What Is a Collection Due Process Hearing?

A Collection Due Process (CDP) hearing is a formal review available to taxpayers facing collection actions from the Internal Revenue Service (IRS). It provides an opportunity to appeal an impending IRS action, such as the seizure of assets, before it occurs. This process allows a taxpayer to have their case heard by an impartial officer from the IRS Office of Appeals, a separate branch within the agency. The involvement of an independent Appeals Officer ensures that the case is reviewed by someone with no prior connection to the underlying tax assessment or collection efforts, fostering a neutral environment for resolution.

The purpose of the CDP hearing is to give taxpayers a voice in the collection process. It is a right that prevents the IRS from unilaterally seizing property without first offering a chance for discussion and negotiation. During this proceeding, a taxpayer can propose different payment arrangements or challenge the collection action itself.

Triggering a Collection Due Process Hearing

The right to a Collection Due Process hearing is activated by specific notices sent by the IRS. The two primary documents that initiate this right are the “Notice of Federal Tax Lien Filing and Your Right to a Hearing” and the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing.” Receiving either of these notices informs a taxpayer of the IRS’s planned collection activity and their opportunity to object.

A federal tax lien is a legal claim against a taxpayer’s property for a delinquent tax debt, securing the government’s interest in assets like real estate and personal property. A levy is the actual seizure of property to satisfy the tax debt, which can include garnishing wages or taking funds from bank accounts. The notices for these actions state that the taxpayer has a right to a CDP hearing to contest the action before it proceeds further.

Upon receipt of a lien or levy notice, a taxpayer has a strict 30-day window from the date printed on the notice to file a request for a CDP hearing. If the 30-day period lapses, a taxpayer may still request an “Equivalent Hearing,” but this alternative path has its own deadlines and a major limitation. The request must be made within one year from the date of a levy notice or, for a lien, within one year and five business days of the tax lien filing. The decision reached in an Equivalent Hearing is not appealable to the U.S. Tax Court, a recourse that is available through a timely CDP hearing request.

Information and Documents for Your Hearing Request

To request a hearing, you must use Form 12153, “Request for a Collection Due Process or Equivalent Hearing.” Completing Form 12153 requires your taxpayer identification number, such as a Social Security Number, the specific tax periods involved, and the type of tax in question. The form requires you to indicate whether the request is in response to a lien, a levy, or both.

The form includes a section where you explain your reasons for disagreeing with the collection action, which is your opportunity to formally present your case. Common reasons include proposing a collection alternative, such as a payment plan or a settlement offer. You might also raise a defense, such as claiming you are an innocent spouse and not responsible for the tax debt.

If you intend to propose a collection alternative based on your financial situation, you will need to complete and attach a Collection Information Statement. This is done using Form 433-A for individuals or Form 433-B for businesses; a simplified Form 433-F is also available for individuals. These forms provide a detailed snapshot of your income, expenses, and assets, which the IRS uses to evaluate proposals like an Offer in Compromise or an Installment Agreement.

The Hearing Request and Process

Once Form 12153 is completed and documents are gathered, submit the request to the address shown on the original IRS lien or levy notice. You also have the option to fax your request; the correct fax number can be found by calling the number on your notice or the main IRS helpline.

Filing a timely CDP hearing request legally suspends most IRS collection actions while the appeal is pending. The IRS cannot proceed with the levy or seizure of assets until the Office of Appeals has issued a final determination, which provides time to negotiate a resolution.

The hearing is not a formal, in-person court proceeding and is most often conducted by telephone or through correspondence with an IRS Appeals Officer. Their role is to consider the arguments presented, review the legal and procedural propriety of the IRS’s actions, and determine if a proposed collection alternative is a viable solution.

Potential Resolutions and Outcomes

The CDP hearing provides a forum to negotiate various resolutions to a tax debt. One of the most common outcomes is an Installment Agreement, which allows the taxpayer to make monthly payments over time. Another potential resolution is an Offer in Compromise (OIC), where the IRS agrees to accept a lower amount to settle the total tax liability, typically when there is doubt as to the collectibility of the full amount.

If a taxpayer has no ability to pay, they may be placed in Currently Not Collectible (CNC) status. This temporarily suspends collection efforts, though the debt continues to accrue interest and penalties. Other resolutions can include the withdrawal of a filed tax lien, which can help improve credit, or the subordination of a lien, which allows another creditor to move ahead of the IRS in securing a claim against a property.

At the conclusion of the hearing process, the IRS Office of Appeals will issue a formal document called a “Notice of Determination.” This notice outlines the Appeals Officer’s decision, the facts of the case, and the legal reasoning behind the conclusion. It will state whether the proposed IRS collection action is sustained or if an alternative resolution has been agreed upon.

If you disagree with the outcome detailed in the Notice of Determination, you have 30 days from the date of the notice to file a petition with the U.S. Tax Court. This allows for a judicial review of the Appeals Office’s decision.