Collection Due Process (CDP) hearings: your right to appeal IRS levies and liens

You get CDP rights from specific notices, not from every IRS letter: Each notice states the deadline. The IRS CDP FAQs lists the qualifying notices.

• Final notice of intent to levy — usually Letter 1058 or LT11, or CP90 for certain cases.
• Notice of federal tax lien filing — Letter 3172, sent after the IRS files a lien.
• Notice of levy on a state tax refund or a jeopardy levy, where the hearing comes after the levy.

You must request a CDP hearing within 30 days of the date on a levy notice, or within the period stated on the lien notice (30 days after the five-business-day notice period). Mail Form 12153 to the address on your notice, or as the notice instructs. Missing the deadline by even a day loses the CDP hearing, but you can still request an equivalent hearing (below).

A timely CDP request on a levy notice generally prohibits the IRS from levying for the periods involved while the hearing and any Tax Court appeal are pending. The collection statute is suspended during that time, so the IRS gets extra time to collect later. A CDP request on a lien notice doesn't remove the lien automatically, but Appeals can order it withdrawn or released if appropriate.

In the hearing you can: Appeals must also verify that the IRS followed legal and procedural requirements.

• Propose a collection alternative — an installment agreement, Offer in Compromise or Currently Not Collectible status.
• Challenge the appropriateness of the levy or lien, including requesting lien withdrawal, subordination or discharge.
• Raise spousal defenses such as innocent spouse relief.
• Dispute the underlying tax — but only if you didn't receive a deficiency notice or otherwise have a prior opportunity to dispute it.

Most CDP hearings are informal conferences by phone or correspondence with an Appeals Officer who wasn't involved in your case. You'll usually need current financial information (often Form 433-A or 433-F) if you propose an alternative, plus all required returns filed. Appeals balances the need for efficient collection against your concern that the action is more intrusive than necessary, then issues a written Notice of Determination.

If you disagree with the Notice of Determination, you can petition the U.S. Tax Court within 30 days of the determination date. That judicial review is the biggest advantage of a CDP hearing over other appeals. The Tax Court generally reviews whether Appeals abused its discretion, and reviews the underlying liability more fully when you were entitled to dispute it.

If you miss the CDP deadline, you can still request an equivalent hearing on the same Form 12153 within one year after the levy notice date (or the end of the lien notice period). Appeals considers the same issues, but a levy isn't automatically suspended, the collection statute isn't suspended, and you generally can't go to Tax Court afterward. It's still a useful route to propose an alternative.

The Collection Appeals Program (CAP) is faster and covers more actions, such as rejected or terminated installment agreements, but CAP decisions are final with no court review. CDP is narrower and slower but preserves Tax Court rights. Many taxpayers file CDP when they receive a final levy notice and use CAP for other disputes.

1. File every missing return before or with the request.
2. Check the box for the alternative you want on Form 12153 and explain briefly.
3. Keep proof of mailing (certified mail).
4. Prepare financial statements and documents in advance.
5. Stay current on this year's taxes; Appeals looks for compliance.
6. Don't use CDP solely to delay — frivolous requests can be disregarded and penalized.