September 20, 2016

Denver Tax AttorneyBoth individuals and business entities are eligible to collection due process rights. Collection due process rights refer to your legal right to argue prior to the levy seizure of your income or assets that the IRS should not levy your property, but should instead accept a less invasive collection remedy such as an installment agreement, innocent spouse relief, offer in compromise, or currently not collectible status.

This kind of IRS Appeal request is typically made available to you if the agency has put you on notice of the IRS’ intent to file a levy against you, or if the IRS has filed a federal tax lien against you.

The collection due process or CDP request must be made using Form 12153 within the timeframe indicated by the IRS—typically 30 days from the date on your IRS notice. You must provide complete background information about yourself on this form, along with the reason or reasons you believe that the IRS should not pursue the lien or levy against you. If the information on the form is incomplete, your request will be denied. It is strongly advised to file your request for collection due process via certified mail, return receipt requested.

If you are able to file your CDP request in a timely manner, your collection case will be transferred from the IRS Collection Division to the IRS Appeals Division, and the IRS will be unable to seize your income or assets until a final determination is made following the CDP hearing or a consequent appeal in Tax Court.

In a CDP hearing, you may raise any significant issue pertaining to your unpaid tax or the levy proposed. This includes challenging the suitability of the collection actions or offering collection alternatives. If necessary, you may also challenge the amount or existence of a tax liability for any tax period—but only if you were not issued a statutory notice of deficiency for that particular liability or were not given an opportunity to dispute the said liability. Note that many CDP hearings are informal in nature, and usually held over the phone. You may, however, request a face-to-face CDP hearing. After the CDP hearing, the IRS will issue its determination by registered or certified mail. You will be given 30 days to appeal the determination in Tax Court.

If you miss the 30-day window for filing your CDP request, you may opt to submit a request for a CDP equivalent hearing by filing Form 12153 within 12 months from the date on the IRS notice—though doing so will not stop any collection actions. This means that pending the hearing, the IRS will still be authorized to pursue the debt against you. You will also not be given a chance to appeal the determination. Also, a timely filed CDP will extend the IRS’ 10-year statute of limitations, while the equivalent hearing will not.

The collection due process is one of the best ways to request the IRS to cease collections on a tax debt, as well as approve the collection remedy of your choice.

Categories: IRS