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

A taxpayer received a statutory notice of deficiency for 2020, did not petition the Tax Court, and allowed the deficiency to be assessed. The IRS later issued a notice of intent to levy for the unpaid 2020 balance. The taxpayer timely requested a collection due process hearing and now wants to argue that a deduction from 2020 was wrongly disallowed.

At the CDP hearing, which statement is correct regarding this challenge to the underlying liability?

Appeals must consider the challenge because a CDP hearing is the taxpayer's final opportunity to contest the merits before collection.
Appeals may consider the challenge if the taxpayer shows reasonable cause for not having petitioned the Tax Court earlier.
Appeals may not consider the challenge because the taxpayer received a deficiency notice and had a prior opportunity to dispute the liability.
Appeals may not consider the challenge, but the taxpayer can raise the issue in any later CDP hearing that follows a subsequent lien notice.
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SEE - Special Enrollment Exam Quiz

SEE - Special Enrollment Exam Quiz: Collection Actions And Appeals

Practice Collection Actions And 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 Collection Actions And Appeals, giving you a quick way to practice the rules, question types, and explanations that matter most for SEE - Special Enrollment Exam.

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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

A taxpayer received a statutory notice of deficiency for 2020, did not petition the Tax Court, and allowed the deficiency to be assessed. The IRS later issued a notice of intent to levy for the unpaid 2020 balance. The taxpayer timely requested a collection due process hearing and now wants to argue that a deduction from 2020 was wrongly disallowed.

At the CDP hearing, which statement is correct regarding this challenge to the underlying liability?

  1. Appeals must consider the challenge because a CDP hearing is the taxpayer's final opportunity to contest the merits before collection.
  2. Appeals may consider the challenge if the taxpayer shows reasonable cause for not having petitioned the Tax Court earlier.
  3. Appeals may not consider the challenge because the taxpayer received a deficiency notice and had a prior opportunity to dispute the liability. (correct answer)
  4. Appeals may not consider the challenge, but the taxpayer can raise the issue in any later CDP hearing that follows a subsequent lien notice.
Explanation: Choice C is correct. IRC § 6330(c)(2)(B) provides that the existence or amount of the underlying tax liability may not be raised at a CDP hearing if the taxpayer had a prior opportunity to dispute it. Receiving a statutory notice of deficiency and failing to petition the Tax Court supplies that prior opportunity. Choice A is wrong because the CDP hearing is not a second merits forum when the taxpayer already had a deficiency opportunity. Choice B is wrong because reasonable cause for not petitioning the Tax Court is not the statutory test. Choice D is wrong because a later CDP notice does not reset the prohibition on relitigating the same underlying liability.

Question 2

An IRS revenue officer proposes to levy on a taxpayer's principal residence to collect an assessed income tax liability of $85,000. The taxpayer has received the required notices and does not dispute the amount of the tax.

Which statement is correct about the proposed levy?

  1. A principal residence is exempt from levy unless a judge or magistrate judge of a United States district court approves the levy in writing. (correct answer)
  2. A principal residence is exempt from levy only until the taxpayer has had a CDP hearing, after which the IRS may levy without court approval.
  3. A principal residence is never subject to levy for federal tax liabilities.
  4. A principal residence may be levied after a 30-day notice of intent to levy and a CDP determination, without judicial approval.
Explanation: IRC § 6334(a)(13)(B) and (e)(1)(A). A taxpayer's principal residence is exempt from levy unless a judge or magistrate judge of a U.S. district court approves the levy in writing. The jeopardy exception in § 6334(e)(1)(B) applies to certain business assets, not to a principal residence, and because the liability far exceeds the $5,000 limit of § 6334(a)(13)(A), the court-approval rule governs. Choice A is correct. Choice B is wrong because a CDP hearing does not replace the statutory requirement of written judicial approval. Choice C is wrong because a principal residence may be levied once a district court judge or magistrate judge approves the levy in writing. Choice D is wrong because the notice and CDP process alone do not satisfy the court-approval requirement.

Question 3

The IRS filed a notice of federal tax lien against a client for unpaid 2021 taxes on Monday, May 12, 2025, and mailed the lien CDP notice (Letter 3172) on May 15, 2025. The client was traveling outside the United States from May 20 through June 30, 2025. After his return, an enrolled agent filed Form 12153 on July 14, 2025, requesting a hearing on the lien.

Which of the following best describes the client's rights with respect to that request?

  1. The request is timely for a collection due process hearing because the client was outside the United States during the 30-day period, which extends that period to 150 days.
  2. The request is late for a collection due process hearing, and because the 30-day period has expired, the client has no right to any hearing concerning the lien.
  3. The request is timely for a collection due process hearing because a taxpayer has one year from the date of the CDP notice to request such a hearing.
  4. The request is late for a collection due process hearing, but it will be treated as a request for an equivalent hearing because it was made within the one-year period for requesting one. (correct answer)
Explanation: IRC § 6320(a)(2)-(3) and Treas. Reg. § 301.6320-1(i). The IRS must give notice of a lien filing within 5 business days after the filing, and the taxpayer may request a CDP hearing during the 30-day period that begins the day after that 5-business-day period ends. The lien was filed Monday, May 12, 2025, so the 5-business-day period ended May 19 and the CDP request period ran through June 18, 2025. A taxpayer who misses that period may still request an equivalent hearing within the one-year period that begins the day after the 5-business-day period ends; the decision issued after an equivalent hearing cannot be reviewed by the Tax Court. The July 14 request was after June 18 but well within the year. Choice D is correct. Choice A is wrong because it misapplies the 150-day period of IRC § 6213(a), which governs a Tax Court petition after a notice of deficiency addressed to a person outside the United States and does not extend the CDP request period. Choice B is wrong because it overlooks the equivalent hearing available within one year. Choice C is wrong because it confuses the one-year equivalent-hearing window with the 30-day CDP request period.

Question 4

A taxpayer's 2015 income tax liability was assessed on June 1, 2016, and the taxpayer has made no payments. On June 1, 2020, the taxpayer filed Form 656, an offer in compromise based on doubt as to collectibility. The IRS rejected the offer on June 1, 2023, and the taxpayer did not appeal. No other events have suspended the collection statute of limitations. In 2025, the taxpayer's enrolled agent is determining the new collection statute expiration date (CSED).

What is the taxpayer's CSED after these events?

  1. June 1, 2026 — a rejected offer in compromise has no effect on the collection statute of limitations.
  2. June 1, 2029 — the CSED is extended only by the 36 months during which the offer was pending.
  3. July 1, 2029 — the CSED is extended by the 36 months the offer was pending plus the 30 days after the rejection. (correct answer)
  4. June 1, 2030 — the CSED is extended by the 36 months the offer was pending plus one year after the rejection.
Explanation: IRC § 6502(a)(1) gives the IRS ten years from the date of assessment to collect an assessed tax. Under IRC § 6331(k), the running of the collection period is suspended while an offer in compromise is pending and for 30 days after the offer is rejected. The offer was pending for exactly 36 months, from June 1, 2020, through June 1, 2023, and the taxpayer did not appeal, so the CSED is extended by 36 months plus the 30 days following the rejection. The original CSED was June 1, 2026 (June 1, 2016, plus 10 years); adding 36 months and 30 days produces July 1, 2029. Choice C is correct. Choice A ignores the suspension entirely, treating the rejected offer as having no effect on the CSED. Choice B adds only the 36-month pending period and omits the 30 days after the rejection. Choice D treats the post-rejection period as a full year rather than the statutory 30 days.

Question 5

A taxpayer's assessed liability has a collection statute expiration date (CSED) of September 30, 2025. In August 2025, the taxpayer requests an installment agreement, and the IRS, as part of granting it, asks the taxpayer to sign a written agreement extending the collection period. The taxpayer has not previously executed an extension.

Which statement is correct about extending the collection period?

  1. The period cannot be extended by agreement, and the IRS must release any lien as soon as the original 10-year period ends.
  2. The IRS may unilaterally extend the period for an additional 10 years by filing a notice of federal tax lien before the expiration date.
  3. The period is automatically extended for an additional year for each installment agreement the taxpayer entered into during the 10-year period.
  4. The collection period may be extended by a written agreement made when the installment agreement is entered into, but the IRS cannot extend it unilaterally. (correct answer)
Explanation: IRC § 6502(a)(2). Since 1998, the 10-year collection period may be extended by agreement only (A) in writing at the time an installment agreement is entered into, in which case the IRS may collect until 90 days after the agreed period ends, or (B) in writing before a levy made within the 10-year period is released after that period. The decisive fact is that the requested extension is part of an installment agreement made before the CSED. The IRS cannot extend the period by its own act. Choice D is correct. Choice B is wrong because filing a notice of federal tax lien does not extend the collection period. Choice C is wrong because the law gives no automatic one-year extension for each installment agreement; an extension tied to an agreement must be agreed in writing. Choice A is wrong because § 6502(a)(2)(A) allows an agreed extension with an installment agreement, and the lien release rule applies when the liability is satisfied or becomes unenforceable.

Question 6

On June 2, 2025, the IRS mailed a taxpayer a Final Notice of Intent to Levy and Notice of Your Right to a Hearing for an assessed individual income tax liability. The taxpayer did not contact a representative until July 14, 2025, after the 30-day request period had ended. No levy has been issued. The taxpayer wants to stop collection and obtain Appeals review.

Which statement correctly describes the taxpayer's appeal rights?

  1. The taxpayer may still obtain a collection due process hearing, and the IRS must suspend all collection until Appeals reaches a decision.
  2. The taxpayer may obtain only an equivalent hearing; the IRS need not suspend collection, and the Appeals decision is not reviewable in Tax Court. (correct answer)
  3. The taxpayer has no remaining appeal right because the 30-day period to request a CDP hearing expired and cannot be extended.
  4. The taxpayer may obtain an equivalent hearing and, if the decision is adverse, may petition the Tax Court within 30 days of the decision.
Explanation: Choice B is correct. IRC § 6330(a)-(b) and Treas. Reg. § 301.6330-1(i) provide that a taxpayer who fails to request a collection due process hearing within the 30-day period may, if the request is made within one year of the notice, receive an equivalent hearing. An equivalent hearing does not suspend collection, and the resulting decision is not appealable to the Tax Court. Choice A is wrong because the 30-day deadline is not revived merely because no levy has occurred. Choice C is wrong because the equivalent hearing procedure remains available. Choice D is wrong because an equivalent hearing decision, unlike a CDP determination, is not reviewable in Tax Court.

Question 7

A taxpayer timely requested a CDP hearing after the IRS filed a Notice of Federal Tax Lien. Appeals sustained the lien filing in a Notice of Determination. The taxpayer disagrees with the determination and wants judicial review.

Which statement is correct?

  1. The taxpayer may file a petition in the United States Tax Court within 30 days after the determination. (correct answer)
  2. The taxpayer may request a new CDP hearing before a different Appeals officer on the same underlying tax.
  3. The taxpayer may not obtain judicial review because a Notice of Federal Tax Lien is an administrative filing, not a final collection decision.
  4. The taxpayer's only judicial remedy is a refund suit in federal district court after paying the full assessed liability.
Explanation: Choice A is correct. IRC § 6320(c) incorporates the review provisions of IRC § 6330(d)(1), which allow a taxpayer to petition the Tax Court within 30 days after a CDP determination. Choice B is wrong because a taxpayer does not receive a new CDP hearing on the same liability from a different Appeals officer. Choice C is wrong because a CDP determination following a lien filing is a final, reviewable determination. Choice D is wrong because the Tax Court has jurisdiction to review lien CDP determinations without requiring the taxpayer first to pay the assessed liability.

Question 8

The IRS audited a taxpayer's 2021 individual return and mailed a statutory notice of deficiency on March 1, 2024, disallowing a business expense deduction. The taxpayer received the notice but did not petition the Tax Court, and the deficiency was assessed in June 2024. In April 2025, the IRS filed a notice of federal tax lien for the unpaid balance and mailed the CDP notice explaining the taxpayer's lien-filing and hearing rights. The taxpayer timely filed Form 12153 requesting a collection due process hearing. She intends to challenge the disallowed deduction at the hearing and also wants to propose a monthly installment agreement.

Which of the following is correct regarding the collection due process hearing?

  1. Because the taxpayer timely requested the hearing, the Appeals officer must review the underlying deficiency de novo and may reduce the lien to the correct balance.
  2. The taxpayer cannot challenge the deficiency because she had a prior opportunity to dispute it, but the proposed installment agreement will be considered as a collection alternative. (correct answer)
  3. The taxpayer may challenge the deficiency because the prior-opportunity bar applies only when a taxpayer actually petitioned the Tax Court, not when a notice was received and ignored.
  4. The deficiency has become final, so the taxpayer cannot raise it at the hearing, and her only remaining remedy is to pay the balance and bring a refund suit.
Explanation: IRC § 6330(c)(2)(B) provides that a taxpayer may challenge the existence or amount of the underlying tax liability in a collection due process hearing only if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute it. Because the taxpayer received the deficiency notice in March 2024 and did not petition the Tax Court, the disallowed deduction cannot be relitigated at the CDP hearing. However, IRC § 6330(c)(2)(A) requires the Appeals officer to consider collection alternatives such as an installment agreement, so the proposed agreement is properly before the officer. Choice B is correct. Choice A misapplies the rule: a timely request makes the hearing available, but it does not open the underlying liability to de novo review. Choice C misstates the prior-opportunity test, which turns on the opportunity to contest the liability, not on whether the taxpayer actually petitioned the Tax Court. Choice D wrongly concludes that the taxpayer's only remaining remedy is a pay-and-sue refund action; the taxpayer may still use the CDP hearing to pursue collection alternatives.

Question 9

For 2025, an unmarried individual taxpayer owes $44,000 in assessed income tax, penalties, and interest. She has filed all required returns, has no other unpaid liabilities, and proposes to pay the balance in 60 monthly installments by direct debit. Which statement is correct concerning this installment agreement?

  1. She qualifies for a guaranteed installment agreement because the IRS must accept any agreement when the aggregate liability is $50,000 or less and all returns are filed.
  2. She is eligible for a streamlined installment agreement, without a financial statement, because the balance is under $50,000 and she will pay by direct debit within 72 months. (correct answer)
  3. She qualifies for a streamlined installment agreement only if she agrees to payroll deduction, because direct debit is available only for balances of $25,000 or less.
  4. She cannot obtain a streamlined installment agreement because the balance exceeds $25,000, so she must submit a full financial statement and prove economic hardship.
Explanation: Under IRC § 6159 and streamlined installment agreement procedures, an individual who owes $50,000 or less in assessed tax, penalties, and interest, has filed required returns, and can full-pay within 72 months is generally eligible for a streamlined installment agreement. Where the balance exceeds $25,000, direct debit or payroll deduction is the method used to qualify without a financial statement. Choice B is correct. Choice A misstates the guaranteed installment agreement threshold of $10,000 and the IRS's acceptance requirements. Choice C incorrectly limits direct debit to balances of $25,000 or less and treats payroll deduction as the only method above that amount. Choice D ignores the direct-debit streamlined path.

Question 10

The IRS proposes to assess the trust fund recovery penalty under IRC § 6672 against a responsible person. Which statement is correct about the pre-assessment procedure?

  1. The IRS must send written notice of its intent to assess, and the person has 60 days to appeal to the IRS Office of Appeals; if the person appeals, no assessment or collection may be made until the Appeals determination is final. (correct answer)
  2. The IRS must send written notice of its intent to assess at least 30 days before assessment; the person has 30 days to request an Appeals hearing, after which the IRS may assess and levy immediately.
  3. The IRS does not need to give any pre-assessment notice but must obtain a Tax Court judgment before assessing; the person can contest the penalty in Tax Court without paying it.
  4. The IRS must issue a statutory notice of deficiency under IRC § 6212, giving the responsible person 90 days to petition the Tax Court; the penalty cannot be assessed during that period.
Explanation: Under IRC § 6672(b), before assessing the trust fund recovery penalty, the IRS must notify the responsible person in writing of the proposed assessment. The person has 60 days to appeal to the IRS Office of Appeals. If a timely appeal is made, the IRS may not assess or collect the penalty until the Appeals determination is final. Choice A is correct. Choice B uses the 30-day CDP-style period and immediate collection, which is incorrect for a TFRP pre-assessment notice. Choice C incorrectly requires a Tax Court judgment; the TFRP is assessed administratively. Choice D wrongly invokes the deficiency notice and Tax Court petition procedures of IRC §§ 6212 and 6213, which do not govern the TFRP.

Question 11

Which statement is correct regarding the difference between a release of a federal tax lien and a withdrawal of a notice of federal tax lien?

  1. A withdrawal of a notice of federal tax lien removes the notice from the public record but does not extinguish the underlying lien; a certificate of release, issued after the liability is satisfied or becomes unenforceable, is conclusive that the lien is extinguished. (correct answer)
  2. A certificate of release is issued only after the underlying liability is paid in full, and it extinguishes the federal tax lien; a withdrawal of the notice of federal tax lien also extinguishes the lien but only for property owned after the withdrawal date.
  3. A certificate of release removes the notice from the public record but the lien continues to attach to after-acquired property; a withdrawal is the only way to fully terminate the lien.
  4. Both release and withdrawal are discretionary, but a release is available only if the taxpayer proposes an installment agreement and a withdrawal is available only after the collection statute expires.
Explanation: Under IRC § 6323(j), the IRS may withdraw a notice of federal tax lien, which removes the notice from the public record but does not discharge the underlying lien. Under IRC § 6325, once the underlying liability is satisfied or becomes unenforceable, the IRS must issue a certificate of release, and the certificate is conclusive that the lien is extinguished. Choice A is correct. Choice B misstates withdrawal as extinguishing the lien and incorrectly limits release to full payment. Choice C confuses release with withdrawal: a release extinguishes the lien, and the lien does not continue against after-acquired property. Choice D misstates release as discretionary and conditioned on an installment agreement.

Question 12

Which statement is correct regarding a Taxpayer Assistance Order under IRC § 7811?

  1. The Taxpayer Advocate may issue a TAO only after the IRS has issued a final notice of intent to levy, and the order cannot affect an installment agreement that is already in effect.
  2. A TAO may be issued only by the National Taxpayer Advocate and only for taxpayers whose adjusted gross income is at or below 250% of the federal poverty guidelines.
  3. A TAO may direct the IRS to release levied property or to stop a collection action, and the limitations period is suspended from the application until the decision on it. (correct answer)
  4. A TAO is an informal request that has no binding legal effect, but it may be considered by Appeals in a later Collection Due Process hearing.
Explanation: Governing authority: IRC § 7811. A Taxpayer Assistance Order may require the IRS to release property that has been levied upon or to cease, or refrain from, a collection action when the taxpayer is suffering, or is about to suffer, a significant hardship. Under § 7811(d), the running of the period of limitations for the affected action is suspended from the date of the taxpayer's application until the National Taxpayer Advocate's decision on it, and for any period specified in an order issued on the application. Choice C is correct. Choice A imposes conditions not found in the statute and wrongly states that a TAO cannot affect an existing installment agreement. Choice B is wrong because the National Taxpayer Advocate may delegate TAO authority, and there is no 250% of poverty threshold for a TAO. Choice D is wrong because a TAO is binding on the IRS, not an informal request.

Question 13

During a Collection Due Process hearing on a proposed levy, when may a taxpayer challenge the existence or amount of the underlying tax liability?

  1. A taxpayer who received a statutory notice of deficiency but did not petition the Tax Court may nevertheless contest the liability at a CDP hearing if the amount is based on an audit change.
  2. A taxpayer may contest the underlying liability at a CDP hearing only if the IRS has first issued a notice of determination and given the taxpayer 90 days to file a refund claim.
  3. A taxpayer may contest the underlying liability at a CDP hearing only in cases involving a federal tax lien, not in cases involving a proposed levy.
  4. A taxpayer may contest the existence or amount of the underlying liability at a CDP hearing only if he did not receive a statutory notice of deficiency and did not otherwise have an earlier opportunity to dispute it. (correct answer)
Explanation: Under IRC § 6330(c)(2)(B), a taxpayer may challenge the existence or amount of the underlying tax liability at a CDP hearing only if the taxpayer did not receive a statutory notice of deficiency for that liability and did not otherwise have an opportunity to dispute it. Choice D is correct. Choice A ignores the prior-opportunity bar: receipt of a deficiency notice without a Tax Court petition normally forecloses a later liability challenge. Choice B invents a notice-of-determination and refund-claim prerequisite. Choice C is wrong because the underlying-liability issue is available in both lien and levy CDP hearings under the same standard.

Question 14

On February 3, 2025, the IRS mailed a taxpayer a final notice of intent to levy and notice of the right to a Collection Due Process hearing. The taxpayer did not request a hearing until March 14, 2025. Which statement best describes the taxpayer's procedural rights?

  1. Because the request was made after the 30-day CDP period, the taxpayer is ineligible for any Appeals hearing and may challenge the levy only in a refund suit after paying the assessed tax.
  2. Because the request was made before the levy was actually served, the taxpayer still has full CDP rights, including suspension of collection and Tax Court review, so long as the 10-year collection period on the assessed federal tax liability has not expired.
  3. Because the request was made after the 30-day CDP period but within one year of the notice, the taxpayer is entitled to an equivalent hearing; the levy is not suspended and the decision is not reviewable by the Tax Court. (correct answer)
  4. Because the taxpayer did not timely file Form 12153, the only available remedy is an installment agreement or offer in compromise, and the Appeals Office will not consider the case for a hearing of any kind.
Explanation: Under IRC §§ 6330(a)–(b) and Treas. Reg. § 301.6330-1(i), a taxpayer has 30 days from the date of a notice of intent to levy to request a CDP hearing. A request filed after that period but within one year of the notice is treated as a request for an equivalent hearing. Because the March 14 request was after the 30-day period but within one year, the taxpayer is entitled to an equivalent hearing. In an equivalent hearing, Appeals may consider collection issues, but the automatic suspension of levy under IRC § 6330(e) does not apply, and the determination is not subject to Tax Court review. Choice C is correct. Choice A is wrong because an Appeals hearing is still available as an equivalent hearing. Choice B is wrong because the controlling date is the notice date, not the date the levy is served; a late request does not restore full CDP protections. Choice D is wrong because an equivalent hearing is available and Appeals will consider the case.

Question 15

The IRS mailed a taxpayer a rejection letter for his offer in compromise. Within 30 days, the taxpayer timely appealed the rejection to the IRS Office of Appeals. Which statement is correct regarding the effect of the appeal?

  1. The IRS may levy on the taxpayer's property because the offer was already rejected; the appeal is not a Collection Due Process hearing.
  2. The taxpayer's appeal is treated as a request for a Collection Due Process hearing, and the 30-day CDP period starts on the date the rejection letter is mailed.
  3. The taxpayer must first pay the amount of the rejected offer before the appeal will be considered, and the IRS will assess the full liability if the appeal is unsuccessful.
  4. The IRS may not levy while the appeal is pending, and if the appeal is denied, the taxpayer has no further administrative appeal of that denial. (correct answer)
Explanation: Under IRC § 6331(k), the IRS may not levy while an offer in compromise is pending. An offer remains pending during the 30-day period after rejection and, if the taxpayer timely appeals, during the pendency of that appeal. Therefore, the IRS may not levy during the appeal. Once Appeals sustains the rejection, the rejection becomes final administratively. Choice D is correct. Choice A is wrong because the appeal continues the prohibition on levy. Choice B is wrong because an OIC appeal is not converted into a CDP hearing, and the CDP 30-day period does not begin from the rejection letter. Choice C is wrong because paying the offered amount is not a prerequisite to appealing the rejection.