Toolkit · Tax

The IRS Examination, Appeals, and Collection Defense Toolkit

26 U.S.C. § 6020

Type
Toolkit
Jurisdiction
National
Date
2026-03-30
Topic
Tax

This toolkit supplies the working documents for a federal tax matter. Tool 1 is a transcript analysis worksheet producing the case grid, and Tool 2 is a compliance and deadline tracker. Tool 3 is an examination response letter format, and Tool 4 is an appeals protest outline. Tool 5 is a collection due process request listing the issues to preserve, and Tool 6 is a financial statement with the collection potential computation. Tool 7 is a penalty abatement request framework, and Tool 8 is a levy release and lien withdrawal request set. Tool 9 is a spousal relief worksheet, Tool 10 is a consolidated authority table, and Tool 11 is a client status letter.

The IRS Examination, Appeals, and Collection Defense Toolkit

Tax > IRS Audits, Collection, and Taxpayer Rights | Published 30 March 2026 - Updated 9 August 2026 | UpLaw - uplaw.us

How to use this toolkit. Complete Tool 1 before anything else; it produces the facts every other tool depends on. Bracketed text is for completion. The guide supplies the doctrine and the checklist supplies the sequence.

TOOL 1 — TRANSCRIPT ANALYSIS WORKSHEET

Taxpayer: [ ] · Prepared: [date] · Transcripts obtained: [account / return / record of account / wage and income] for [years]

Year Return filed? Original or substitute Assessment date Assessed tax Penalties (type) Interest Payments applied Current balance Assessment period expires Collection period expires Suspension events
[ ] [ ] [ ] [ ] [$] [ ] [$] [$] [$] [ ] [ ] [offer / bankruptcy / CDP / abroad]

Observations

☐ Years assessed from substitute returns under 26 U.S.C. § 6020: [list] — file correct originals ☐ Years where the assessment period under 26 U.S.C. § 6501 has expired: [list] ☐ Years where the collection period under 26 U.S.C. § 6502 is near expiration: [list] ☐ Payments applied to unintended periods: [list] ☐ Penalties eligible for first-time abatement: [list] ☐ Notices issued to a stale address: [list] ☐ Examinations closed without adjustment that contradict a collection notice: [list]

📌 This worksheet is the case. Everything that follows is derived from it, and clients should receive a plain-language version of it at the first meeting.

TOOL 2 — COMPLIANCE AND DEADLINE TRACKER

Item Status Deadline Owner Done
Delinquent returns filed [year list] [ ] [ ] [ ]
Current withholding or estimates adjusted [ ] [ ] [ ] [ ]
Payroll deposits current [ ] [ ] [ ] [ ]
Authorization on file for all years and tax types [ ] [ ] [ ] [ ]
Deficiency petition deadline [date] 90 days from notice [ ] [ ]
Collection hearing request [date] [per notice] [ ] [ ]
Appeals protest [date] [30 days] [ ] [ ]
Refund claim deadlines [ ] [per 26 U.S.C. § 6511] [ ] [ ]
Summons return date [ ] [ ] [ ] [ ]
Financial statement due [ ] [ ] [ ] [ ]

⚠️ The deficiency petition and the collection hearing request cannot be recovered. Everything else can.

TOOL 3 — EXAMINATION RESPONSE LETTER

Re: [Taxpayer], [tax year], [notice number]

1. Scope. We understand the issues under examination to be [list]. Please confirm, and advise in writing if additional issues are added.

2. Response by issue.

Issue 1 — [description]. Position: [ ]. Supporting documents: Exhibits [ ]. Explanation: [what the documents show, in two or three sentences]. Authority: [ ].

Issue 2 — [description]. [As above.]

Issue 3 — [description]. The taxpayer concedes this adjustment and requests that it be reflected in the report.

3. Records. The taxpayer maintained records as required by 26 U.S.C. § 6001. Where original records are unavailable because [reason], reconstruction has been performed using [method], and the supporting materials are attached.

4. Requests. Please provide [workpapers relied on / the basis for the proposed adjustment / an opportunity to discuss before the report issues].

5. Extension. [If requested: the taxpayer will consider a restricted consent limited to Issue [ ] and expiring [date].]

Exhibit index attached.

☐ Concede something real. It buys credibility on everything else. ☐ Index the exhibits and cite them by number in the text. ☐ Send with provable mailing under 26 U.S.C. § 7502.

TOOL 4 — APPEALS PROTEST OUTLINE

Protest of proposed adjustments — [Taxpayer], [years], [letter date]

1. Statement of request. The taxpayer requests a conference with the independent appeals function and does not agree with the findings in the report dated [ ].

2. Years and adjustments in dispute. [Table: year, adjustment, amount, agreed or disputed.]

3. Facts. [Narrative with exhibit citations. Keep it factual; argument belongs below.]

4. Issue-by-issue analysis. For each: the adjustment proposed; the taxpayer's position; the supporting authority; the supporting evidence; and a candid statement of the hazards on each side.

5. Penalties. [Address each penalty separately, with reasonable cause facts and any first-time abatement request.]

6. Settlement posture. [What the taxpayer is prepared to concede and on what basis, framed as an efficient resolution rather than as capitulation.]

7. Requested relief. [Specific.]

8. Declaration and signature. [As required.]

Attachments. Exhibit index; report; supporting documents.

📌 A protest that concedes two issues and defends three is more persuasive than one that fights everything. Appeals may consider hazards of litigation, and a realistic protest tells them where the hazards are.

TOOL 5 — COLLECTION DUE PROCESS REQUEST

Request for a hearing under 26 U.S.C. § 6320 / 26 U.S.C. § 6330

Taxpayer: [ ] · Years and tax types: [ ] · Notice date: [ ] · Request date: [within the period]

Issues raised (list every one; issues not raised may be waived)

☐ Collection alternative: installment agreement under 26 U.S.C. § 6159 / offer in compromise under 26 U.S.C. § 7122 / currently not collectible status. ☐ Lien withdrawal, subordination, or discharge under 26 U.S.C. § 6323. ☐ Levy release under 26 U.S.C. § 6343 on hardship grounds. ☐ Exempt property improperly levied under 26 U.S.C. § 6334. ☐ Spousal defenses under 26 U.S.C. § 6015. ☐ Underlying liability — only where no prior opportunity to dispute existed. Basis: [ ]. ☐ Procedural defects: notice not sent to the last known address; assessment made in violation of 26 U.S.C. § 6213; collection period under 26 U.S.C. § 6502 expired; required notice and demand under 26 U.S.C. § 6331 not made. ☐ Penalty abatement.

Attachments: financial statement; supporting documents; proposed alternative with computation.

⚠️ Raise every issue. A collection hearing is not a place to hold something back.

TOOL 6 — FINANCIAL STATEMENT AND COLLECTION POTENTIAL

Assets (quick-sale value)

Asset Fair market value Quick-sale value Encumbrance Net realizable equity
Residence [$] [$] [$] [$]
Vehicles [$] [$] [$] [$]
Bank and investment accounts [$] [$] [$] [$]
Retirement accounts [$] [$] [$] [$]
Business assets and receivables [$] [$] [$] [$]
Other [$] [$] [$] [$]
Total net realizable equity [$]

Income and allowable expenses (monthly)

Item Amount Standard Allowed Documentation
Gross income, all sources [$] — [$] [ ]
Food, clothing, misc. [$] [national] [$] [ ]
Housing and utilities [$] [local] [$] [ ]
Transportation [$] [local] [$] [ ]
Out-of-pocket health care [$] [national] [$] [ ]
Taxes [$] actual [$] [ ]
Court-ordered payments [$] actual [$] [ ]
Necessary business expenses [$] actual [$] [ ]
Monthly disposable income [$]

Collection potential. Net realizable equity [$] + (disposable income [$] × multiple for the elected payment period [ ]) = [$]

Comparison. Balance owed [$]. Remaining collection period [months]. Alternative supported by the numbers: [offer / installment agreement / partial-pay agreement / currently not collectible].

⚠️ Prepare this as though it will be verified, because it will be. One overstated expense discredits the whole submission.

TOOL 7 — PENALTY ABATEMENT REQUEST

Re: Request for abatement of penalties — [Taxpayer], [years]

1. Penalties at issue. [Type, year, amount, from the transcript.]

2. First-time abatement. The taxpayer had no penalties for the three preceding years and was compliant with filing and payment requirements. Abatement is requested on that basis for [year].

3. Reasonable cause. [For each remaining penalty: the specific circumstance; the dates; how it prevented compliance; when compliance resumed; and the documents attached.] The taxpayer exercised ordinary business care and prudence.

4. Authority. 26 U.S.C. § 6651 for failure to file and pay; 26 U.S.C. § 6662 for accuracy-related penalties, addressed by [substantial authority / adequate disclosure / reasonable cause and good faith]. The taxpayer acknowledges that reliance on an agent to file is not reasonable cause under United States v. Boyle and relies instead on [ ].

5. Interest. [If applicable, abatement under 26 U.S.C. § 6404 is requested for the period [ ] because of an agency delay in performing a ministerial or managerial act, specifically [ ].]

Attachments. [Medical records; disaster declaration; death certificate; records destruction report; third-party confirmations.]

TOOL 8 — LEVY RELEASE AND LIEN REQUESTS

A. Levy release. "A levy served on [employer/bank] on [date] is creating an immediate economic hardship. The enclosed financial statement shows monthly income of [$] against allowable living expenses of [$], leaving the taxpayer unable to meet basic living expenses. Release is requested under 26 U.S.C. § 6343. The taxpayer proposes [alternative] and has attached the supporting computation. The taxpayer is current on [filings/deposits]."

B. Lien withdrawal. "The taxpayer has entered a direct debit installment agreement under 26 U.S.C. § 6159 effective [date] and has made [number] timely payments. Withdrawal of the notice of federal tax lien is requested because withdrawal will facilitate collection: [reason — refinance, sale, credit access]."

C. Lien discharge or subordination. "The taxpayer is [selling/refinancing] property at [address] on [date]. The lien filed [date] under 26 U.S.C. § 6323 attaches under 26 U.S.C. § 6321. [Discharge/subordination] is requested because [the United States will receive [$] from the transaction / the transaction will increase the amount realizable]. Attached: appraisal, title report, settlement statement, and payoff figures."

TOOL 9 — SPOUSAL RELIEF WORKSHEET

Element Facts Evidence
Joint return filed [ ] [ ]
Understatement attributable to [spouse] [ ]
Requesting spouse's knowledge or reason to know [ ] [ ]
Significant benefit received [ ] [ ]
Marital status now [ ] [ ]
Economic hardship if relief denied [ ] [ ]
Abuse or financial control [ ] [ ]
Compliance since [ ] [ ]
Form of relief sought [traditional / separation of liability / equitable] —

☐ Authority: 26 U.S.C. § 6015. ☐ Note the non-requesting spouse's right to participate, and address the conflict before any joint filing or agreement. ☐ Consider injured spouse relief separately where a joint refund was offset under 26 U.S.C. § 6402.

TOOL 10 — AUTHORITY TABLE

Provision Subject
26 U.S.C. § 6001 Records and returns
26 U.S.C. § 6011 General filing requirement
26 U.S.C. § 6015 Relief from joint and several liability
26 U.S.C. § 6020 Returns prepared by the Secretary
26 U.S.C. § 6103 Confidentiality of return information
26 U.S.C. § 6159 Installment agreements
26 U.S.C. § 6201 Assessment authority
26 U.S.C. § 6212 Notice of deficiency
26 U.S.C. § 6213 Restrictions on assessment; Tax Court petition
26 U.S.C. § 6320 Lien hearing
26 U.S.C. § 6321 Lien for taxes
26 U.S.C. § 6322 Period of lien
26 U.S.C. § 6323 Validity and priority against third parties
26 U.S.C. § 6330 Levy hearing
26 U.S.C. § 6331 Levy and distraint
26 U.S.C. § 6334 Property exempt from levy
26 U.S.C. § 6335 Sale of seized property
26 U.S.C. § 6343 Release of levy
26 U.S.C. § 6402 Overpayments and offsets
26 U.S.C. § 6404 Abatements
26 U.S.C. § 6501 Limitations on assessment
26 U.S.C. § 6502 Collection after assessment
26 U.S.C. § 6511 Limitations on refund claims
26 U.S.C. § 6651 Failure to file or pay
26 U.S.C. § 6662 Accuracy-related penalty
26 U.S.C. § 6663 Fraud penalty
26 U.S.C. § 6672 Trust fund recovery penalty
26 U.S.C. § 6702 Frivolous submissions
26 U.S.C. § 7121 Closing agreements
26 U.S.C. § 7122 Compromises
26 U.S.C. § 7123 Appeals dispute resolution
26 U.S.C. § 7402 Jurisdiction of district courts
26 U.S.C. § 7421 Anti-Injunction Act
26 U.S.C. § 7429 Jeopardy assessment review
26 U.S.C. § 7430 Attorney fees and costs
26 U.S.C. § 7431 Damages for unauthorized disclosure
26 U.S.C. § 7433 Damages for unauthorized collection
26 U.S.C. § 7502 Timely mailing as timely filing
26 U.S.C. § 7521 Taxpayer interview rights
26 U.S.C. § 7602 Examination and summons authority
26 U.S.C. § 7609 Third-party summonses
26 U.S.C. § 7803 Taxpayer rights
26 U.S.C. § 7811 Taxpayer assistance orders
26 C.F.R. Part 1 Income tax regulations
26 C.F.R. Part 301 Procedure and administration
26 C.F.R. Part 601 Statement of procedural rules
31 C.F.R. Part 10 Practice before the Treasury Department
United States v. Powell Summons enforcement standard
United States v. Clarke Hearings on improper summons purpose
Polselli v. IRS Third-party summons notice exception
United States v. Boyle Reliance on an agent is not reasonable cause
Commissioner v. Banks Contingent fees includible in income
United States v. Galletti Assessment extends collection against others
Drye v. United States Disclaimers and the federal lien
United States v. Craft Tenancy by the entirety
United States v. National Bank of Commerce Levy on joint accounts
United States v. Fior D'Italia Aggregate estimation methods
Tyler v. Hennepin County No retention of surplus beyond the debt
Hibbs v. Winn Limits on restraining tax administration
Direct Marketing Assn. v. Brohl What counts as restraining assessment

Closing note

Build Tool 1 first and give the client a plain-language version of it. In a field where the dominant risk is disengagement, showing a taxpayer what is actually true about their account is the single most effective thing a representative does.

TOOL 11 — CLIENT STATUS LETTER

Re: Your federal tax matter — status as of [date]

What we found. [Plain-language summary of the transcript grid: which years are at issue, what is owed, which balances are wrong and why, and which years have already expired.]

What we have done. [Filings made; responses sent; hearings requested; abatements requested.]

What happens next, and when. [Each step with its date.]

What you must do. [Specific, dated, and short: file X by Y; adjust withholding to Z; send the following documents by [date]; do not ignore any letter that arrives.]

What to expect. [Realistic range of outcomes, stated plainly, including the possibility that a balance will remain.]

If a levy or a notice arrives, call us the day it arrives. Do not wait for our next scheduled call.

📌 Send this letter after the first transcript review and update it at every stage. Clients who understand their own position stay engaged, and engagement is the variable that most affects the outcome.

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