When to Request a Collection Due Process Hearing

Tax Levies and liens

What is a Collection Due Process Hearing?

A collection due process (CDP) hearing gives you one last chance to avoid a federal tax lien or tax levy. You will know you have a right to request a CDP hearing because you will receive a CDP notice. This notice is sent when any of the following IRS collection actions are being taken:

  • Filing of a Federal tax lien
  • Bank account levy
  • Jeopardy Levy
  • Levy on Your State Tax Refund

The IRS should send you this notice before taking the proposed actions, but there are some situations where they can send the notice of taking action. The important thing to note is that you have 30 days from the date of the notice to request a CDP hearing.

Why You Should Request a Collection Due Process Hearing

By requesting a CDP hearing, you temporarily avoid the lien or levy. The IRS will typically not initiate the levy during the CDP hearing process. This gives you time to weigh your options.

The IRS is going to continue to pursue collection unless you give them a viable alternative. It’s always better to negotiate before they levy your assets than after.

Once you’ve requested a CDP hearing using Form 12153, you can use several different techniques to resolve your tax problems.

Use the CDP Hearing to Avoid a Lien or Levy

If you don’t dispute the tax liability, you can offer the IRS a collection alternative to avoid the lien or levy. Any of the following strategies can be used:

  • Pay your tax debt in full. If you can get the money to pay off your tax debt, you can avoid the levy and be done with your tax problems for good.
  • Installment agreements. Make payments on your tax debt over time. The IRS won’t levy your assets as long as you make all your payments in full and on time.
  • Submit an Offer in Compromise. If you don’t have many assets or disposable income, you may be able to settle your tax debt for pennies on the dollar.

You can also present a number of defenses during the CDP hearing: innocent spouse relief, disputing the tax liability altogether, or other defenses. You may also be able to negotiate tax penalty relief or have your account placed in currently not collectible status if you are experiencing temporary financial difficulties.

If you receive a CDP notice, contact a tax resolution attorney right away. You don’t want to miss your chance to request a CDP hearing and avoid a tax lien or levy.

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Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.