SEE - Special Enrollment Exam Quiz: Administrative Appeals
15 questions · exam conditions
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Administrative AppealsQuestion 1 of 15

An enrolled agent represents a taxpayer who received a CDP Notice of Intent to Levy. The taxpayer did not request a hearing before the 30-day CDP request period expired, but the period for requesting an equivalent hearing is still open. The taxpayer would like Appeals to consider an installment agreement.

Which statement correctly describes the taxpayer's procedural situation?

The taxpayer is barred from any Appeals hearing because the CDP request period has expired, so the IRS may proceed with the levy immediately.
The taxpayer may request a CDP hearing, and Appeals must suspend collection while the hearing and any Tax Court review are pending.
The taxpayer may request an equivalent hearing; Appeals will consider the collection issue, but collection is not suspended and the outcome is not reviewable by the Tax Court.
The taxpayer may request an equivalent hearing, and the IRS must suspend collection for the same period as a timely CDP hearing; only the Tax Court review right is lost.
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SEE - Special Enrollment Exam Quiz

SEE - Special Enrollment Exam Quiz: Administrative Appeals

Practice Administrative Appeals in SEE - Special Enrollment Exam with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Administrative Appeals, giving you a quick way to practice the rules, question types, and explanations that matter most for SEE - Special Enrollment Exam.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

An enrolled agent represents a taxpayer who received a CDP Notice of Intent to Levy. The taxpayer did not request a hearing before the 30-day CDP request period expired, but the period for requesting an equivalent hearing is still open. The taxpayer would like Appeals to consider an installment agreement.

Which statement correctly describes the taxpayer's procedural situation?

  1. The taxpayer is barred from any Appeals hearing because the CDP request period has expired, so the IRS may proceed with the levy immediately.
  2. The taxpayer may request a CDP hearing, and Appeals must suspend collection while the hearing and any Tax Court review are pending.
  3. The taxpayer may request an equivalent hearing; Appeals will consider the collection issue, but collection is not suspended and the outcome is not reviewable by the Tax Court. (correct answer)
  4. The taxpayer may request an equivalent hearing, and the IRS must suspend collection for the same period as a timely CDP hearing; only the Tax Court review right is lost.
Explanation: IRC § 6330(e)(1) suspends collection only for a timely requested CDP hearing, and Treas. Reg. § 301.6330-1(i)(1) provides that a late request within the equivalent-hearing window is considered for an equivalent hearing, not a CDP hearing. Because the taxpayer missed the CDP request period, the available remedy is an equivalent hearing, but the IRS is not required to suspend collection and no Tax Court review is available. Choice A ignores the equivalent hearing right. Choice B describes CDP rights that were lost when the request period expired. Choice D incorrectly attaches the CDP suspension rule to an equivalent hearing.

Question 2

During an Appeals conference, a taxpayer and the IRS execute a closing agreement under IRC § 7121 to resolve an unagreed examination adjustment. A year later, the taxpayer discovers the agreement was based on a computation that misapplied a deduction rule.

Which statement best describes the effect of the closing agreement?

  1. The agreement is only a preliminary settlement and is not binding unless the Tax Court approves it in a stipulated decision.
  2. The IRS may reopen the agreement at any time within the assessment period, but the taxpayer cannot ask for a reopening.
  3. The agreement is final and binding on both parties and may be reopened only for fraud, malfeasance, or misrepresentation of a material fact. (correct answer)
  4. The taxpayer may disregard the agreement and file a refund claim because a legal error in computation makes the agreement void.
Explanation: IRC § 7121(b) provides that a closing agreement is final and conclusive on both the taxpayer and the IRS, except upon a showing of fraud, malfeasance, or misrepresentation of a material fact. A later computational or legal error is not one of those exceptions, so the agreement remains binding. Choice A confuses a closing agreement with an unapproved stipulation. Choice B incorrectly allows reopening at the IRS's discretion for any reason. Choice D incorrectly treats the agreement as void for legal error.

Question 3

Before an Appeals conference, the Appeals officer asks the revenue agent who conducted the examination to write a memorandum explaining why the taxpayer's books were rejected. The officer does not tell the taxpayer or the taxpayer's enrolled agent about the request. The EA later learns of it.

Which statement about this communication is correct?

  1. It is permissible because Appeals has full access to the case file and may consult with the examining agent without notice.
  2. It is permissible only if the memorandum is limited to factual matters and does not discuss an Appeals settlement position.
  3. It is permissible because the taxpayer has no right to participate in communications between IRS employees before a conference.
  4. It is generally prohibited as an ex parte communication between Appeals and another IRS employee regarding the case. (correct answer)
Explanation: IRM 8.6.1.5 (implementing RRA 1998 § 1001(a)(4)) generally prohibits ex parte communications between Appeals employees and other IRS employees about a case without the taxpayer's knowledge or opportunity to participate. Choice D correctly states that the described communication is generally prohibited; the Appeals officer's private request to the revenue agent for a memorandum supporting the proposed adjustment is exactly the type of off-the-record communication the rule targets. Choice A is incorrect because Appeals' access to the case file does not permit a private, substantive consultation with the examining agent. Choice B is incorrect because the prohibition is not overcome merely by limiting the memorandum to factual matters or avoiding a discussion of a settlement position. Choice C is incorrect because the taxpayer and the taxpayer's authorized representative are entitled to notice and an opportunity to participate in substantive communications about the case.

Question 4

An examiner sent a taxpayer a 30-day letter with a proposed deficiency. The taxpayer wants an Appeals conference, and the case is not eligible for small-case procedures. The enrolled agent sends Appeals a letter that states the taxpayer wants reconsideration but does not state any grounds and is not verified.

Which statement is correct about the request for Appeals review?

  1. A formal written protest is required, and it should state the taxpayer's position and be made under penalties of perjury; the current letter is not sufficient. (correct answer)
  2. The letter is sufficient because a taxpayer represented by an enrolled agent may obtain an Appeals conference without a formal written protest.
  3. The taxpayer may make an oral protest at the Appeals conference, and the letter will be treated as a timely request.
  4. The taxpayer must instead sign Form 870 and the Appeals Office will then review the proposed deficiency for legal errors.
Explanation: Under IRS Pub. 5, Your Appeal Rights, a case that is not eligible for small-case procedures generally requires a formal written protest. A valid protest should state the taxpayer's position and the grounds for disagreement and must be made under penalties of perjury. The agent's letter lacks those essential elements. Choice B incorrectly waives the protest requirement for represented taxpayers. Choice C incorrectly allows an oral protest to substitute for the required writing. Choice D misstates the effect of Form 870, which waives restrictions on assessment rather than request Appeals review.

Question 5

An individual taxpayer received a Notice of Intent to Levy and timely requested a collection due process (CDP) hearing. At the hearing, her enrolled agent proposed an offer in compromise based on doubt as to collectibility as a collection alternative. The Independent Office of Appeals rejected the offer and issued a notice of determination sustaining the proposed levy. The taxpayer does not dispute the underlying liability and wants to keep contesting the rejection of the offer.

Which statement correctly describes the taxpayer's options?

  1. The rejection is final, because Appeals has already considered the offer and no court may review an Appeals decision on a collection alternative.
  2. The taxpayer may petition the Tax Court within 30 days after the notice of determination, and the court may review Appeals' rejection of the offer as part of its review of the determination. (correct answer)
  3. The taxpayer may petition the Tax Court within 90 days after the notice of determination, the same period that applies to a statutory notice of deficiency.
  4. The taxpayer must first pay the liability in full and file a claim for refund before any court may review the rejection of the offer.
Explanation: IRC § 6330(c)(2)(A)(iii) and (d)(1). A taxpayer may propose an offer in compromise as a collection alternative in a CDP hearing, and may petition the Tax Court within 30 days after Appeals issues its notice of determination; the court's review of the determination includes Appeals' handling of the offer. The decisive fact is that the offer was raised in a CDP hearing. An offer rejected outside CDP may be reviewed by Appeals under IRC § 7122(e) at the taxpayer's option, but that rejection cannot be taken to the Tax Court. Choice B is correct. Choice A is wrong because § 6330(d)(1) gives the Tax Court jurisdiction to review a CDP notice of determination, including the rejection of a collection alternative. Choice C is wrong because it borrows the 90-day deficiency period of § 6213(a); the period to petition from a CDP determination is 30 days. Choice D is wrong because Tax Court review of a CDP determination does not require payment first; paying and suing for a refund is a different remedy.

Question 6

At an Appeals conference, the taxpayer's representative argues that the IRS should accept a proposed settlement because litigation would cost the government more than the tax at issue and because the examiner's main evidence on one issue is weak. The Appeals officer says the settlement proposal is still too low.

Which statement correctly describes Appeals' settlement authority?

  1. Appeals may consider the hazards of litigation, but a settlement cannot be based merely on avoiding litigation costs or on nuisance value. (correct answer)
  2. Appeals has no settlement authority before a statutory notice of deficiency is issued, so the case must first go to Tax Court.
  3. Appeals must adopt the examiner's position unless the taxpayer proves the position is wrong by clear and convincing evidence.
  4. Appeals may settle for any amount, but only if the revenue agent who examined the return agrees to the settlement in writing.
Explanation: Appeals is authorized to resolve cases based on the hazards of litigation, meaning the relative strengths and weaknesses of the parties' legal and factual positions. See Treas. Reg. § 601.106. A weak evidentiary position is a legitimate hazard, but a settlement based solely on the cost of litigation or on nuisance value is not a proper basis for settlement. Choice B incorrectly denies Appeals' pre-deficiency settlement authority. Choice C misstates the standard Appeals uses. Choice D incorrectly makes the examining agent's approval controlling.

Question 7

A taxpayer received a statutory notice of deficiency for tax year 2022 but did not petition the Tax Court. The IRS assessed the deficiency. It later issued a CDP notice proposing to levy to collect the balance. At the CDP hearing, the taxpayer wants to contest the amount of unreported income used to compute the deficiency and wants to propose an installment agreement.

Which statement is correct about what Appeals will consider?

  1. Appeals must consider both the liability challenge and the installment agreement because a CDP hearing starts a new review of the entire assessment.
  2. Appeals must consider the installment agreement, but the taxpayer may not challenge the underlying liability because the taxpayer had a prior opportunity to dispute it. (correct answer)
  3. Appeals may consider the underlying liability but must defer the installment agreement until the liability dispute is resolved in Tax Court.
  4. Appeals must reject both issues because the statutory notice of deficiency made the assessment final and beyond any further review.
Explanation: IRC § 6330(c)(2)(B) bars a taxpayer from challenging the existence or amount of the underlying tax liability at a CDP hearing when the taxpayer received a statutory notice of deficiency and had an opportunity to dispute it. Here, receipt of the notice and failure to petition the Tax Court close that issue. Under IRC § 6330(c)(2)(A), an installment agreement may be raised as a collection alternative, and under IRC § 6330(c)(3) Appeals must take it into account in making its determination. Choice A incorrectly treats a CDP hearing as reopening the entire liability. Choice C reverses the correct treatment of the two issues. Choice D incorrectly bars consideration of the installment agreement.

Question 8

Which of the following is correct regarding a request for a Collection Due Process (CDP) hearing under IRC § 6330?

  1. A timely request filed within 30 days of the notice suspends collection and the running of the collection limitations period, while a request filed after 30 days but within one year permits only an equivalent hearing, with no suspension of collection and no right to Tax Court review. (correct answer)
  2. A timely request filed within 30 days suspends collection while the hearing is pending and for 90 days after the determination becomes final, while a request filed within one year of the notice permits an equivalent hearing whose adverse determination may be appealed to the Tax Court.
  3. A timely request filed within 30 days suspends collection and the 10-year collection period, while a request filed even one day after the 30-day period is untimely, so the taxpayer forfeits any right to a hearing before collection proceeds.
  4. A timely request filed within 30 days suspends both the proposed levy and the collection limitations period, while a request filed within one year of the notice, although late, still suspends the limitations period even though it does not suspend the levy.
Explanation: Governing authority: IRC § 6330(a)(3)(B) and (e)(1); Treas. Reg. § 301.6330-1(i)(1)-(2). A taxpayer who requests a CDP hearing within 30 days of the notice is entitled to suspension of the levy action and of the section 6502 collection period while the hearing and any Tax Court appeal are pending, and the collection period cannot expire before the 90th day after the final determination. A request filed after the 30-day period but within the one-year period results in an equivalent hearing only: collection is not suspended and the decision is not reviewable by the Tax Court. Choice A states both halves of the rule. Choice B misstates the consequence of an equivalent hearing, whose decision is not appealable to the Tax Court. Choice C misstates the late-request rule: a request filed within the one-year period does not forfeit all hearing rights; the IRS grants an equivalent hearing. Choice D misstates the effect of an equivalent hearing: it suspends neither the levy action nor the running of the collection limitations period.

Question 9

Which of the following is correct regarding the duties of an Appeals officer conducting a Collection Due Process hearing?

  1. The Appeals officer must verify that the taxpayer received the notice that triggered the hearing and must reject any proposed installment agreement unless the taxpayer makes a down payment equal to the taxpayer's equity in the taxpayer's assets.
  2. The Appeals officer must verify that the underlying tax liability was correctly computed and is required to redetermine the liability de novo whenever the taxpayer disputes the assessment at the hearing, even if the taxpayer previously had an opportunity to dispute the liability.
  3. The Appeals officer must verify that the requirements of applicable law and administrative procedure have been met and must weigh the need for efficient collection of tax against the concern that the collection action be no more intrusive than necessary. (correct answer)
  4. The Appeals officer must verify that the revenue officer followed the procedures in the Internal Revenue Manual and must sustain the proposed collection action if the record shows the liability remains unpaid at the time of the hearing.
Explanation: Governing authority: IRC § 6330(c)(1) and (c)(3). The Appeals officer must obtain verification that the requirements of any applicable law or administrative procedure have been met and, in deciding whether to sustain the collection action, must balance the need for efficient collection of tax against the taxpayer's legitimate concern that the action be no more intrusive than necessary. Choice C states both duties. Choice B misdirects the verification duty to the correctness of the liability, and de novo redetermination occurs only when the taxpayer properly raises the liability and had no prior opportunity to dispute it. Choice A invents a down-payment precondition; no such requirement exists for consideration of a collection alternative at a CDP hearing. Choice D misstates the decisional standard: an unpaid liability does not compel sustaining the action; the officer must apply the statutory balancing test to the administrative record.

Question 10

Which of the following is correct regarding judicial review of an Appeals determination in a Collection Due Process case?

  1. The taxpayer has 30 days from the date of the notice of determination to petition the Tax Court, which reviews the determination solely for abuse of discretion on the administrative record, including any properly raised underlying liability issue.
  2. The taxpayer has 30 days from the date of the notice of determination to petition the Tax Court, which reviews the entire determination de novo because the hearing is informal and non-adversarial in nature.
  3. The taxpayer has 30 days from the date of the notice of determination to petition the Tax Court, which reviews the determination for abuse of discretion except that a properly raised underlying liability issue is reviewed de novo. (correct answer)
  4. The taxpayer has 30 days from the date of the notice of determination to file a refund suit in federal district court, where the court will conduct a trial on the merits without regard to the administrative record.
Explanation: Governing authority: IRC § 6330(d)(1); Sego v. Commissioner, 114 T.C. 604 (2000). The taxpayer has 30 days from the notice of determination to petition the Tax Court. The Tax Court reviews the Appeals determination for abuse of discretion, except that a properly raised underlying liability is reviewed de novo. Choice C states the rule. Choice B misstates the standard of review: the informal, non-adversarial character of the hearing does not make the entire determination reviewable de novo. Choice A drops the exception and would apply abuse-of-discretion review even to a properly raised underlying liability. Choice D misstates the forum and the nature of the proceeding: CDP appeals go to the Tax Court, and a refund suit in district court would require payment of the assessed tax.

Question 11

Which of the following is correct regarding the independence of the IRS Office of Appeals?

  1. Appeals personnel are supervised by the Deputy Chief Counsel for litigation, and ex parte communications with other IRS employees are permitted if the Appeals officer determines that they are necessary to develop the administrative record.
  2. Appeals personnel are supervised by the Chief of Appeals, but ex parte communications with examination and collection employees are categorically prohibited because any contact with other IRS functions weakens the appearance of independence.
  3. Appeals personnel are supervised by the Commissioner through the examination function, and ex parte communications with other IRS employees are prohibited whenever the Appeals officer is developing the administrative record.
  4. Appeals personnel are supervised by the Chief of Appeals, who reports directly to the Commissioner, and ex parte communications with other IRS employees are barred only if they would appear to compromise Appeals' independence. (correct answer)
Explanation: Governing authority: IRC § 7803(e)(3); see also IRM 8.1.3.6. The Office of Appeals is independent of the rest of the IRS: Appeals personnel are supervised by the Chief of Appeals, who reports directly to the Commissioner, and ex parte communications between Appeals employees and other IRS employees are prohibited only to the extent they would appear to compromise Appeals' independence; they are not categorically banned. Choice D states the rule. Choice B turns the prohibition into an absolute bar on any contact with examination or collection personnel, which the statute does not impose. Choice C misstates the chain of command and would bar record-development communications altogether. Choice A misstates both the reporting structure and the standard: permitted communications are those that do not appear to compromise independence, not those the Appeals officer simply deems necessary.

Question 12

Which of the following is correct regarding a taxpayer's ability to challenge the existence or amount of the underlying tax liability at a Collection Due Process hearing?

  1. The taxpayer may raise the underlying liability at a CDP hearing only if he did not receive a statutory notice of deficiency for the liability and did not otherwise have an opportunity to dispute it. (correct answer)
  2. The taxpayer may raise the underlying liability at a CDP hearing only when the tax was assessed through a substitute-for-return procedure rather than reported on a return filed with the IRS, because such assessments are made without the taxpayer's participation.
  3. The taxpayer may raise the underlying liability at a CDP hearing regardless of any prior opportunity to dispute it, because the Appeals officer's review of the amount of the liability is always de novo.
  4. The taxpayer may raise the underlying liability at a CDP hearing only after paying the undisputed portion of the tax and filing a claim for refund, as in a suit for refund in federal district court.
Explanation: Governing authority: IRC § 6330(c)(2)(B); Treas. Reg. § 301.6330-1(e)(1), Q&A-E2. At a CDP hearing the taxpayer may challenge the existence or amount of the underlying liability only if he received no statutory notice of deficiency for the liability and had no other opportunity to dispute it. A taxpayer who received a notice of deficiency and let the 90-day petition period expire, or who otherwise waived the opportunity, may not relitigate the liability at the hearing. Choice A states the rule. Choice B ties the right to the assessment method; the right turns on the absence of a prior opportunity to dispute, not on how the tax was assessed. Choice C makes the right absolute; a prior statutory notice of deficiency, or any other prior opportunity to dispute, bars the challenge. Choice D imports the pay-and-sue requirements of a refund suit; no payment or claim for refund is required to raise the underlying liability at a CDP hearing.

Question 13

A taxpayer requests a CDP hearing after receiving a Notice of Intent to Levy. The Appeals officer assigned to the hearing previously served as the revenue officer on the same account and had recommended the levy to Collection. The taxpayer objects to the assignment.

Is the taxpayer's objection correct?

  1. No, because Appeals is independent of Collection and reviewing a case previously worked is not disqualifying.
  2. No, because a prior recommendation of the levy is not the same as prior involvement with the unpaid tax.
  3. No, provided the Appeals officer did not personally approve the levy and works under an Appeals manager.
  4. Yes, because the hearing must be conducted by an Appeals officer who has had no prior involvement with the unpaid tax. (correct answer)
Explanation: IRC § 6330(b)(3). A collection due process hearing must be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax before the hearing, unless the taxpayer waives the requirement. A revenue officer who worked the same account and recommended the levy has prior involvement, so the taxpayer's objection is correct. Choice D is correct. Choice A is wrong because § 6330(b)(3) bars any officer or employee with prior involvement in the unpaid tax, whatever the general separation between Appeals and Collection; Appeals' institutional independence does not cure an individual officer's prior involvement. Choice B is wrong because recommending the levy on this account is prior involvement with respect to the unpaid tax; the statute contains no exception for a recommendation. Choice C is wrong because it adds conditions the statute does not contain: the bar is any prior involvement, not only personal approval of the levy, and supervision by an Appeals manager does not lift it.

Question 14

Which of the following is correct regarding the suspension of collection activities during a Collection Due Process proceeding?

  1. The proposed levy is suspended only until the Appeals officer issues the notice of determination, after which levy may begin immediately even though the taxpayer may still pursue an appeal of the determination.
  2. The proposed levy and the collection limitations period are suspended while the hearing and any Tax Court appeal are pending, the limitations period cannot expire before the 90th day after the final determination, and interest continues to accrue during the suspension. (correct answer)
  3. The proposed levy and the collection limitations period are suspended for 90 days from the date the hearing request is received, after which collection may proceed even if the Appeals officer has not yet issued a determination.
  4. The proposed levy is suspended while the hearing is pending, but the suspension ends when the determination is issued even if the taxpayer files a timely petition with the Tax Court, and the 90-day period runs from the date of the determination.
Explanation: Governing authority: IRC § 6330(e)(1). A timely CDP request suspends the levy actions that are the subject of the hearing and the running of the section 6502 collection limitations period for the period during which the hearing, and any appeal of the determination, is pending, and in no event does the limitations period expire before the 90th day after there is a final determination. The suspension does not stop interest, which continues to accrue on the unpaid tax under IRC § 6601. Choice B states the rule. Choice A misstates the duration: a timely Tax Court petition keeps the levy suspended while the appeal is pending. Choice C misstates the measuring period: the suspension lasts as long as the hearing and any appeal are pending, not a fixed 90 days from the hearing request. Choice D misstates the effect of a timely Tax Court petition: the appeal continues the suspension rather than ending it, and the 90-day minimum runs from the final determination, not from the date the notice of determination is issued.

Question 15

Which of the following is correct regarding a taxpayer's request for an Appeals office conference after an examination of an individual income tax return?

  1. The taxpayer generally has 30 days from the date of the 90-day letter to request an Appeals conference, and making a timely request extends the time for filing a Tax Court petition by 30 days.
  2. The taxpayer generally has 30 days from the date of the 30-day letter to request an Appeals conference, and if no timely request is made, the IRS may issue a statutory notice of deficiency. (correct answer)
  3. The taxpayer generally has 90 days from the date of the 30-day letter to request an Appeals conference, and a written protest must accompany the request.
  4. The taxpayer generally has 30 days from the date of the 30-day letter to request an Appeals conference, and the request must be submitted on Form 12153 together with a written protest.
Explanation: Governing authority: IRC § 6212 and § 6213(a); IRS Publication 5 (Your Appeal Rights). After an examination, the IRS sends the examination report with a 30-day letter, and the taxpayer generally has 30 days from its date to request an Appeals conference. If no request is made, the IRS may issue a statutory notice of deficiency, after which the taxpayer has 90 days to petition the Tax Court. Choice B states this sequence. Choice A misstates the deadline and the effect of the request: the 90-day letter is the statutory notice of deficiency, and an Appeals request does not extend the Tax Court petition period. Choice C misstates the deadline: the request period is 30 days from the 30-day letter, not 90. Choice D misstates the form: Form 12153 is used to request a collection due process hearing following a lien or levy notice, not to request an Appeals conference after an examination.