If for some reason, you find yourself defaulting on a tax payment or two, the IRS will take steps to recover that debt. This could be through IRS levies, allowing them to seize your assets, taking money from your accounts or through a Notice of Federal Tax Lien (NFTL). By law, the IRS must inform you before any collection efforts are made, and after filing an NFTL.
What is an IRS CDP Hearing?
After the IRS makes it known to you that they intend to initiate steps to recover what you owe, you can request a hearing to discuss your case. At the hearing, you get to find out whether there were any procedural issues on the IRS’s side or propose alternative methods of collection. So, a Collection Due Process (CDP) hearing is a last-ditch effort to avoid the penalties altogether or offer payment alternatives that would be easier on you. It’s important to note, though, that most CDP hearings discuss alternative collection methods. So your chances of getting away without making payments are slim.
What do I need to do?
If you feel that the IRS hasn’t stated the correct figure you owe, or you just want to discuss alternatives, you can request a CDP hearing. After requesting the hearing, the IRS will send you a notice stating that your request has been forwarded to the Appeals Office and that the office will contact you within 60- 90 days. Use this time to get yourself ready for the hearing. Provide all the relevant financial documents, and most importantly, make sure you comply with tax filings and your federal tax deposits. If you aren’t in compliance, the IRS will not listen to your case for alternative payments.
The IRS will then send you a letter with your Settlement Officer’s name and contact information. For objectivity, you will be assigned a Settlement Officer who hasn’t worked on your case before.
What happens during the CDP hearing?
Your CDP hearing will be over in a jiffy if you were in compliance with all the relevant regulations, and if you provided all the relevant financial documents before the hearing. After verifying your compliance, the IRS will move to discuss the terms of your alternative collection proposal. If both parties come to a resolution, all you have to do is waive your appeal rights, and off you go.
Should you run into denial, the IRS will issue a Notice of Determination, providing you 30 days to file an appeal with the United States Tax Court.
If you keep your nose clean and follow all the procedures, a CDP tax hearing could either release you from paying hefty fees or facing seizures. It could also allow you to negotiate more bearable collection terms. And like all matters tax, contact a knowledgeable and experienced tax professional to guide you through the entire process.
Contact a Tax Lawyer
If you have tax issues and don’t know where to turn, contact the experienced tax debt attorneys at Ayar Law for free, no-obligation tax advice at 800.571.7175