Released levy does not end the taxpayer's notice and hearing rights

Plain-English summary

Chief Counsel advised that the IRS should still send Letter 1058-D to a taxpayer after releasing a levy. The release of a levy does not end the taxpayer's statutory right to notice and a Collection Due Process hearing for the affected tax period. The advice also stated that the Service had no formal procedure for rescinding a Notice of Determination and explained that a levy generally may not be made while an installment-agreement offer is pending. If the installment agreement is rejected, the taxpayer must still have received the applicable collection due process rights.

Ruling snapshot

• Question: Should the IRS send the taxpayer a CDP notice after a levy has been released?
• Outcome: Advice given.
• Key authorities: IRC §§ 6330(a), 6330(f), and 6331(k)(2).

Full text (IRS public release)

ID:         CCA_2010012010271459                          Number: 201007059
                                                          Release Date: 2/19/2010
Office: ------------
UILC:       6330.00-00


From: ------------------
Sent: Wednesday, January 20, 2010 10:27:16 AM
To: ------------------
Cc: ---------------------------------------------
Subject: FW: CDP Questions for -------------

Hi -----------

This is a follow up to the two questions you sent to ------------------ on January 4.

1. There are currently no formal procedures for the rescission of a Notice of Determination. In regards to
the particular case that your question stems from, why was the information submitted after the Notice of
Determination had been issued? In light of the new information, how does Appeals expect the case to be
resolved?

2. No. The Letter 1058-D should still be sent to the taxpayer regardless of the fact that the levy has been
released. Under section 6330(f), the Service has to provide the TP of a disqualified employment tax levy
with a “reasonable” period of time after the levy, instead of before the issuance of the levy. When the RO
issued the levy, he was unaware (?) of Appeals’ efforts with TP to establish an Installment Agreement (IA)
that would include the tax period that the levy covered. [Under section 6331(k)(2), a levy may not be
made while an IA offer is pending with the Service].

Although Appeals is now considering the applicable tax period in the IA offer, the RO’s issuance of the
levy established the TP’s right to be notified of his CDP hearing rights for the applicable tax period. The
act of releasing the levy does not terminate the TP’s statutory right to notice and hearing under section
6330(a); the Letter 1058-D should be sent to the TP. If the IA is rejected, the TP has to have been
afforded his CDP rights for the tax period at issue in the now released levy.