Collections Due Process Explained

The Fourth Amendment guarantees you due process in situations where your life, liberty, or property are at risk. When you owe money to the IRS, they have the power to garnish your wages, file liens and levies on your property, and sue you, but the IRS Restructuring and Reform Act of 1998 gives you statutory rights in this situation, including the right to a hearing.

A Collections Due Process Hearing gives you the opportunity to resolve a tax situation before litigation starts. You can request a hearing in response to any of these IRS notices:

  • Final Notice of Intent to Levy
  • Notice of Federal Tax Lien Filing
  • Notice of Jeopardy Levy

To request a CDP hearing before the United States Tax Court, you must file Form 12153 with the IRS Office of Appeals within 30 days of the notice being mailed. Even if you don’t submit your request before this deadline, you can request an equivalent hearing up to one year after receiving the levy notice.

The IRS will not typically take any collection actions against you during the hearing process. (There are certain exceptions, such as a state tax refund levy.) The statute of limitations to collect your unpaid taxes will also be extended until the hearing concludes.

It should be noted that even after requesting a hearing, you always have the option of working out your case with the IRS. If you are able to reach a payment agreement, you may opt to cancel the CDP hearing.

What Happens at the Hearing?

At the hearing, which is held before an IRS Appeals Officer, you may dispute the amount you allegedly owe or request a form of tax relief, such as:

  • Being treated as an Innocent Spouse
  • A collection alternative such as an Offer in Compromise or Installment Agreement
  • Abatement of interest and penalties

All claims of financial hardship or collection alternative proposals must be accompanied by financial information that supports your position.

In most cases, you cannot dispute liability at a CDP hearing, as any challenges to the underlying tax liability are triggered by the Statutory Notice of Deficiency, otherwise known as the 90-Day Letter. There is an exception if you receive this letter after receiving a Final Notice of Intent to Levy: since you have not previously had an opportunity to dispute liability in this case, you are permitted to bring up these issues at your Collection Due Process Hearing.  In this case, if you want to challenge the assessment and you are unable to reach a resolution in Appeals, you can appeal both the levy and the tax liability by filing a petition with the Tax Court.

Contact a Seattle Tax Attorney

If the IRS has notified you of its intent to levy against assets you own, the Collection Due Process procedure is your opportunity to stop the collection action and arrange an alternative outcome. At Boeshaar Law, we help individuals and small businesses resolve their disputes with the IRS at CDP hearings and in other situations. We will work with you to prepare and present a Payment Plan, Offer in Compromise, or another sustainable arrangement that addresses your tax debt. For more information, contact us or call (206) 899-4860.

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