Collection Due Process Hearing

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The IRS will go after unpaid taxes by levying bank accounts, seizing property, or issuing a wage garnishment.  But before the IRS levies against property, the Tax Code, Section 6330(a), requires written notice to any taxpayer whose property it wishes to levy to collect back taxes.

In that written notice, the IRS will state the specific amount of unpaid taxes that are due, along with a statement regarding the taxpayer’s right to a hearing, which is known as a Collection Due Process Hearing or CDP Hearing.  Generally speaking, if the taxpayer files a request for a CDP Hearing within 30 days of the notice, the IRS is precluded from enforcement action pending the outcome of the hearing.

Appealing a Tax Levy

The CDP Hearing is the place for appealing a tax levy. At the hearing, the taxpayer has the chance to raise any issues relating to the collection action, such as its appropriateness and/or alternatives, for example.

During the hearing, the taxpayer can propose an alternative to levy such as an installment agreement, an offer in compromise (OIC), currently not collectible or innocent spouse relief.

At the Collection Due Process Hearing, a settlement officer determines whether or not to proceed with collection. To do so, the settlement officer analyzes the following:

  • Whether the government has satisfied all applicable legal and administrative requirements;
  • What issues the taxpayer has raised; and
  • The balance of the intrusiveness of the proposed collection action against the need for effective tax collection

United States Tax Court

At the end of the hearing, the settlement officer issues a Notice of Determination regarding the disputed collection action.  If the CDP request is filed properly and within 30 days from issuance, the taxpayer can challenge the settlement officer’s determination in US Tax Court.  The Tax Court will review the administrative determination based on an abuse of discretion (i.e., whether or not the IRS has failed to make sound, reasonable and legal decisions in the case).  In some circumstances, the Tax Court may review the validity of underlying tax liability.  If the CDP request is filed more than 30 days, but within one year from issuance, then the settlement officer’s decision is final and conclusive.  This type of hearing is known as an equivalent hearing rather than a CDP hearing.  A CDP hearing is more meaningful because the settlement officer will evaluate the hazards of US Tax Court litigation.

When you owe back taxes and receive a notice of intent to levy, you have to act quickly. Without proper attention, these issues can escalate and cause complications. The Law Offices of Todd S. Unger, Esq. LLC is here to assist you in stopping IRS levies and choosing and implementing the best tax resolution to meet your goals. Contact the Law Offices of Todd S. Unger to discuss your specific situation today.

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