How Does the Appeals Office Evaluate Collection Due Process Requests?

The IRS Appeals Office evaluates Collection Due Process (CDP) requests to protect taxpayer rights while balancing the government’s need to collect taxes. When a taxpayer files Form 12153 (Request for a Collection Due Process or Equivalent Hearing) within the required timeframe, Appeals performs an independent review of the case, weighing procedural compliance, the taxpayer’s financial circumstances, applicable collection alternatives, and the hazards of litigation. The goal is an impartial administrative resolution that may stop or change liens and levies or approve an alternative collection solution.

This article explains the legal framework, the specific items Appeals reviews, practical steps to build a strong CDP submission, common pitfalls, and where CDP fits among other collection options. It includes practitioner insights drawn from years of representing taxpayers through appeals and collections.

Sources: IRS — Understanding Collection Due Process (CDP) and Appeals (see https://www.irs.gov/individuals/understanding-collection-due-process and https://www.irs.gov/appeals).

Legal and procedural foundation

CDP rights were established by the IRS Restructuring and Reform Act of 1998 to give taxpayers an opportunity for an administrative hearing before certain significant collection actions take effect (notably levies and the filing of a Notice of Federal Tax Lien). The taxpayer must timely file Form 12153 to trigger Appeals’ jurisdiction and to preserve the right to later petition the U.S. Tax Court for review of the Appeals determination (26 U.S.C. § 6320 and § 6330).

Key authoritative references:

What Appeals actually reviews

When an Appeals Officer receives a CDP request, their review typically covers these elements:

  1. Proper notice and procedural compliance
  • Did the IRS provide the legally required Notice of Intent to Levy or Notice of Federal Tax Lien?
  • Was the CDP request filed within the statutory deadline (generally 30 days from the date of the notice)? Timeliness matters — a late CDP filing usually eliminates CDP rights, though a taxpayer can still pursue a non‑CDP collection appeal (Collection Appeals Program).
  1. Verification of the assessment and right to collection
  • Has the liability been properly assessed and assessed to the correct taxpayer? If the taxpayer never had a prior opportunity to dispute the underlying liability (for the periods in question), they may raise that issue in CDP.
  1. Appropriate collection actions and alternatives
  • The Appeals Officer evaluates whether the proposed lien or levy is appropriate given the taxpayer’s circumstances and whether less intrusive alternatives (installment agreement, offer in compromise, or currently not collectible status) are reasonable.
  1. Consideration of taxpayer-elected collection alternatives
  • Taxpayers may propose collection alternatives during the CDP hearing. Appeals will consider those alternatives and may forward an accepted Offer in Compromise (OIC) package or authorize an installment agreement. (If pursuing an OIC, the taxpayer will need to follow Form 656 procedures and provide the financial package required by the IRS.)
  1. Hazards of litigation and hazard-of-litigation standard
  • Appeals assesses the hazards of litigation — the probability the IRS would lose if the case went to court — as part of settlement considerations. This independent settlement posture allows Appeals to recommend a resolution that avoids protracted litigation when appropriate.
  1. Special circumstances and equitable considerations
  • Examples include economic hardship, critical business needs, third-party impacts, and claims like innocent spouse relief. Appeals has discretion to weigh equity and the taxpayer’s ability to pay.

Timeline and immediate effects of filing CDP

  • Notices: A Notice of Intent to Levy and a Notice of Federal Tax Lien trigger CDP rights.
  • Deadline: CDP requests normally must be filed within 30 days from the date of the notice. (If the taxpayer files Form 12153 on time, Appeals gains jurisdiction.)
  • Automatic stay of levy: Filing a timely CDP request generally prevents the IRS from levying while Appeals considers the case, though urgent exceptions (serious jeopardy) can occur. Confirm the stay with Appeals and your representative to avoid surprises. (See IRS guidance: Understanding CDP.)

Practical steps to prepare a strong CDP request

  1. File Form 12153 quickly and correctly
  • Submit Form 12153 within the 30‑day window. If you mail it, keep proof of mailing. If you have doubts about timeliness, file immediately and preserve all proof of submission.
  1. Assemble a focused financial package
  • Bring current bank statements, income documents, monthly living expenses, and a proposed alternative (installment amount, OIC calculations using the IRS OIC pre‑qualifier). Detailed, organized documentation saves time in the hearing.
  1. Identify the issues you will raise
  • Procedural defects, inability to pay, spousal issues, or an offer in compromise. If you intend to dispute the underlying tax liability, be prepared to show why you did not previously have that opportunity.
  1. Consider professional representation
  • A CPA, enrolled agent, or tax attorney can frame arguments to Appeals, prepare financial exhibits, and negotiate settlement terms. In my practice representing over 500 clients, early professional involvement reduced levies and preserved business operations in most cases.
  1. Be candid about ability to pay
  • Appeals values realistic, documented proposals. Inflated claims or vague budgeting weakens credibility.
  1. Follow through after the hearing
  • If Appeals requests additional documentation or a Form 656 for an OIC, provide it quickly. Missing deadlines can forfeit opportunities.

Common pitfalls and how Appeals treats them

  • Missing the 30‑day deadline: Missed CDP deadlines generally forfeit CDP rights but do not eliminate all administrative options. The Collection Appeals Program (CAP) can still provide a forum to contest collection actions, though CAP lacks some of the procedural protections and Tax Court petition rights of CDP. See the IRS Collection Appeals Program page: https://www.irs.gov/individuals/collection-appeals-program-cap

  • Treating Appeals as collections only: Appeals is an independent, settlement‑oriented office. Framing arguments only as collection delays (without showing why relief is warranted) reduces the chance of a favorable outcome.

  • Incomplete financial disclosures: Appeals will request verification. In my experience, clients who provide full, organized documentation get faster and better outcomes.

Outcomes from an Appeals CDP determination

An Appeals Officer can:

  • Sustain the IRS proposed levy or lien (deny relief),
  • Modify the action (approve an installment agreement, propose a partial lien withdrawal, or recommend an OIC), or
  • Reverse or vacate the filing or the levy if the Appeals officer finds procedural or substantive problems.

If Appeals issues an adverse determination, the taxpayer generally has 30 days to petition the U.S. Tax Court for judicial review. A timely CDP filing is the gateway to this judicial right.

When CDP is the right path — and when it is not

CDP is usually the right first step when you receive a Notice of Intent to Levy or a Notice of Federal Tax Lien and you want an independent administrative review with Tax Court appeal rights. If you’ve missed the CDP window, CAP or informal collection resolution might be the available alternatives.

For tax debt relief options and how they interact with Appeals, see these helpful guides on FinHelp:

Final professional tips

  • Act fast: File Form 12153 immediately after receiving a lien or levy notice; proofs of timely filing are crucial.
  • Be organized: A clear financial statement and supporting documents make the Appeals Officer’s job easier and improve settlement prospects.
  • Use Appeals strategically: Appeals looks for fair, practical resolutions — present realistic alternatives and be prepared to explain why a levy would cause undue hardship or why the IRS’s proposed filing is incorrect.

Professional disclaimer: This content is educational and does not substitute for personalized tax advice. For case‑specific guidance, consult a licensed tax professional or attorney. Authoritative IRS resources include the IRS CDP and Appeals pages cited above.