Originally from Paladini Law

Getting behind on paying your taxes is a common issue in the U.S., and there are many reasons for not paying—you could have missed a deadline without knowing it, you may be experiencing financial hardship, or you could disagree with the amount the IRS assessed against you.

But if you continue to avoid payment after getting IRS notices in the mail, the agency may alert you that it is filing a federal tax lien against you or issuing a tax levy, which is when they seize your property, including your home, wages, or financial assets. If you get a notice about a lien or levy, it will include information about your right to a collection due process (CDP) hearing, which allows you to appeal the IRS’s stated action. 

CDP hearings help safeguard you against IRS collection actions, but to take advantage of this right, you must act quickly and take all the right steps. Find out exactly when and how to file a hearing request.

Key Takeaways:

  • You have the right to a collection due process (CDP) hearing after receiving a notice of federal tax lien filing or a notice of intent to levy from the IRS.
  • CDP hearings allow you to pause collections and try to resolve your tax matter before your assets are levied.
  • You have 30 days from receiving the notice to request a hearing. 
  • Complete Form 12153 to explain your reason for the hearing request.
  • If you don’t agree with the determination after the hearing, you can petition the tax court.
  • Talk to the Paladini Law team for help navigating complex IRS requirements and to set up a free consultation. 

Which IRS Notices Trigger Your CDP Rights?

When you don’t pay your full tax bill by the deadline, the IRS will begin trying to collect from you via notices sent through the mail, which will probably also include penalties like the failure to pay penalty. 

These initial notices are typically CP14, CP501, and CP503. While they indicate that you have an unpaid bill and alert you of building charges, they don’t mean that the IRS is coming after you just yet. With these notices, your rights to a CDP hearing haven’t yet kicked in. 

If you still do nothing and don’t take steps to get your debt paid off, the next notices may alert you of the IRS’s intent to levy your property or to file a federal tax lien. These notices then trigger your right to a CDP hearing. Here’s a list of what to watch for:

  • Letter 1058, LT11, Notice CP90, or Notice CP297: These are notices of the IRS’s intent to levy and notice of your right to a hearing. If you receive one of these and don’t respond, the IRS may seize your assets to cover your tax bill. 
  • Letter 3172: This is the Notice of Federal Tax Lien Filing that the IRS sends you when it has filed a notice of tax lien for your unpaid taxes. 
  • Notice CP92 or CP242: This notice is alerting you of the IRS’s seizure of your state tax refund and notice of your right to a hearing. This means the IRS has already seized the indicated amount from your state tax refund to apply to your unpaid federal tax bill.

All of these notices give you 30 days to request a collection due process hearing. For the intent to levy notices, the IRS also gives you 30 days to pay what you owe to avoid asset seizure. If you need help responding to a notice, talk to a tax expert who can help you navigate the process.

When Should You Request a CDP Hearing?

Requesting a CDP hearing isn’t the right answer for all tax problems and cases. However, if you’re in any of these situations, it could be helpful:

  • You already paid the bill, but the payments haven’t been applied.
  • You haven’t yet disputed the tax liability, and you don’t agree with it.
  • You want to avoid a lien or levy through a resolution option, such as an installment agreement or offer in compromise.
  • You are going through financial hardship. 

If you plan to request a hearing, do so immediately after receiving your notice in the mail. You don’t want to miss that 30-day window for filing your request — otherwise, you won’t be able to pause collections and preserve your tax court rights. So, file your request as soon as possible.

How to File Your Request for a CDP Hearing

You must follow all instructions on your notice carefully and submit a formal request for a CDP hearing. You will use Form 12152, Request for a Collection Due Process or Equivalent Hearing. Once you file, collections are suspended. 

Let’s walk through the sections of this form so you know exactly what you need to provide:

Section 1: Basis for Hearing Request

This section is where you indicate whether you’ve received a Notice of Federal Tax Lien or Notice of Proposed or Actual Levy. Select whichever type of notice gave you the offer to request a hearing. If you’ve received both, you can check both boxes.

Section 2: Equivalent Hearing

The box in this section states, “If my request does not meet the requirements for a timely CDP hearing, I would like a hearing that is equivalent to a CDP hearing.” Only check this box if it applies to your situation. An equivalent hearing may apply if you have missed the deadline for requesting a CDP hearing. In this case, the request doesn’t avoid the levy, and you can’t contest the appeal court’s decision later.

You have one year plus five business days from the federal tax lien filing or one year from the CDP levy notice to make an equivalent hearing request. An equivalent hearing is similar to a CDP hearing, but you can’t appeal the results. So whenever possible, you want to get your CDP hearing request in on time so you don’t lose your chance to appeal.

If you are within the given time frame for your CDP request, leave Section 2 blank.

Sections 3 and 4: Taxpayer 1 Information

In Section 3, provide your name, your taxpayer ID number, and your current address. Section 4 asks for your phone number to call during normal business hours and whether it is a home, work, or cell number.

Sections 5 and 6: Taxpayer 2 Information

If applicable, enter the same information in these two sections if it is a joint request.

Section 7: Tax Information as Shown on Your Lien or Levy Notice

You should include a copy of your lien or levy notice with your application, but if you don’t, fill out Section 7. It asks for the type of tax involved (income, employment, excise, or civil penalty), the tax form number, and the applicable tax periods.

Section 8: Reason You Are Requesting a Hearing

You must provide a reason for requesting the hearing. Here are the options:

  • You aren’t liable for the tax.
  • You are claiming innocent spouse relief.
  • Your taxes were discharged in bankruptcy.
  • You already made payments that weren’t applied.
  • You are applying for tax lien withdrawal.
  • You are experiencing financial hardship.
  • You can’t afford to pay the full bill and are seeking another resolution.
  • You have another reason — list it in the space provided, and attach separate pages if needed.

Check the box of whichever situation describes your reason for the request.

Section 9: Proposed Collection Alternative

Here is where you can indicate which resolution option you want to pursue to stop the levy. Options are as follows:

  • Installment agreement: This is a IRS payment plan that allows you to pay off what you owe over time and stops collection actions as long as you stay current on the agreement.
  • Offer in compromise: These arrangements are for taxpayers who can’t afford to pay their full tax bill and want to offer a lower settlement amount.
  • Currently unable to pay: The IRS may agree to put your account in currently not collectible (CNC) status if you’re experiencing financial hardship.
  • Other: Provide an explanation of another resolution option you are pursuing.

The instructions state that you may need to include Form 433-A for individuals or Form 433-B for businesses to provide financial information that supports your request. It’s not required, but can help expedite the process.

You don’t need to submit your financial statements if you automatically qualify for an installment agreement online or if your offer in compromise is based on doubt as to liability.

Section 10: Signatures

Finally, you will sign and date the form (as well as your joint filer, if applicable). 

The instructions following these sections indicate examples of reasons for requesting a CDP hearing and other important information about making your request so that it has a higher chance of being successful. 

When in doubt, talk to a tax expert about your case to understand the best way to move forward.

What Happens After a CDP Hearing?

Potential outcomes of the hearing include the IRS withdrawing its action (lien or levy), setting up a payment plan to pay off your debt, or denial of your appeal, with an option to then petition the tax court.

When Not to File for a CDP Hearing

If you missed the provided 30-day window from your notice, you can no longer request a CDP hearing. However, you could still use Form 12153 to indicate that you are requesting an equivalent hearing — but remember, these won’t stop a levy.

You also may not need to request a hearing if you can directly apply for another relief option, such as an installment agreement, offer in compromise, or CNC status. If you contact the IRS right away about these options and start getting your taxes resolved, you may not need a CDP hearing.

What to Do If You Disagree with the Determination

After you request a CDP hearing and go through the hearing process, you may disagree with the determination made by the Appeals Court. If this is the case, you have the right to petition that decision within 30 days of your determination letter. (You cannot petition the determination in equivalent hearings unless it was for an innocent spouse case or interest abatement.)

The IRS also has a Collection Appeal Program (CAP) that allows you to appeal levies, liens, or installment agreement decisions, as follows:

  • Levies:
    • You can appeal anytime surrounding a notice of intent to levy, whether before or after you receive it.
    • You can appeal before actual property seizure takes place or 10 days after.
    • Your request to return levy proceeds was disallowed.
    • You or a third party are claiming the levy is wrong before the proceeds have been given to the IRS.
    • A third party’s claim for the return of wrongfully levied property is denied.
  • Liens:
    • You can appeal anytime before or after the IRS files a federal tax lien.
    • The IRS filed a special condition lien that attaches to property under a third party’s name.
    • Your request was denied for discharge, subordination, or withdrawal of a lien, or a certificate of non-attachment was denied.
  • Installment agreement:
    • The IRS rejected, terminated, modified, or proposed termination or modification of your installment agreement application.

During the CAP process, the IRS will cease collection actions. However, you can’t petition the tax court if you disagree with the CAP determination.

When to Contact Paladini Law

If you’ve received a notice about a lien or levy, never ignore that notice. You want to avoid the IRS from seizing your property, which you can do if you act quickly to pay off your debt or request a collection due process hearing. 

When you need assistance reviewing your notices or preparing Form 12153 properly, work with Paladini Law. We provide free consultations to talk with you about your case.

Contact Paladini Law today to get started with an attorney.

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