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:
- A statement of the taxpayer's right to request a hearing within 30 days;
- The amount of the tax due;
- The actions that the IRS intends to take the respect to collection and a listing of the taxpayer's rights including:
- The provisions of the Internal Revenue Code related to levies and sales of property by the IRS;
- The procedures that are applicable to levies and sales under the Internal Revenue Code;
- Information about the appeals which the taxpayer can avail himself of;
- The alternatives that are open which could forestall sales or levies including the option of an installment agreement;
- The Internal Revenue code provisions and procedures which relate to the redemption or property and the release of federal tax liens.