When a debtor fails to address an outstanding debt, such as a tax debt to the Internal Revenue Service (IRS), a creditor can place a lien on a debtor’s assets, and in some cases can levy on a debtor’s assets pursuant to collecting on the outstanding debt. The IRS has special powers when it comes to levying on a tax debtor’s assets, and if a debtor receives a Notice of Federal Tax Lien or a Notice of Intent to Levy, it is clear that the IRS has chosen to exercise those powers. Nevertheless, tax debtors are guaranteed certain rights as well, including the right to contest the levy amount or lien in a Collection Due Process hearing (CDP).
A CDP hearing is a hearing to determine whether the lien or levy is proper under the Internal Revenue Code (IRC). The CDP hearing becomes available to a tax debtor when that debtor receives any one of the following:
- Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320
- Final Notice – Notice of Intent to Levy and Notice of Your Right to a Hearing
- Notice of Jeopardy Levy and Right of Appeal
- Notice of Levy on Your State Tax Refund – Notice of Your Right to a Hearing
- Post Levy Collection Due Process (CDP) Notice
Under sections 6320 and 6330 of the IRC, taxpayer’s may exercise his or her right to a CDP hearing before the United States Tax Court up to 30 days after receiving an IRS levy or lien notice for each tax assessment within a tax period. That said, even if a tax debtor’s CDP request is not submitted in a timely fashion, i.e. within 30 days of the levy or lien notice, an equivalent hearing may be requested up to one year following receipt of the levy notice.
To request a collection due process hearing, you must use Form 12153. This form must be filed with the IRS Office of Appeals, which is an independent agency within the IRS that exists to fairly adjudicate tax disputes between taxpayers and the government. The hearing is held before an IRS Appeals Officer, and the assistance of an attorney with knowledge and experience in federal tax law can be instrumental for the taxpayer to reach a successful outcome. If you are dealing with a complex set of tax issues and have received one of the forms mentioned above, you should contact an experienced tax attorney and begin the appeals process.