IRS Collection Due Process Hearing Help
Introduction to IRS Collection Due Process Hearings
Internal Revenue Service Collection is a serious matter. The IRS has the legal authority to utilize collection tools much more aggressively than other creditors, and the consequences are severe. IRS Collection efforts can put your financial future at risk. An IRS Collection Due Process (CDP) hearing is a critical protection available to taxpayers facing aggressive IRS collection actions, such as a federal tax lien or levy. Collection Due Process hearings, codified in Internal Revenue Code §6330, allow taxpayers to dispute the IRS’s proposed collection action, such as the intent to seize assets, challenge the validity of the underlying tax liability (in certain cases), and propose alternative solutions such as installment agreements, Offers in Compromise, or other collection alternatives. Collection Due Process hearings exist to ensure that taxpayers are not subjected to enforced collection without the opportunity for a fair review, making them an essential safeguard against premature or unjustified IRS actions.
CDP hearings are conducted by the IRS Independent Office of Appeals, where impartial Settlement Officers evaluate a taxpayer’s case to determine whether the collection action proposed by the IRS Collection function is appropriate. Taxpayers must request a Collection Due Process hearing within 30 days of receiving the IRS notice—typically Letter 1058 (IRS Notice of Intent to Levy) or Notice of Federal Tax Lien Filing (Letter 3172). Prompt action is crucial, as missing the deadline limits the taxpayer’s options and reduces available protections. When properly requested and supported, CDP hearings can help taxpayers avoid harsh IRS Collection actions like wage garnishments, bank levies, and real property liens by providing a structured forum to negotiate reasonable alternatives and resolve tax disputes efficiently.
Understanding Federal Tax Liens and Their Consequences
A federal tax lien is the government’s legal claim against all of a taxpayer’s property—including real estate, financial assets, and personal property—when they have an unpaid tax debt. The IRS typically files this lien after assessing the unpaid liability, sending a bill, and the taxpayer either refuses or is unable to pay the outstanding debt. Once the IRS records a Notice of Federal Tax Lien, it becomes public information, alerting creditors that the government has a priority interest in the taxpayer’s assets. This filing severely impacts a taxpayer’s credit profile, making it harder to secure loans, qualify for credit cards, refinance a mortgage, or obtain business financing.
A federal tax lien also negatively impacts property ownership and property sales, as the lien must usually be satisfied before the property can be transferred/sold with a clear title. Buyers, lenders, and title companies often avoid transactions involving unresolved tax liens, delaying or preventing sales. Fortunately, taxpayers have options: they can request a Collection Due Process (CDP) hearing to challenge the lien’s validity, negotiate alternatives such as lien withdrawal or subordination, or explore payment solutions that limit the lien’s impact, such as a monthly payment plan. By requesting a timely CDP hearing, taxpayers may secure relief or resolve the issue before it creates long-term financial obstacles.
Resolving Tax Debt Through a CDP Hearing
Collection Due Process (CDP) hearings give taxpayers a valuable opportunity to resolve tax liabilities before the IRS proceeds with enforced, involuntary collection. During the hearing, taxpayers can propose a range of collection alternatives tailored to their financial situation, including installment agreements, offers in compromise, or a request for currently not collectible (CNC) status when they are unable to pay. These options allow taxpayers to work toward compliance while preventing levies, liens, or other collection actions.
An IRS Settlement Officer (essentially an Appeals Officer that considers Collection cases) carefully reviews each CDP hearing request and collection alternative request, ensuring it aligns with IRS guidelines while also considering the taxpayer’s ability to pay and overall financial circumstances. As Federal Tax collection is complex and every case is unique, working with an experienced tax professional at Booth P.C. will significantly strengthen your position. Skilled guidance from Booth P.C. will result in compelling financial presentations, identification of the most effective resolution path, and negotiating terms that increase the chances of achieving a favorable outcome.
Steps in the Collection Due Process
Generally, before the IRS can seize assets, file a notice of federal tax lien, or enforce collections, it must follow a series ofrequired steps. The IRS must assess the tax owed, send a demand for payment (tax bill), and provide multiple notices explaining the taxpayer’s balance due and the consequences of nonpayment. Two of the most significant enforcement notices are the Final Notice of Intent to Levy and the Notice of Federal Tax Lien, each signaling that the IRS is preparing to take more aggressive collection actions. These notices inform taxpayers that their wages, bank accounts, or property may be at risk if the debt remains unpaid or otherwise unresolved.
After these final IRS notices are sent, taxpayers have 30-days to request a Collection Due Process (CDP) hearing. This CDP hearing is a final administrative opportunity to dispute the IRS’s proposed collection actions, verify the accuracy of the tax debt, and present collection alternatives such as installment agreements, offers in compromise, or lien relief options. Exercising the right to a CDP hearing can pause enforcement while the dispute is reviewed by an IRS Settlement Officer, ensuring taxpayers have a fair chance to resolve their tax issues before the IRS proceeds with levies or other aggressive collection actions.
How to Request a CDP Hearing
To request a Collection Due Process hearing, taxpayers must file Form 12153 with the IRS Office of Appeals. This form allows individuals and businesses to officially request a hearing before the IRS proceeds with a proposed collection action, such as levies or filing a federal tax lien. When completing Form 12153, taxpayers must provide background information, including their name, address, Social Security or Employer Identification Number, the specific tax periods at issue, and the type of tax involved. The IRS also requires taxpayers to indicate which collection action they are disputing and to state the proposed collection alternatives that the taxpayer would prefer, such as installment agreements, offers in compromise, or lien withdrawal options.
In addition to requesting a CDP hearing, the taxpayer may request an equivalent hearing. The primary difference between the two is that a CDP hearing must be requested within the strict deadline, typically 30 days from the date on the IRS notice, and offers full legal protections, including the ability to appeal an adverse final determination to the U.S. Tax Court. An equivalent hearing, while similar in process administratively, does not provide judicial review by the Tax Court and does not stop the IRS from continuing collection actions during the equivalency hearing review process. Because missing the CDP deadline limits the ability to immediately stop IRS Collection in most cases, acting promptly is essential to preserve appeal options and protect against enforced collections.
What to Expect During the CDP Hearing Process
A Collection Due Process hearing typically begins with a conference call or in-person meeting between the taxpayer and an IRS Settlement Officer. This informal setting allows taxpayers to explain their situation and present any documentation relevant to the tax dispute. During the hearing, taxpayers may submit updated financial information, supporting documents for their claims, or propose alternative payment solutions such as installment agreements (payment plan), offers in compromise, or requests for lien relief.
Throughout the process, the IRS Settlement Officer reviews the facts included in your CDP hearing request submission and the applicable law and regulations, including whether the IRS has followed proper procedures. The Settlement Officer also determines whether the proposed collection action balances effective tax collection with the taxpayer’s rights. After evaluating the evidence and alternatives, Appeals issues a final determination. If a taxpayer disagrees with that outcome, they have the right to appeal the decision to the U.S. Tax Court.
Protecting Due Process Rights in a CDP Hearing
Collection Due Process hearings play a critical role in safeguarding taxpayer rights during IRS collection actions. These hearings ensure taxpayers have the right to be heard, to present evidence, and to receive fair, unbiased consideration before the IRS proceeds with collection actions such as levies or federal tax liens. By allowing taxpayers to submit financial documents, document hardships, or challenge errors made by the IRS, CDP hearings provide an administrative opportunity to ensure that IRS Collection actions are not taken prematurely or unfairly.
Navigating the IRS Collection Process with Professional Help
IRS collection cases can quickly become overwhelming for taxpayers who aren’t familiar with the agency’s notices, procedures, and strict deadlines. A single missed response date will often lead to aggressive IRS Collection actions such as levies or federal tax liens, making it crucial to understand every notice the IRS sends and what steps must be followed. The complex rules surrounding Collection Due Process (CDP) hearings, payment options, and appeals add to the stress, especially when taxpayers are unsure how to protect their rights or present their case effectively.
A Booth P.C. tax attorney will provide essential guidance throughout the process, helping taxpayers file for CDP hearings on time, prepare persuasive arguments, and submit the financial documents needed to support their position. Skilled legal representation from Booth P.C. will also assist in negotiating alternatives—such as installment agreements, offers in compromise, or lien relief—before the IRS takes aggressive collection actions. With professional support from Booth P.C., taxpayers significantly improve their chances of reaching a fair resolution and avoiding wage garnishments, bank levies, or property seizures.
Frequently Asked Questions
What is an IRS Collection Due Process (CDP) hearing?
An IRS Collection Due Process (CDP) hearing is an administrative appeals process that allows taxpayers to challenge or resolve IRS collection actions, such as a tax lien filing or a levy. When you retain Booth P.C., we timely request a CDP hearing, and collection activity is generally paused while an independent IRS Appeals officer reviews whether the IRS followed the law, considers collection alternatives like installment agreements or offers in compromise, and evaluates any appropriate challenges to the tax liability. At Booth P.C., our role is to protect you during this process by stopping enforcement, presenting the strongest possible resolution strategy, and preserving your right to further appeal to the U.S. Tax Court if the outcome is unfavorable.
How do I request a CDP hearing with the IRS?
To request a Collection Due Process (CDP) hearing, the taxpayer files Form 12153 within 30 days of the date on the IRS lien or levy notice, specifying the collection action involved and the issues that Appeals should consider. Once the request is timely and accurately submitted, most IRS collection activity is suspended while the case is pending. At Booth P.C., we handle the timely filing, confirm that the request is timely and accurately submitted, and prepare the legal and financial arguments to present at the hearing so your rights are preserved and your case is positioned for the best possible outcome
What is the deadline for filing Form 12153?
To request a Collection Due Process (CDP) hearing, a Form 12153 must be filed within 30 days of the date on the IRS lien or levy notice, specifying the collection action involved and the issues for the Independent Office of Appeals to consider. After you retain Booth P.C. and the request is timely and accurately submitted, most IRS collection activity is suspended while the case is pending, protecting you from IRS Collection. At Booth P.C., we handle the filing, confirm that the request is timely and accurately submitted, and prepare the legal and financial arguments to present at the hearing so your rights are preserved and your case is positioned for the best possible outcome
What issues can I raise in a CDP hearing?
In a Collection Due Process hearing, a broad range of issues can be raised, including whether the IRS followed proper legal and procedural requirements, whether the lien or levy is appropriate, and what collection alternative best fits your situation, such as an installment agreement, offer in compromise, or currently not collectible status. At Booth P.C., we will also challenge the underlying tax liability if you did not previously have a meaningful opportunity to dispute it, and we address concerns like financial hardship, equity, and whether the proposed collection action is more intrusive than necessary. At Booth P.C., our role is to identify the strongest factors that will allow relief, present them clearly to Appeals, and position your case for the most favorable resolution while preserving your right to further review if needed.
What happens after a CDP hearing determination?
After the Collection Due Process hearing determination is issued, a written Notice of Determination will be issued explaining whether the IRS can proceed with the lien or levy and how the Appeals officer ruled based on the facts of the case. If the determination is unfavorable in any respect, a petition must be filed with the United States Tax Court within 30 days, which continues to suspend collection while the court reviews the case. If the determination is favorable, the IRS is required to follow it, such as releasing a levy, modifying a lien, or implementing a payment or settlement option. At Booth P.C., we monitor your account closely to ensure the IRS carries out the decision correctly and protects you from improper collection activity.
What is the difference between a CDP hearing and an Equivalent Hearing?
The primary difference between a Collection Due Process (CDP) hearing and an Equivalent Hearing is timing and the rights that follow. At Booth P.C., we focus on securing a CDP hearing whenever possible because it offers stronger legal protections. A CDP hearing is available when a timely request is made (30 days after the receipt of the notice), which automatically stops most collection activity and gives the right to appeal an unfavorable determination to the United States Tax Court. An Equivalent Hearing applies when the request is late but still within one year, and it allows Booth P.C. to negotiate with IRS Appeals and request collection alternatives on your behalf, but it does not suspend collection by law and does not provide Tax Court appeal rights, making it a less powerful, but still useful, option when a CDP hearing is no longer available.
Can I appeal an IRS lien through a CDP hearing?
Yes, an IRS lien can be appealed in a Collection Due Process (CDP) hearing if you received a Notice of Federal Tax Lien Filing and timely request the hearing. At Booth P.C.m we will file Form 12153 within 30 days of the notice you receive, and ask an independent IRS Appeals officer to review whether the lien was legally and procedurally proper, whether it appropriately balances the IRS’s interest in collection against the harm to you, and whether a less intrusive alternative, such as a lien withdrawal, subordination, or an installment agreement, is more appropriate. At Booth P.C., we manage the entire process, present your financial and legal arguments, and preserve your right to challenge an unfavorable determination in the U.S. Tax Court if necessary.
How does a CDP hearing help with an IRS levy?
A Collection Due Process (CDP) hearing helps protect against an IRS levy by allowing a formal opportunity to stop or prevent the levy and propose a better resolution before the IRS seizes wages, bank accounts, or other assets. When you retain Booth P.C., we timely request the CDP hearing after a levy notice, and most levy actions are automatically suspended while the case is pending. This allows Booth P.C. to challenge whether the levy is appropriate, raise financial hardship, and negotiate collection alternatives such as an installment agreement, offer in compromise, or currently not collectible status. At Booth P.C., we present your case to an independent Appeals officer and, if needed, preserve your right to further review in the U.S. Tax Court to keep collection on hold and protect your income and assets.
What are the requirements for a CDP hearing?
To qualify for a Collection Due Process (CDP) hearing, you must have received a qualifying IRS notice, such as a Notice of Intent to Levy or a Notice of Federal Tax Lien Filing, and timely request the CDP hearing by filing Form 12153 within 30 days of the notice date. You must also be compliant with current filing requirements, meaning all required tax returns are filed, for the Independent Office of Appeals to consider collection alternatives such as an installment agreement or offer in compromise. At Booth P.C., our role is to confirm eligibility, meet the strict deadline, ensure your request is properly submitted and logged, and prepare the financial and legal issues so Appeals can fully review whether the IRS’s proposed collection action is appropriate and lawful in your case.
Why should I hire a Booth P.C. IRS Collection Due Process appeal lawyer?
Hiring a Booth P.C. IRS Collection Due Process appeal lawyer is critical because a CDP hearing is often your best, and sometimes last, opportunity to stop IRS collection and force an independent review of your case. At Booth P.C., we are experts at filing the hearing request correctly and on time, securing the suspension of levy action, and presenting the strongest possible arguments to IRS Appeals, including collection alternatives, hardship, and procedural defects that the IRS must consider. Just as importantly, we preserve your right to take the case to the U.S. Tax Court if the Appeals rules against you, manage all communications with the IRS so you are not dealing with enforcement pressure directly, and position your case to achieve the least intrusive and most sustainable resolution under the law.