The Collection Due Process (CDP) hearing is one of the most important rights given to taxpayers. It’s your final opportunity to stop an IRS levy of your assets or the filing of a federal tax lien against your property.
Requesting the CDP Hearing
The IRS is only required to give you a CDP hearing if you request it. You should receive a Notice of Intent to Levy in the mail which explains your CDP rights. The IRS can only seize your assets without sending this notice in rare cases, such as when collection of the tax is at risk.
The notice will tell you that you have 30 days to request a CDP hearing. You need to request the hearing in writing and by the deadline.
If you miss the deadline, you may receive what is known as an equivalent hearing, but you will lose some important rights.
Delay Liens and Levies
Once you request the CDP hearing, the IRS has to wait until your hearing is complete before taking any collection actions. At the very least, this gives you more time to come up with a plan for resolving your tax debt and permanently avoiding the levy.
If your request for a CDP hearing is late and you receive an equivalent hearing, the IRS is permitted to levy your assets during the hearing process.
There are many alternatives the IRS will consider at a CDP hearing, including:
- Dispute the amount or existence of the tax liability.
- Request an installment agreement.
- Ask for one of the three types of innocent spouse relief.
- Submit an Offer in Compromise.
- Request currently not collectible
These alternatives can allow you to permanently avoid an IRS levy. For example, the IRS won’t levy assets while you are making payments on a monthly payment plan unless you violate the terms of your agreement.
Go to Tax Court
At the end of the CDP hearing, the IRS will issue a determination letter. If you don’t agree with the determination, you have the right to take your case to Tax Court. However, you may not be able to bring up any new issues in Tax Court unless new information becomes available.
Make sure you preserve your CDP rights by requesting a hearing, and contact a tax attorney to discuss solutions to your tax problems.
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