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If you have an outstanding debt with the IRS, it’s important to keep in mind the options that are available to you. This is particularly true if the IRS has already embarked on its collection process, such as by filing a bank levy, sending a notice of a federal tax lien, or by seeking to garnish your wages. But, what happens if you dispute the amount that you owe? What steps can you take to remedy the issue? If you disagree with the IRS’s account of what you owe, then you can file a request for a Collection Due Process (CDP) hearing. What’s a CDP hearing, you wonder? Let’s discuss.
What is a CDP Hearing and how can you get one?
When you receive a collection notice from the IRS, you will also receive some information about the options you have to either dispute it or settle your debt. One of these options is a CDP hearing. You will have 30 days from the date of the letter to file a request for a CDP hearing. When you file a CDP hearing request, the good news is that it will halt the IRS’s collection proceedings pending the outcome of your hearing. This means that the IRS can’t levy on your bank accounts or garnish your wages until a formal decision has been made at your hearing.
You can file for a CDP hearing by going to the IRS’s website and obtaining IRS Form 12153, a.k.a. The Request for a Collection Due Process or Equivalent Hearing. The form will ask you some standard information, including whether you are interested in an installment payment plan or in making an Offer in Compromise. If you miss the 30 day deadline, you can still request an Equivalent Hearing, which is similar but has some meaningful differences.
What happens?
Assuming you have timely and properly filed your CDP hearing request, the IRS must immediately stop collecting on your debt until the whole process is finished. The hearing process is conducted within the IRS Office of Appeals by one of its employees. At the hearing, the employee will look for certain things, including:
- The validity and timeliness of your request;
- Any relevant issues, defenses, and challenges raised by you during the hearing;
- Any alternate collection offers or ideas to settle a dispute suggested by you; and
- Whether the IRS’s collection process is appropriate given the amount of debt that you owe.
Before any determination is made, the appeals officer has to verify with the IRS that there aren’t any laws or administrative procedures whose requirements have not been met. If you are requesting a collection alternative, such as an installment payment plan, the IRS will require that you provide certain financial information, including IRS Form 433-A, copies of bank statements, pay stubs, etc.
Contact an experienced tax professional today.
At Weisberg Kainen Mark, PL, we regularly work with our clients on their tax issues. From CDP hearings to repayment plans, we understand the correct routes to take to help settle your dispute. If you have received a notice from the IRS about an outstanding tax debt, contact us today!
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