How to use Form 12153
to Request an IRS CDP Hearing
The IRS has two powerful tools to collect unpaid taxes. One of these is the tax lien, where the IRS places a legal claim on your property to secure its ability to collect a tax debt. The other is the tax levy, which allows the IRS to actually take your property to satisfy a tax debt.
These seem like fairly drastic measures, and they are. Because of that, taxpayers have the right to challenge the IRS’ use of a tax levy or lien. One of the most powerful tools available to mount this challenge is the collection due process hearing.
What Is a Collection Due Process Hearing?
The Collection Due Process (CDP) hearing is an independent review of the IRS’ decision to file a Notice of Federal Tax Lien or issue a levy on your property. The IRS Independent Office of Appeals holds these hearings in front of an IRS officer or employee (usually a settlement officer) who has no prior involvement in the case. The purpose of this requirement is to provide an impartial review of your challenge to the IRS’ lien or levy action.
The goal of a CDP hearing is twofold. First, it provides you the chance to dispute the tax debt, whether it’s the fact that you have to pay it or its amount. Second, it provides you and the IRS an opportunity to discuss alternatives to settling your tax debt without the IRS having to use a tax lien or levy your property. For example, you can talk about payment plans or offers in compromise.
When Can You Request a CDP Hearing?
You can file this request after you receive a letter from the IRS indicating you have this right. In most cases, the right to a CDP hearing will arise after the IRS sends you a letter relating to a filed notice of federal tax lien or a notice of proposed or actual levy. These can include notices such as:
Many other types of letters and notices may inform you of your right to request a CDP hearing. But these will often differ in the type of property the IRS is trying to secure.
Requesting a CDP Hearing with the IRS
To obtain a CDP hearing with the IRS Independent Office of Appeals, you’ll need to fill out IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing. This is a deceptively simple form to complete, but depending on the arguments you intend to present at the hearing, you may want to take extra care in completing Form 12153.
For example, you might plan on using your financial situation as a reason why the IRS shouldn’t place a lien or levy on your property. Or, you might state that you’re an innocent spouse. Depending on what you want to argue, you may need to provide specific facts or documents along with Form 12153. You may also need to provide additional forms, like Form 8857, Request for Innocent Spouse Relief.
Given this complexity, it might help to hire a tax professional to help you request a collection due process hearing. The IRS is busy enough as it is and the last thing they want to do is give themselves more work. So if they find an easy reason to reject your CDP request, you should expect the IRS to take it.
After completing Form 12153, you’ll mail it to the address listed on the IRS notice or letter you received notifying you of your right to a CDP hearing. If you want to submit the form by fax or aren’t sure which address to use, you can call the telephone number on the IRS notice or call 1-800-829-1040.
Whether you submit Form 12153 yourself or with professional help, one thing you must be aware of is the limited amount of time you have to ask for a CDP hearing.
How Much Time Do I Have to Request a Collection Due Process Hearing?
You have 30 days from the date of the letter or notice you received from the IRS to request the CDP hearing. This is an important deadline to meet because if you miss it, you can’t get a CDP hearing. Instead, you’ll get what’s called an “equivalent hearing.”
What’s an Equivalent Hearing?
An equivalent hearing is like a CDP hearing in that you can present the same arguments and payment alternative proposals. But it has two major drawbacks. The most notable is that a CDP hearing will temporarily stop the IRS from placing a levy on your property. In contrast, the IRS may levy your property during the equivalent hearing process.
Another significant disadvantage of the equivalent hearing is that you don’t have the right to ask the U.S. Tax Court to review the CDP hearing decision if you disagree with it.
To apply for an equivalent hearing, you will also use Form 12153. You also have more time to request the equivalent hearing. If requesting an equivalent hearing concerning a tax lien, you have one year plus five business days from the date of the federal tax lien filing. If your request relates to a tax levy, you have one year to request an equivalent hearing from the date of the levy notice.
One advantage of the equivalent hearing over the CDP hearing is that it doesn’t suspend the 10-year statute of limitations deadline for IRS tax collection. This is only a small benefit, as getting out from under a tax debt due to the passage of the statute of limitations deadline is not easy to do.
How Long Does it Take to Get a CDP Hearing After Requesting One?
It depends. After submitting your request, the collection officer handling your case that led to a lien or levy can continue working with you to resolve the tax matter. They have 90 days to do this, but may choose not to and instead send your case to the IRS Independent Office of Appeals immediately upon learning that you filed Form 12153.
Alternatively, you can refuse to continue your case with the collection officer and ask them to immediately forward your case to the IRS Independent Office of Appeals to get the CDP hearing sooner rather than later.
What to Expect During the Collection Due Process Hearing
CDP hearings are fairly informal and usually occur by telephone, although in-person hearings are an option. During the hearing, the settlement officer (or other IRS employee with no prior involvement in your case) will confirm you filed Form 12153 on time and address the merits and feasibility of your arguments or proposals.
For many taxpayers, the CDP hearing is less about arguing the validity of the tax or tax collection methods and instead is more about providing an opportunity to discuss payment arrangements to settle the tax debt. These arrangements can include an installment agreement, offer in compromise, or financial hardship.
What Happens After the CDP Hearing?
The settlement or appeals officer hearing your case will prepare a Notice of Determination. This will discuss when or if the tax lien or levy will proceed and/or outline the details of any payment arrangements that were agreed upon during the hearing. If you completed an equivalent hearing, you won’t get a Notice of Determination, but a Decision letter instead.
If you disagree with the Notice of Determination, you have 30 days to file an appeal with the U.S. Tax Court.
CDP Vs. Collection Appeals Program (CAP)
If you want to appeal a collection action, a CDP or equivalent hearing are not the only options. You can also appeal through the Collection Appeals Program (CAP). To use the CAP, file Form 9423, but if you’re already working with an IRS officer, you will need to request a meeting with their manager first.
You can use the CAP in more situations than a CDP hearing. In particular, you can protest if the IRS rejects your installment agreement offer. However, you cannot protest fees in a CAP meeting as you can with a CDP hearing. Additionally, you can appeal the results of a CDP hearing, but you cannot appeal the CAP in Tax Court. A tax attorney can let you know which path is best for your situation.
The Benefits of Using an IRS Collection Due Process Attorney
To avoid getting a Notice of Determination you disagree with, it’s important to present the best case possible to the settlement officer. One way to do this is to provide concrete and actionable solutions and arguments, as well as details to support your assertions.
For instance, don’t ask the IRS to remove the tax lien because it makes it all but impossible to refinance your home. Instead, tell the IRS it can keep its tax lien, but that it should subordinate its lien to the bank you’re trying to refinance with. You can show how this will allow the bank to issue a second mortgage giving you money to pay back some or all of your unpaid taxes to the IRS.
This is just a basic example of how providing the right information to the IRS can make a big difference in whether you get what you want from the CDP hearing. The tax pros at Damiens Law can provide the guidance you need to make the most of your collection due process hearing. We have plenty of experience requesting CDP and equivalent hearings and representing taxpayers during those hearings. We’d be more than happy to discuss how we can help with a free initial consultation.
