How does the Tax Court review a Collection Due Process decision?

You petition the U.S. Tax Court within 30 days of the IRS Appeals notice of determination (IRC 6330(d)(1)). The court then reviews Appeals' decision for abuse of discretion, generally on the record Appeals made, and decides any properly raised dispute about the tax itself fresh. While the case is pending, the levies covered by the hearing generally stay suspended, and the court can send the case back to Appeals if the hearing was flawed.

This review is the payoff for asking for a timely Collection Due Process hearing in the first place, and it works very differently from a deficiency case. It connects Kathryn Meyer's tax litigation and collection work.

How Tax Court review of a CDP decision works, step by step

1. Appeals issues a notice of determination after a timely CDP hearing on a lien or levy notice. An equivalent hearing, requested late, ends in a decision letter instead, and Publication 1660 says it cannot be taken to court.
2. You petition within 30 days. Tax Court Rule 331 calls the filing a "Petition for Lien or Levy Action Under Code Section 6320(c) or 6330(d)." It must state the date of the notice of determination and the Appeals office that issued it, the tax and periods involved, lettered assignments of every error you say Appeals made, the facts behind each, and the relief you want, with the notice attached. The filing fee is $60 (Rule 331(d)).
3. The IRS answers within the periods in Rule 36, as Rule 333 provides.
4. The court reviews the determination. The Internal Revenue Manual's table of standards for Appeals officers describes how: abuse of discretion for administrative determinations, reviewed on the administrative record; de novo review for the liability issue when liability is properly at issue, where the court "is not limited to reviewing the record before Appeals and may hold a trial and take new evidence."
5. The court may remand. If the record is incomplete or Appeals erred, the court can send the case back for a supplemental hearing, after which Appeals issues a supplemental determination.
6. Decision and appeal. The court enters a decision, which in a regular case may be appealed to the court of appeals for the circuit of an individual's legal residence or an entity's principal place of business (IRC 7482(b)(1)(G)).

The hearing that starts all of this, including its own 30-day request deadline, is explained in what a Collection Due Process hearing is and when to ask for one.

What standard does the court apply?

The IRS manual also notes a harmless error rule: a court should not find an abuse of discretion where a mistake caused no prejudice or did not affect the result, and it says the rule is often applied where only frivolous arguments were raised. Because review is usually on the record, Publication 1660 warns that the Tax Court may not let you raise new issues and may limit the evidence to what Appeals saw.

When does the court send a case back to Appeals?

IRM 8.22.9 lists examples of situations in which a remand has been appropriate, including when Appeals:

• did not consider a requested abatement of interest;
• rejected an offer in compromise without considering financial information the taxpayer provided before the determination;
• issued the determination before an agreed deadline for the taxpayer to provide information;
• closed the case without addressing a liability challenge the taxpayer was entitled to raise; or
• made findings that were confusing or contradictory.

The manual adds that changed circumstances after the hearing are usually handled outside the CDP case, and that a remand for changed circumstances is appropriate only in rare cases where the change is material and would likely have altered the determination. Separately, IRC 6330(d)(3) says Appeals keeps jurisdiction over its determination, so you can return to Appeals about how collection carries it out, or after exhausting your remedies, about a change in circumstances.

What changes the answer

• Whether the 30 days were met. In Boechler, P.C. v. Commissioner (2022), the Supreme Court held that the 30-day limit in IRC 6330(d)(1) is not jurisdictional and can be equitably tolled. That is a narrow exception, not a second deadline.
• Bankruptcy. If a bankruptcy case prevents you from filing, IRC 6330(d)(2) suspends the 30 days while you are barred and for 30 days after.
• Whether liability was open to challenge. Under IRC 6330(c)(2)(B), you can dispute the tax itself only if you did not receive a notice of deficiency and had no other opportunity to dispute it; that decides whether the court reviews liability anew.
• The size of the balance. If the total unpaid tax is $50,000 or less, you may elect small case procedure (IRC 7463(f)(2)), which gives up any appeal; see small tax case or regular case.
• Levies during an appeal. The suspension of levies continues through appeals, but under IRC 6330(e)(2) a court may let a levy proceed while an appeal is pending if liability is not at issue and the IRS shows good cause.
• The collection clock. The 10-year period to collect is suspended while the hearing and appeals are pending and cannot end sooner than 90 days after the final determination (IRC 6330(e)(1)); see how long the IRS has to collect a tax debt.

For example: a rejected offer

For example, imagine a taxpayer who requests a timely CDP hearing after a final notice of intent to levy and proposes an offer in compromise. She sends Appeals updated pay stubs and medical bills two weeks before the agreed deadline, but the determination issues without mentioning them and sustains the levy. She petitions the Tax Court within 30 days, assigning as error that Appeals rejected the offer without considering the financial information she provided. Because her liability came from her own filed return and was not in dispute, the court reviews for abuse of discretion on the record. The record shows the documents were sent and not addressed, which matches one of the remand situations the IRS manual describes, and the case is sent back for a supplemental hearing in which Appeals must consider them. Levies on the periods in the hearing remain suspended throughout. This is a hypothetical, not a real case.

Common mistakes in CDP Tax Court cases

• Treating the petition as the first chance to make your case. Review is generally on what Appeals had; evidence and alternatives belong in the hearing.
• Leaving out an assignment of error. Under Rule 331(b)(4), any issue not raised "shall be deemed to be conceded."
• Relying on Boechler. Equitable tolling is possible but rare; file within 30 days.
• Arguing the tax when you already had a chance to. Liability is open only in the circumstances IRC 6330(c)(2)(B) allows.
• Raising a brand-new alternative in court. The IRS manual describes new offers raised after a petition being sent to Collection rather than reviewed by the court.
• Including a cost claim in the petition. Rule 331 says claims for litigation costs are not included in the petition; they follow Rule 231.

What to do this week

1. Find the date on the notice of determination and count 30 days.
2. Get a copy of everything you gave Appeals and the attachment explaining its decision.
3. List each error Appeals made, tied to what was in front of it.
4. Decide whether the underlying tax is properly at issue, and whether the balance qualifies for small case procedure.
5. File the petition with the notice attached, and keep proof of the filing date.

Frequently asked questions

Does a CDP Tax Court case stop all collection?

It suspends the levy actions that were the subject of the hearing and generally continues through appeals, with the IRC 6330(e)(2) exception. It does not prevent a lien filing; lien relief is covered in whether a federal tax lien can be released or withdrawn.

Can the court approve a payment plan itself?

The court reviews whether Appeals abused its discretion in rejecting or accepting an alternative; it does not negotiate the plan. Plans are compared in the IRS payment plan options.

What if Appeals denied hardship status?

That decision is reviewed for abuse of discretion against the financial record; how the IRS measures hardship is in how the IRS decides what you can afford to pay.

Can a Collection Appeals Program decision be reviewed instead?

No. A CAP decision is binding and cannot be taken to court; the two routes are compared in Collection Due Process or the Collection Appeals Program.

Is the filing process the same as a deficiency case?

Largely, with a different petition title and contents; see how to file a petition in the U.S. Tax Court.

Can the decision be appealed?

Yes, in a regular case, within 90 days after entry; see whether you can appeal a Tax Court decision.

What if the offer was rejected outside CDP?

A rejected offer outside a CDP hearing is appealed within the IRS instead; see whether you qualify for an IRS offer in compromise.

Taking a CDP determination to court

A CDP case in the Tax Court is won or lost largely on the record built at the hearing, and the petition must name every error. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel, which defends these determinations in the Tax Court, and now represents taxpayers. If you have a notice of determination, contact the firm or call (571) 560-8674 within the 30 days.

Sources

• 26 U.S.C. 6330, Notice and opportunity for hearing before levy
• 26 U.S.C. 6320, Notice and opportunity for hearing upon filing of notice of lien
• 26 U.S.C. 7463, Disputes involving $50,000 or less
• 26 U.S.C. 7482, Courts of review
• Tax Court Rule 331, Commencement of Lien and Levy Action
• Tax Court Rule 333, Other Pleadings
• Internal Revenue Manual 8.22.9, Closing and Post Closing Actions (Collection Due Process)
• IRS Publication 1660, Collection Appeal Rights
• Boechler, P.C. v. Commissioner, No. 20-1472 (U.S. Apr. 21, 2022)