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Requesting a Collection Due Process (CDP) hearing is a right granted to taxpayers in the United States when facing specific IRS collection actions, such as a levy or lien. It’s a necessary procedure that can provide a platform for resolution and potentially prevent aggressive IRS collection measures. Here’s a detailed explanation of how to request a CDP hearing:
What is a Collection Due Process Hearing?
A CDP hearing is a legal avenue provided by the IRS, allowing taxpayers to challenge the IRS’s decision to proceed with specific collection actions. It’s part of the due process rights afforded to taxpayers under the Internal Revenue Code.
When Can You Request a CDP Hearing?
You can request a CDP hearing when you receive one of the following from the IRS:
- Notice of Federal Tax Lien Filing: This notice indicates that the IRS has a legal claim against your property due to unpaid tax debt.
- Final Notice of Intent to Levy: This is the last step before the IRS can seize your property or income to satisfy the tax debt.
You have 30 days from the date of these notices to request a CDP hearing.
How to Request a CDP Hearing
- Fill Out IRS Form 12153: This form, titled “Request for a Collection Due Process or Equivalent Hearing,” is used to request the hearing formally. It’s available on the IRS website.
- Provide Detailed Information: You need to specify on the form why you are requesting the hearing. Common reasons include:
- Disputing the tax amount.
- Discussing collection options (like installment agreements or an Offer in Compromise).
- Addressing procedural errors by the IRS.
- Demonstrating financial hardship caused by the levy or lien.
- Submit the Form: Send the completed Form 12153 to the IRS office indicated on the levy or lien notice. It’s crucial to adhere to the 30-day deadline.
What Happens After You Request a CDP Hearing?
- Suspension of Collection Actions: Generally, the IRS suspends collection actions while your request is pending.
- Review by the IRS Office of Appeals: An independent Appeals Officer reviews your case. They assess whether the IRS followed proper procedures and consider any issues you raise.
- The Hearing: It can be conducted in person, via phone, or through correspondence. You can present your case, raise disputes, propose alternatives, and provide documentation.
What Happens During a CDP Hearing?
The CDP hearing isn’t your typical courtroom scenario. Instead, it’s an opportunity to discuss your case with an IRS Appeals Officer.
- Discussion Points: You can challenge the collection action and propose alternatives, like installment agreements or an Offer in Compromise.
- Examine All Aspects: The Appeals Officer will review your case. This includes your tax history, current financial situation, and any proposed solutions you have.
- Outcome of the Hearing: The work can range from halting the collection action to setting up a payment plan. Each case is unique, and the result will depend on your specific circumstances.
Possible Outcomes of a CDP Hearing
- Agreement on a Resolution: The Appeals Officer might agree to a payment plan, compromise, or find the collection action unwarranted.
- No Change in IRS Decision: If the Appeals Officer upholds the IRS’s decision, collection actions may proceed.
Why Consider Professional Assistance
A CDP hearing is more than just a formality. It’s a critical step that ensures your rights are respected in the collection process. Understanding these rights is crucial in overcoming the situation confidently. Requesting a CDP hearing and overcoming the process can be complex, especially when dealing with tax laws and IRS procedures. Professional assistance from a tax attorney or a qualified tax adviser like us can be invaluable. We can help in:
- Preparing and submitting the request.
- Developing a strategy for the hearing.
- Representing you during the hearing.
- Negotiating with the IRS.
Ready to Take the Next Step?
If you’re facing IRS collection actions and need to request a CDP hearing, we’re here to help. At DiLucci CPA Firm, we offer more than just tax services; we offer peace of mind. Call us at (972) 444-9934 or online to schedule a consultation. Whether it’s tax, accounting, or IRS matters, we’re here to guide you through it every step of the way.