When filing for a CDP hearing, it is important to make sure that you request the hearing in a way that ensures the IRS does not dismiss your Form 12153 (or a request in similar form) outright as frivolous before you have a chance to be heard.
In order to do that, you will want to make sure that you use a valid reason to request a CDP hearing. However, in making the initial request for a hearing, you should also avoid making the basis of your request too narrow - the IRS may try to hold you to the basis for your request even if your circumstances or arguments change between the time you request the hearing, and the hearing takes place. Don't feel like you need to check just one box, or that you cannot fill in additional reasons for requesting the hearing - just make sure that your reasons for the hearing comply with the Internal Revenue Code and Treasury Regulations.
How to know when you have the right to request a CDP hearing.
You Owe the IRS a legally enforceable debt.
So, you owe some money to the IRS. Maybe you self-reported this income to the IRS, but could just not afford to pay the amount due on your return, maybe you were audited in some way and have yet to find the funds to pay back the government, or maybe you are stuck holding the bill for what should be someone else's tax problem. Whatever the reason for you tax debts, if you are reading this post, it is likely that you owe the IRS some money, or you know someone who does.
When you owe a legally enforceable debt to the IRS, the government can use its extreme powers of lien, levy, and the US mail to rip any assets or income away from you - midstream, before you even get your hands on it - and apply those funds to your back taxes.
Lucky for you, though, you happen to live in the United States. And, in the United States - we have this thing called Due Process. You are entitled to Due Process before the government can take your stuff away from you.
The trick is knowing when those Due Process rights are triggered, because you have a limited time to exercise those rights to the fullest extent.
If you miss the deadline to file for a CDP hearing, you can still request an Equivalent hearing (EH). But an EH does not protect you from collection while the hearing is pending, and an EH does not allow you to appeal an adverse decision by the IRS Settlement Officer to Tax Court.
The IRS Sends you a letter
The IRS will send you a letter via certified (and usually via regular mail as well) that informs you of its "intent to levy" your property or income. Or the IRS will file a lien and send you a letter notifying you of the filing.
Previously, the IRS was using letter that made it obvious that you have a right to a hearing. However, recently the IRS has begun sending out letters that make taxpayers due process rights less obvious. It is up to you to make sure that you read every letter you received from the IRS carefully to make sure that you are not sitting on your appeal rights. IF you do not understand the contents of a letter, you should bring it to a professional who offers free consultations and who is willing to look at the letter and explain it to you.
When can someone request a CDP hearing with the IRS?
There seems to be some confusing regarding the question of when a taxpayer can request a CDP (Collection Due Process hearing). In terms of a Notice of Levy or similar notice, a taxpayer has 30 days to request a hearing. If the hearing is requested within 30-days, the taxpayer will be protected form levy action until the taxpayer has a chance to be heard by IRS Appeals, an office separate and independent from the IRS offices actually tasked with collecting tax debt.
What reasons can someone use to request a CDP hearing?
A taxpayer is entitled to request a CDP hearing to propose alternatives to forced collection action by the IRS. It is really that simple. However, if you are about to file a request for a CDP hearing, and would like someone to take a look, I urge you to give me a call at (203)628-2952 so we can discuss the right approach to filing a CDP request. If you want me to review your actual filing, to make sure you are using the right words and checking the right boxes to make your request, I am happy to do that for a small fee.
Do you need to hire a Tax Lawyer for your CDP hearing?
No. But you probably should. Too many taxpayers try to go it alone with the IRS and end up getting tricked or misled by the IRS into a "solution" that is not optimal or sustainable for the taxpayer.
In addition, it is too easy to miss something when you have never submitted an Offer in Compromise or requested an Installment Agreement with the IRS. Having a representative speak for you at an IRS CDP hearing puts distance between you and the arguments being made - adding legitimacy to those arguments, because a professional is vouching for those arguments and helped develop them.
A CDP hearing is your best shot at obtaining a fair resolution to your tax problems - and you only get one shot at such a hearing per tax year.