What Is Collection Due Process (CDP)?A Collection Due Process Hearing (CDP) is a type of IRS Appeal request available to taxpayers, when one of the following notices is received:
- Final Notice of Intent to Levy and Your Right to a Hearing;
- Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC Sec. 6320;
- Notice of Levy and Notice of Your Right to a Hearing;
- Notice of Jeopardy Levy and Right of Appeal;
- Notice of Levy on State Tax Refund, Notice of Your Right to a Hearing.
How Do I Request a CDP?Your CDP request must be in writing. Use IRS form 12153. To be considered timely, your CDP must be submitted within the time given by the IRS in the notice you receive, usually 30 days from the date on your IRS notice. Send your CDP request to the IRS address on your notice. (I recommend sending it via US Mail Certified Receipt or other certified carrier.)
What If I Miss the IRS' 30-Day Appeal Deadline?If you miss the 30-day deadline to timely file your CDP request, you may submit a CDP Equivalent Hearing request. However, you may need to submit your Equivalent request within 12 months from the date on your IRS notice for it to be considered.
What is the difference between a timely filed CDP and an Equivalent CDP?There are a few big differences between a timely filed CDP request and an Equivalent CDP request. First, a timely filed CDP request will prevent the IRS from enforcing collection of the tax in the form of levies and seizures. An Equivalent CDP request will not prevent the IRS from having the ability to levy your bank account, wages or seize your assets. However, in some cases, the IRS will hold off on levies and seizures until the Equivalent Hearing is held by Appeals, unless the taxpayer is not current and compliant, and there are dissipating assets.
A timely filed CDP request also allows the taxpayer to go to tax court if there is no agreement reached with IRS Appeals. The Appeals Settlement Officer will issue a Determination Letter with a 30-day deadline to appeal to tax court. An Equivalent CDP hearing does not allow the taxpayer to appeal to tax court. The Settlement Officer will issue a Decision Letter that does not afford the taxpayer any further options.
What is a disqualified employment tax levy CDP?If you operate a business and have accrued a payroll tax liability, the IRS has an additional rule regarding CDP requests that may affect you. The opportunity for a CDP Hearing before a levy does not apply to a disqualified employment tax levy, even if the CDP request was filed timely. A disqualified employment tax levy is a levy issued to collect employment taxes.
For example, if a CDP request was filed on a Final Notice of Intent to Levy issued to a 941 tax return for the 1st quarter of 2011, and the taxpayer then accrues another liability on the 941 for the 3rd quarter of 2012, the IRS will not stop collection action if a CDP is submitted on the Final Notice of Intent to Levy issued to the 941 for the 3rd quarter of 2012.
What Can I Expect in My CDP Hearing?Most CDP Hearings are informal and held over the phone. However, you may request a face-to- face hearing if your request is timely. The Settlement Officer from Appeals that is assigned to your case will go over the facts and documents that you've presented in an effort to resolve the matter. Be prepared to resolve your issue in one phone call with your Settlement Officer. It is helpful to provide any additional documents and your plan for resolution to your Settlement Officer prior to your hearing.
What Else Should I Know About CDPs?A timely filed CDP extends the ten-year Statute of Limitations the IRS has to collect the tax. An Equivalent Hearing does not extend the Statute of Limitations. A taxpayer is entitled only one CDP per period with accrued liability, and it may take months from the time you submit your CDP request to the time you have your hearing. See IRS Publication 1660 Collection Appeal Rights for more information.