When the taxpayer has not responded to an audit notice
Correct answer: When the IRS believes collection is in jeopardy because the taxpayer is placing assets beyond reach or leaving the country
A jeopardy levy under IRC §6861 allows immediate seizure without the usual 30-day notice when the IRS determines that collection is in jeopardy.
CTRS CTRS IRS Collections and Enforcement 2
Under IRC §6343, the IRS must release a levy if which condition is met?