Background and Legal Framework
When the IRS seeks to collect unpaid federal taxes, it may impose liens on your property or levy assets such as bank accounts and wages. Recognizing the potential financial impact on taxpayers, Congress established the Collection Due Process (CDP) hearing under the IRS Restructuring and Reform Act of 1998. This provision ensures taxpayers can appeal certain IRS collection actions and request judicial review before serious enforcement actions proceed.
How a Collection Due Process Hearing Works
If you receive an IRS notice regarding a lien, levy, or similar collection action, you have 30 days to request a CDP hearing with the Office of Appeals. The hearing provides an opportunity to:
- Dispute the IRS’s proposed collection action or its basis
- Present financial information supporting your inability to pay in full
- Propose installment agreements or an offer in compromise to settle the debt
- Request a “currently not collectible” status if immediate payment would cause hardship
During the hearing, a hearing officer reviews your case impartially and decides whether the IRS should continue with the collection action, modify it, or remove it.
Who Is Eligible for a CDP Hearing?
Taxpayers who receive a formal IRS notice of intent to file a Federal Tax Lien, levy assets, or who have had property discharged or denied discharge from levy actions are eligible for a CDP hearing. A timely request (within 30 days of the notice) is required to preserve this right.
Key Rights in a Collection Due Process Hearing
| Right | Description |
|---|---|
| Request a Hearing | You have 30 days to challenge IRS lien or levy notices by requesting a CDP hearing (see IRS notices examples). |
| Present Your Case | Explain why you disagree with the IRS’s collection action and provide financial details. |
| Propose Payment Options | Suggest installment agreements (Learn about IRS installment agreements) or offers in compromise to resolve the tax debt. |
| Pause Collection | The IRS typically suspends collection activities during the hearing. |
| Representation | You may have an attorney or authorized representative with you (Taxpayer representation rights). |
| Fair Review | A neutral hearing officer will review your case and make a determination. |
Common Misconceptions
- Deadline Missed Means No Appeal: Failing to request the hearing within 30 days forfeits your right to a CDP hearing.
- CDP Forgives Debt: The hearing reviews only collection actions, not the underlying tax liability.
- No Negotiation Possible: Taxpayers can propose payment alternatives during the hearing.
- Ignoring Notices: Lack of response allows the IRS to proceed with collection without hearing.
Practical Tips for a Successful CDP Hearing
- Act promptly and submit your hearing request within the 30-day window.
- Gather comprehensive financial documentation including income, expenses, assets, and proof of hardship.
- Understand different payment options: installment agreements, offers in compromise, or currently not collectible status.
- Consider consulting a qualified tax professional or tax attorney to guide you.
- Maintain a detailed record of all IRS communications and your hearing submissions.
Frequently Asked Questions
Can I have a representative at the hearing? Yes, you can be represented by an attorney, CPA, or enrolled agent.
Does the CDP hearing stop IRS collection? Usually, collection actions are paused during the appeals process.
Will the hearing officer adjust the amount I owe? No. Tax liability disputes must be resolved through separate IRS procedures or courts.
Example Scenario
Suppose the IRS files a tax lien against your property due to unpaid taxes. You promptly request a CDP hearing and demonstrate financial hardship during the session. You propose an installment agreement, and the hearing officer agrees to delay further collection while you make monthly payments.
Additional Resources
To learn more about responding to IRS notices, visit How to respond to an IRS notice?. For detailed taxpayer rights, see our Taxpayer Bill of Rights.
For official guidance, review IRS Resource pages on Collection Due Process hearings IRS Collection Due Process Hearings.
Understanding and exercising your rights in a Collection Due Process hearing is critical to protecting your finances from aggressive IRS collection efforts. Meeting deadlines, preparing thoroughly, and seeking professional help can make the process more manageable and increase your chances for a favorable outcome.