Letter 3846 tells you Appeals received your Collection Due Process hearing request and that the request contains two kinds of issues: legitimate ones Appeals will consider, and positions the IRS treats as frivolous. The letter schedules a telephone conference and gives you a chance to withdraw the frivolous positions.
What Counts as Frivolous
The IRS publishes a list of positions it treats as frivolous. Common examples include claims that wages are not income, that the income tax is voluntary, that the IRS lacks authority to collect, or that a taxpayer is not a "person" subject to the Code. These arguments have been rejected by every court that has heard them.
Why You Should Take the Offer
Under IRC Section 6330(g), the IRS can disregard any portion of a hearing request that is based on a frivolous position. If the whole request is frivolous, the IRS can treat it as if it was never filed, which means no hearing, no suspension of collection, and no Tax Court review. IRC Section 6702(b) also authorizes a $5,000 penalty for a specified frivolous submission, including a hearing request.
Letter 3846 is the IRS giving you a path to keep the legitimate parts of your hearing. Withdraw the frivolous positions in writing and focus on what can actually help you: a collection alternative, a procedural defect, innocent spouse relief, or a genuine challenge to the underlying liability if you had no prior opportunity to dispute it.
If you received Letter 3846 and want to salvage the hearing, call us at (813) 229-7100. A real collection alternative almost always does better than a tax-protester argument.