What is a Collection Due Process Hearing?

A Collection Due Process Hearing, also known as a CDP hearing, may be your last best chance to resolve a tax controversy with the IRS short of tax litigation. Generally, the IRS must issue a Notice of Intent to Levy and Right to Request a Hearing if it sends a levy. If you file a request for a CDP hearing within 30 days of the date of its mailing, the IRS may not file a levy until you have had a chance for a hearing. At that hearing, you may ask for an installment agreement, an Offer in Compromise (OIC), or any other collection alternative. You may also request to be treated as an innocent spouse, and if you have not already had an opportunity to do so, dispute the amount of the tax liability. 

The Notice of Intent to Levy and Right to Request a Hearing is generally sent by certified or registered mail, return receipt requested, to a taxpayer's "last known address." As we explain here, if the notice is not sent to your last known address, it may not be valid and therefore the IRS would be prohibited from levying on your bank accounts or other assets. 

Instead of mailing the Notice of Intent to Levy and Right to Request a Hearing by certified, or registered mail, the IRS can also deliver it in person or leave it at the dwelling of the taxpayer or the taxpayer's usual place of business. It is relatively rare, however, for the IRS not to use certified mail in order to serve the Notice of Intent to Levy and Right to Request a Hearing. If a taxpayer refused delivery of the Notice of Intent to Levy and Right to Request a Hearing, or s/he fails to pick it up after the post office leaves a slip indicating that there was an attempted delivery, then generally speaking, theIRS and the courts will treat the notice as if it had been received. So a word (or five) of warning: Pick up your certified mail! When dealing with the Internal Revenue Service, ignorance is NOT bliss. 

The notice is required by the Internal Revenue Code Section 6330 to provide certain information in "simple and non-technical terms." That information is: 

  1. A statement of the taxpayer's right to request a hearing within 30 days; 
  2. The amount of the tax due; 
  3. The actions that the IRS intends to take the respect to collection and a listing of the taxpayer's rights including: 
    1. The provisions of the Internal Revenue Code related to levies and sales of property by the IRS;
    2. The procedures that are applicable to levies and sales under the Internal Revenue Code;
    3. Information about the appeals which the taxpayer can avail himself of; 
    4. The alternatives that are open which could forestall sales or levies including the option of an installment agreement; 
    5. The Internal Revenue code provisions and procedures which relate to the redemption or property and the release of federal tax liens
If you would like to see a sample of what the Notice looks like, we have one here. This version of the Notice of Intent to Levy and Right to Request a Hearing is set forth in IRS Form letter LT 1058. This letter is relatively straightforward in that the title quite clearly states that the Taxpayer has a right to request a hearing. The IRS also uses another notice to inform taxpayers of their statutory rights to request a Collection Due Process Hearing -- Form LT11. The IRS' automated collection service, known as ACS, generally uses the Form LT11 while IRS Revenue Officers use the Form LT 1058.

Somewhere around 2015, the IRS changed the format of Form LT11. A sample of the new Form LT11 is here. This new Form LT11 is very devious. It looks a lot like other notices that the IRS sends out which do not grant the right to a hearing. The right to a hearing is not mentioned in the bold-faced heading of the notice, nor for that matter, anywhere on the first page of the letter. It is only on page two of the notice and it is buried after notifications to pay immediately. 

It is very easy for taxpayers representing themselves to miss that language, and even tax professionals who are using shortcuts may not notice the information. The tricky way the Internal Revenue Service has chosen to implement critical taxpayer rights granted by Congress underlines the importance of obtaining professional assistance. On the one hand, a highly detailed oriented taxpayer might be able to respond to the notice, but the trick is understanding the importance of responding, and even realizing that the failure to respond in WRITING, within a 30 day time period is imperative if this very important right is to be maintained. With the wide variety of information that is rained down on a taxpayer both orally and in writing, a trained tax controversy lawyer can deliver a great deal of value in sorting out your rights. 

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