If you have outstanding debt, the IRS may pursue a collection action. A Collection Due Process Hearing — commonly referred to as a “CDP” — is typically a taxpayer’s last opportunity to resolve a controversy with the Internal Revenue Service (IRS) before resorting to litigation. Before the IRS issues a levy, it must provide you with a final notice of its intent to do so. This notice gives you a 30-day timeline in which to request a CDP hearing.
How to Request a CDP Hearing
A taxpayer has the right to a CDP hearing in connection with the applicable tax period if they have been provided with the following: a Notice of Federal Tax Lien Filing; a Final Notice of Intent to Levy; a Notice of Jeopardy Levy and Right of Appeal; a Notice of Levy on Your State Tax Refund; or a Post Levy Collection Due Process Notice. To ask for a CDP hearing, you must file a Form 12153 with the IRS Service Center that issued the final notice, or the assigned revenue officer. When filing, you must also submit documentation and paperwork with the Form supporting your case.
If you make a timely request for a CDP hearing, the IRS cannot serve a levy or pursue a collection action until the conclusion of the CDP. A request made timely will also suspend the IRS’s 10-year statute of limitations on collection. Failure to ask for a CDP before the end of the 30-day deadline will result in you not being entitled to a CDP hearing. You may still file for an equivalent hearing with the appeals process. Be aware that you will not have the same benefits or the right to go to Tax Court if you do not prevail in the appeals process.
What Happens at the CDP Hearing?
The purpose of a CDP hearing is to determine whether the levy the IRS intends to issue is proper under the Internal Revenue Code. The hearing will be conducted by a Settlement Officer who had no previous involvement in your case. At the hearing, you may make a request for:
- An Offer in Compromise
- An installment agreement
- Any alternative tax collection method
- To be treated as an innocent spouse
You might also have the right to dispute the amount of tax liability if you have not done so already. The IRS must adhere to specific requirements when issuing a Notice of Intent to Levy and Right to ask for a Hearing. It must be sent certified or registered mail, return receipt requested to your “last known address,” — it can also be delivered in person to your home or business. You may dispute the notice itself if you can show that the IRS did not follow the required procedures, and the notice was not sent to your “last known address.”
After the CDP hearing, the Appeals Officer will draft a Notice of Determination which will decide the merits of any issues argued in the case and confirm that all procedural requirements were met. The ruling will be sent to you in the mail. If you receive unfavorable results at the CDP hearing, you will have 30 days to appeal the Notice of Determination with the Tax Court.
Contact an Experienced New York Tax Attorney
Tax disputes can be complex and it’s vital to have an experienced tax attorney by your side who can assist you with navigating the process. The legal team at Brinen & Associates provides representation for a broad scope of tax matters at both the state and federal levels, including those involving CDP hearings. Call (212) 330-8151 or send us a message to learn more about how we can help.