Collection Due Process Hearings

Taxpayers are protected from the summary nature of a federal tax levy or federal tax lien by various rights that are in the nature of limited due process rights, the foremost of which is the right to a Collection Due Process (CDP) Hearing. The Taxpayer’s request for a CDP Hearing about a tax lien filing must be postmarked by the date indicated on the Notice of Federal Tax Lien Filing. A request for a CDP Hearing about a proposed levy must be postmarked within thirty days after the date of the Notice of Intent to Levy. A timely request for a CDP Hearing will prohibit levy action in most cases and will suspend the statute of limitation for collections until a final determination is made by the Appeals Office. The request for a CDP Hearing should be mailed to the address on the lien notice or levy notice. The request for a CDP Hearing may also be faxed.

The Taxpayer can raise the following issues in a CDP Hearing:

1. The validity of the underlying tax (in certain circumstances).
2. Appropriate spousal defenses.
3. Challenge to the appropriateness of collections activities, and collection alternatives (e.g. the posting of a bond, substitution of other assets, Installment Agreement or an Offer In Compromise).
4. The Taxpayer may also argue that his or her taxes should be administratively classified as currently not collectible, or that the relevant liabilities were discharged in bankruptcy.

CDP Hearings are conducted by an Appeals Officer who has had no prior involvement with the relevant tax or tax periods at issue. The CDP Hearing may be conducted in an informal manner, such as by telephone. However, if the Taxpayer requests a face-to-face hearing, Appeals must provide the Taxpayer with the opportunity to have such a hearing at the Appeals office closest to the Taxpayer’s residence or principal place of business. Also, because of the informal nature of the hearing, neither party has the right to subpoena witnesses or documents for the hearing. Following a CDP Hearing, the Appeals Officer issues a Notice of Determination which can be appealed to the appropriate court that has jurisdiction.

Taxpayers who do not timely request a CDP Hearing may request an Equivalent Hearing with Appeals. Appeals generally will follow its procedures for a CDP Hearing, except it will issue a Decision Letter, not a Notice of Determination. Appeals will consider the same issues during an Equivalent Hearing as it would under a CDP Hearing. Unfortunately, the statute of limitations and collections actions are not suspended in an Equivalent Hearing. However, collection matters are handled on a case-by-case basis. Appeals may request that the Internal Revenue Service office with the responsibility for collecting the relevant taxes suspend its activities or take other appropriate action.