If you owe taxes to the Internal Revenue Service, a Collection Due Process Hearing may be available to you and may be a valuable “tool” and option to resolve your IRS tax debt. The article below, drafted by a Denver tax lawyer at The McGuire Law Firm will discuss what a Collection Due Process Hearing is, when they are available and how such hearing may be used to resolve your tax debt or tax problem with the IRS.
A Collection Due Process Hearing (CDP Hearing) provides the taxpayer due process prior to the Internal Revenue Service collecting on a tax debt through enforcement action such as an IRS bank levy, wage garnishment or seizure of assets. Thus, the hearing is available to the taxpayer before the Internal Revenue Service takes enforcement action to actively collect the tax debt. The Collection Due Process Hearing is available when the taxpayer has been issued Letter 1058 (a Final Notice of Intent to Levy), a Notice of Federal Tax Lien or under certain circumstances when the taxpayer has been already experienced collection action. Generally, a taxpayer would request a CDP Hearing upon request of a Final Notice of Intent to Levy from the IRS. A taxpayer has 30 days from the date the final notice is issued to request the CDP Hearing. The CDP Hearing is requested by filing Form 12153 with the IRS service center that issued the final notice. Form 12153 states the taxpayer’s information (name, address, social security number etc), type of tax and periods for which the final notice was issued, why the request is being filed and the collection alternative (installment agreement, offer in compromise, etc.) the taxpayer is proposing.
After submitting the CDP Request, the taxpayer will be contacted by the IRS stating that the request has been received and the taxpayer will be contacted in the future. Eventually, a hearing date with an appeals officer is established. Generally, it will take 2-8 months to establish the hearing date. When the hearing date is established, the appeals officer will also request certain documents to hold the hearing. For example, if a taxpayer submitted a Collection Due Process Hearing Request requesting an offer in compromise as the collection alternative, the appeals officer will need the appropriate financial statements, offer in compromise forms and financial documents. If proper documentation is not provided to the appeals officer, the appeals officer will not be able to make a determination regarding a resolution proposal. Thus, it is likely the appeals officer will sustain the IRS proposed action or hold that enforcement action is necessary to resolve the tax debt because a collection alternative could not be agreed upon.
There is a hold on enforcement action once the hearing request is filed and leading up to the hearing, which will prevent the IRS from issuing bank levies and wage garnishments. It should be noted that the IRS has provided guidance stating the automatic hold will not apply to businesses owing 94 taxes if the business is not in compliance when making the request and leading up to the hearing date. If an agreement is reached with the appeals officer, a determination will be issued outlining the terms of the agreement. If an offer in compromise is submitted through the hearing, the offer is likely to be submitted to the IRS offer in compromise unit. If an agreement is not reached, the appeals officer will issue a determination stating the fact and the taxpayer may be open to enforcement action 30 days after the determination notice has been issued.
Requesting and holding a CDP Hearing can be effective mean by which to resolve an IRS tax debt or other matter. A Denver tax attorney at The McGuire Law Firm can assist you with your tax matters, and represent you before the IRS.
Contact The McGuire Law Firm to discuss your tax questions and issues with a Denver tax attorney. A free consultation is given to all potential clients.