Quick overview
Collection Due Process (CDP) hearings are the primary built‑in protection taxpayers have when the IRS moves to take collection steps that can seriously affect finances—most commonly a levy (seizing assets) or a federal tax lien (a public claim on property). A timely CDP request moves the matter from the Collections function to the independent Office of Appeals so an impartial Appeals Officer can review the case and consider alternatives to enforced collection.
In my practice advising taxpayers for 15 years, I regularly see CDP used to buy breathing room, negotiate installment agreements, and secure lien withdrawals that preserve credit and prevent bank levies. Used correctly, CDP can be the difference between an avoidable financial crisis and an orderly resolution.
Why CDP matters
- It pauses most collection activity while the appeal is pending (the automatic stay applies to levies for CDP requests). (See IRS, Collection Due Process (CDP) Hearings: https://www.irs.gov/businesses/small-businesses-self-employed/collection-due-process-cdp-hearings)
- It transfers the case to an independent Appeals Officer rather than the local collection team.
- It creates a written record and a formal determination you can appeal to U.S. Tax Court in many cases.
Who can use CDP and when
CDP is available when the IRS issues either:
- A Final Notice of Intent to Levy (commonly called a levy notice), or
- A Notice of Federal Tax Lien (NFTL).
You generally have 30 days from the date the IRS mailed the notice to file a CDP request (the notice will list the deadline). If you miss the 30‑day window you may still have other appeal rights (for example, an Equivalent Hearing under the Collection Appeals Program or non‑CDP appeal paths), but those options are narrower. Always act promptly.
Authoritative source: IRS CDP page and the Taxpayer Advocate Service explain deadlines and rights (https://www.irs.gov and https://taxpayeradvocate.irs.gov).
What the CDP hearing can and cannot do
What CDP can do:
- Review whether the proposed collection action is appropriate.
- Consider alternatives, such as an installment agreement, an Offer in Compromise (OIC) (if eligible), or a request to withdraw a Notice of Federal Tax Lien.
- Consider collection alternatives based on ability to pay and reasonable collection potential.
What CDP generally cannot do:
- Re‑examine a tax liability that you already had an earlier opportunity to dispute (for example, if you previously received a statutory notice of deficiency or if the assessment was previously challenged in tax court). There are narrow exceptions if you did not receive prior notice.
How the CDP process works — step by step
- Receipt of notice: The IRS sends a Final Notice of Intent to Levy or a Notice of Federal Tax Lien with instructions and the 30‑day deadline.
- File the CDP request: Send Form 12153 (Request for a Collection Due Process or Equivalent Hearing) or write a timely request that clearly asks for a CDP hearing. Include name, address, taxpayer identification number, the tax periods at issue, and the signature. Mail or fax to the address on the notice. Keep proof of mailing.
- Stay of levy: Filing a timely CDP request generally stops the IRS from levying assets while the appeal is pending (but there are exceptions—e.g., certain jeopardy situations).
- Appeals assignment: The case moves to the IRS Office of Appeals, which reviews the file independently.
- Prehearing conference: The Appeals Officer may request financial information (Form 433‑A, Form 433‑B, supporting bank statements, pay stubs). Be candid and organized—Appeals weighs current ability to pay and reasonable collection potential.
- Hearing and negotiation: This often happens by phone or written submission. You or your representative can explain facts, submit documentation, and propose a collection alternative.
- Appeals determination: The Appeals Officer issues a written determination stating the result and the reasons. If the determination is adverse, you generally have 30 days to petition the U.S. Tax Court for review of the determination.
Preparing for a CDP hearing — documentation checklist
- Copy of the notice you received (final notice of intent to levy or NFTL).
- Recent bank statements (3–6 months).
- Pay stubs or profit/loss statements for business owners.
- A completed collection information statement (Form 433‑A or 433‑B) unless you already have one on file.
- Proof of monthly non‑discretionary expenses (lease/mortgage, utilities, medical bills).
- Prior correspondence or proof of prior payments/agreements with the IRS.
In my practice I always recommend preparing a short cover memo that summarizes your proposal (installment plan, OIC, lien withdrawal) and the reasons—this helps the Appeals Officer quickly see the taxpayer’s goal.
Practical options to propose in CDP
- Installment agreement: Spread payments over time; Appeals can approve based on your ability to pay.
- Offer in Compromise: A binding settlement of the liability for less than the full amount (eligibility and documentation required; see IRS OIC guidance).
- Lien withdrawal: Appeals can recommend withdrawal of a Notice of Federal Tax Lien when withdrawal will facilitate collection or be in the best interest of the government (helps with credit and property transactions).
- Request for release or partial release of levy: In limited cases Appeals can recommend release if levy creates undue economic hardship.
See related coverage on tax liens and relief: Tax Liens and Levies: What They Mean and How to Stop Them and Resolving Tax Liens: Removal, Withdrawal, and Subordination.
Timeline and appeals after CDP
- 30 days: Typical time you have to file a CDP request after notice mailing.
- Appeals determination: Timing varies; the Appeals Office issues a written determination after reviewing submissions and any conference.
- 30 days to Tax Court: If you disagree with Appeals’ determination in a CDP case, you can generally petition the U.S. Tax Court within 30 days of the determination (this is a judicial review). The Tax Court filing preserves judicial review rather than allowing immediate collection enforcement.
Common mistakes to avoid
- Missing the 30‑day deadline. Even a few days late can eliminate CDP rights. File promptly and document delivery.
- Filing incomplete information. Appeals needs clear, organized financials—missing documents slow the process and reduce negotiating leverage.
- Assuming CDP halts every collection action. The stay is powerful for levies but not absolute in emergency/judgmental situations.
- Believing CDP automatically forgives tax debt. CDP is a dispute and negotiation tool, not a debt‑forgiveness program by itself.
Short case study
A self‑employed client faced an imminent bank levy after multiple missed estimated tax payments. We filed a timely Form 12153, submitted a complete Form 433‑B, and proposed an income‑based installment agreement. Appeals accepted the installment plan and recommended lien withdrawal because withdrawal increased the chance of on‑time payments and reduced collection costs. The levy was called off and the client avoided a frozen bank account—an outcome commonly achieved when taxpayers act quickly and provide full documentation.
Frequently asked questions
Q: Can I challenge the amount the IRS says I owe at a CDP hearing?
A: You can challenge an assessment under CDP if you didn’t previously have an opportunity to dispute the tax (for example, you never received a statutory notice of deficiency). If you already had a prior opportunity to contest the assessment, CDP is limited to collection issues.
Q: Do I need a professional to represent me?
A: You can represent yourself, but a CPA, enrolled agent, or tax attorney familiar with CDP procedures generally improves outcomes. In my experience, professionals speed document preparation and frame settlement proposals that Appeals expects.
Q: What happens if Appeals denies my request?
A: You will receive a written determination. In most CDP cases you can file a petition with the U.S. Tax Court within 30 days to seek judicial review.
Next steps and resources
- File Form 12153 if you received a Final Notice of Intent to Levy or an NFTL.
- Visit the IRS CDP page for official instructions: https://www.irs.gov/businesses/small-businesses-self-employed/collection-due-process-cdp-hearings
- Contact the Taxpayer Advocate Service if you face economic harm or if IRS processes are preventing resolution (https://taxpayeradvocate.irs.gov).
- For details on liens and related relief options see: How Tax Liens Are Recorded and How to Get Them Withdrawn.
Professional disclaimer: This article is educational and does not substitute for personalized legal or tax advice. Tax law is complex and facts matter—consult a qualified tax professional (CPA, enrolled agent, or tax attorney) for guidance tailored to your situation.
Authoritative sources
- IRS — Collection Due Process (CDP) Hearings: https://www.irs.gov/businesses/small-businesses-self-employed/collection-due-process-cdp-hearings
- Taxpayer Advocate Service: https://taxpayeradvocate.irs.gov
If you need step‑by‑step help preparing a CDP packet, I routinely prepare submission checklists and cover memos for clients—reach out to a trusted tax professional to ensure deadlines and documentation are handled correctly.
