IRS Collection Due Process Hearing – Timeline, Installment Agreement, Form 12153 Instructions, Rights & Appeals
Congress created the Collection Due Process in the Internal Revenue Service to protect the taxpayers’ rights to their properties and other assets they own. Besides that, the Treasury Department in the United States has also supplemented these particular statutory rights to set out the legal procedures that the IRS should observe and follow upon conducting any collection activities. So if you want to learn more about it, here’s everything you need to know about the Collection Due Process Hearing.
What is IRS Collection Due Process (CDP)?
If you have delinquent legal taxes, the Internal Revenue Service has a particular collection procedure to make you settle your unpaid tax obligations. It’s when you receive notices or letters from the agency requesting you to pay for your tax balance in full. Besides that, because of the taxes you owe, the IRS will continue the collection process by either issuing a levy or filing a lien.
Issuing a levy means that the IRS will take your property to pay your unpaid tax balance, like your house, cars, and many other valuables that you own. On the other hand, filing a lien means that the agency will make your assets as security for your tax debt. Hence, the tax Collection Due Process of the IRS is designed to make sure that all of the taxpayers with delinquent taxes will be able to pay their legal obligations.
IRS Collection Due Process Hearing
The Collection Due Process of the IRS seems to be very stiff to many taxpayers across the country. That’s why the agency has provided them an opportunity to propose a deal or an efficient way to pay the tax balance without facing any enforced collection through a collection due process hearing. According to the tax law, you are given two types of appeals based on either you’re appealing a levy or a lien, which were already discussed above.
Moreover, you can challenge a lien by processing a request for an appeal within thirty days after you receive the federal tax lien notice from the IRS. Also, until thirty days after the IRS sent the final intent to levy notice, the agency cannot issue a levy against you. So during this time, you can go ahead and file a request for a CDP levy appeal since the IRS can’t give a levy against you until the final determination has been finalized on that particular appeal.
How to File a CDP Request?
If you’re a taxpayer in the United States, you can request a CDP hearing after receiving any of the following IRS notices below.
- CP 504 Urgent Notice
- Letter 3172, Notice of Federal Tax Lien Filing
- CP 92, Notice of Your Right to a Hearing
- Letter 2439, Notice of Right of Appeal and Jeopardy Levy
- CP 298, Final Notice Before Levy on Social Security Benefits
- Letter 1058, Notice of Your Right to a Hearing and Notice of Intent to Levy – Final Notice
If you receive any of these, you can go ahead and request a CDP hearing. To do that, you should file the request with the assigned revenue officer. But if there’s none, you can go to the IRS Service Center that issued you the final notice. When you get there, you have to fill out and submit IRS Form 12153. It’s the particular form you need to file a Request for a Collection Due Process or Equivalent Hearing. It’ll require you to provide your complete name, mailing address, ID number, and contact number. Also, you have to include some important information from the notice you received on the said form.
Moreover, taxpayers are only allowed to have one hearing with respect to the particular tax year of the unpaid balance. Because of that, they need to raise all arguments and defenses in Form 12153 and supplement it with appropriate and relevant documentation and other important information.
If you’ve received a notice of levy from the IRS, you only have a total of 30 days to file the CDP Hearing request from the date of the notice. Besides that, if you’ve mailed a lien notice, the period of 30 days to request the said CDP Hearing will start five days after the lien notice filing. Usually, you will find the date on the notice you’ve received, telling you when you should file the CDP Hearing. So if you’re unsure about it, you can just use the date stipulated in the letter.
After that, when the IRS finally receives your form, all of their collection activities will stop, and the period of 10 years for the statute of limitations will also pause. Then, when you postmark the said IRS form by the last day of the thirty-day duration period after you received the notice of intent to levy or tax lien, that’s the time when the agency will respond to your request.
If you can’t meet the 30-day deadline, there’s another option. You can request an Equivalent Hearing, which will give you a year and five business days from the time you file your federal tax lien or a year from the time of your levy notice. However, in most cases, the IRS can still take your assets as the levy goes forward, but the agency will discontinue the levy when the said hearing becomes successful.
What are IRS Collection Due Process Rights?
Under the Internal Revenue Code in Section 6320, it says that every taxpayer with delinquent tax obligations has a right to file a Collection Due Process request or Equivalent Hearing when the IRS has put them on notice of the agency’s intent to file a levy or successfully file a federal tax lien against them.
What is the purpose of a Collection Due Process Hearing?
Generally, the agency will issue and send you a Notice of Intent to Levy and the Right to Request a Hearing before sending a levy. But the IRS will not issue a levy as long as you are given a chance for a hearing once you’ve successfully filed a request for a CDP hearing within the period of 30 days after you received the notice in the mail. So the IRS will stop its collection activity when your hearing is in the process, and it’ll resume once your issues get resolved. Notably, a CDP hearing won’t stop the IRS from revoking or denying your passport for unpaid tax debt.
What is a CDP Equivalent Hearing?
If the taxpayers weren’t able to file a request for the CDP hearing within 30 days, they could request an Equivalent Hearing instead. It’ll give them one year and five business days from the time they file their federal tax lien or one year from the time of their levy notice. However, the IRS can still take their assets as the issued levy will still go forward, but the agency will discontinue the said levy when the hearing becomes successful.
What happens at a collection due process hearing?
The hearing will be done within the Office of Appeals in the IRS and be conducted by one of the agency’s employees who has been assigned to handle your case. During the hearing, the employee will look into the form and other information you’ve submitted when you filed the request, including the following:
- Relevant defenses, tax problems, and challenges you’ve raised during the hearing
- Your request’s timeliness and validity
- Your suggestions, offers, or ideas for alternate collection procedures or methods that will work best for you and the IRS to settle a dispute
- To see whether the collection process of the IRS is appropriate with the aggregate amount of delinquent taxes you owe
These are some of the important things that the agency’s employees will look into during the hearing. So if you decide to have a collection alternative, like an installment payment arrangement, you have to provide the required information to the IRs, such as your bank account details, IRS Form 433-A, bank statement copies, and many others.
Taxpayers may get some benefits from the CDP hearings. That’s why it’s crucial that they or their representatives have enough knowledge about their CDP legal rights, and they can preserve their right to appeal to the tax court whenever needed. So if you’ve received a Notice of Intent to Levy or Notice of Federal Tax Lien from the IRS, you now know what to do. And you can come back to this article any time for further details and information about Collection Due Process.