Hardly anyone likes to pay taxes. But it is one thing not to love, and another thing when debt collection brings you to disaster and does not allow you or your company to function. If you thought that the collection of taxes is impossible to challenge, especially if it has already taken place, then we are happy to reassure you. Not everything is lost.
One of the tools designed to solve the problem is the Collection Appeals Program (CAP) and Form 9423.
This is one of two possible ways to challenge the IRS penalties. The second such program is the Collection Due Process (CDP).
The CAP is used by taxpayers when they need to appeal an action by the Revenue Service before or after this action was done.
What cannot be appealed:
What can be objected:
Both of these tools are designed for termination of collection and are similar in nature but still have several differences.
CAP is needed to challenge an actual action (seizure, lien, or levy). As a rule, with the help of the CAP, an appeal is not made on the actual penalty due to which the arrest or collection of funds occurred.
With the help of the CDP, you can also appeal the fine itself, making a reasonable argument to reduce or cancel it.
Another big difference between the two programs is timing. The CAP takes less time to reach a decision than the CDP. CAP is also capable of stopping the collection by the Revenue Service. While using CDP, you cannot suspend collection actions.
The main advantage of this tool is that it is possible to fill out the document in the shortest possible time. The form is quite simple. The IRS will also suspend the enforcement action while the appeal is pending.
The disadvantages of CAP are following:
The last disadvantage can be an advantage. After all, if the decision is good for you, it means that the IRS cannot challenge it either.
To do this, you must fill out form 9423. Below we will describe in detail how this can be done. But before proceeding with the application, the IRS recommends you try to resolve the issue with your manager (in the Collection office).
If you were unable to reach a solution favorable to you, fill out the document and send it to your manager or inspector within two days.
After you submit the form, a CAP Hearing will be performed. Most often, they are held by phone within five days after the application is submitted. For most solutions, just one phone call will be enough.
A designated appeal resolution officer will review your application and IRS actions to make a decision.
It is important to note that the officer’s decision cannot be appealed by you to the tax court. This decision is final and enforceable.
If you have decided to use CAP, you need to fill out a form. We invite you to use our form-building software to optimize the process. Also, below you will find our illustrated step-by-step guide to completing the application.
Identify the Taxpayer
Include the full name of the person filing the appeal.
Appoint a Representative
If you do not plan to negotiate with the officer yourself, then enter the name of your authorized representative. In this case, you must also provide Form 2848.
If you do not have a representative, please cross this paragraph.
Provide SSN and EIN
Enter your details:
Provide Phone Numbers
All required phone numbers must be specified. If you have a representative, also include their number. In this case, your numbers should also be indicated.
Enter the Address
Indicate the address of the taxpayer by entering in the appropriate columns:
Give Tax Details
You should write:
Select the Contested Action
You need to check the box next to the action you are going to appeal. You can choose several options. During the appeal period, these actions are usually suspended pending a decision.
Give an Explanation
Give a detailed explanation of the situation. Write not only why you disagree but also how you see the solution to the problem.
If you do not have enough space in paragraph 15, the good decision is to attach additional pages.
Your explanation will be reviewed, and a decision will be made.
Sign the Document
The document must be signed by either you or your representative. Check the appropriate box, sign and date the paper.
Submit the Form
Submit the form to the Collection office as soon as possible. It must be received or at least postmarked within three business days of the conference with the manager.
Wait for the Decision
In most cases, a decision is made within five days from the time of submitting the application, after telephone conversations with you or your representatives. Although the decision cannot be appealed in court, there is the possibility of challenging the illegal fee. To do this, the third person must apply to the district court.
