IRS Form 12153 Collection Due Process Hearing Guide
If you receive a notice that the IRS intends to place a tax lien or levy your assets, you can request a Collection Due Process (CDP) hearing. Taxpayers can file IRS form 12153 to request a hearing and appeal the lien or levy. These hearings allow you to appeal the IRS’s collection actions. They can potentially stop the lien or levy from happening.
The Office of Appeals is independent of the other IRS offices. It helps taxpayers to resolve tax controversy without litigation in a way that is fair for both the taxpayer and the IRS. But the first step to appealing a lien or levy is to file this form. The rest of this guide explains the Collection Due Process hearing, and it outlines how to appeal using Form 12153.
What is a Collection Due Process Hearing?
A Collection Due Process hearing allows taxpayers to appeal IRS liens and levies. It is an informal hearing which can happen in person or over the phone. Oaths are not involved, and no transcript gets taken.
The hearing looks at the validity of the notice and relevant issues related to the unpaid tax. At the CDP hearing, you can attempt to obtain innocent spouse relief— that’s where you argue that your spouse or ex-spouse was exclusively responsible for the taxes owed. You may also work out a payment plan or suggest collection alternatives.
Essentially, the purpose of a Collection Due Process hearing is to figure out a compromise between the IRS’s need to collect taxes and your concerns about the collection activity. After the hearing, the IRS issues a Notice of Determination. It outlines the following elements:
- Whether or not the IRS delivered the lien or levy demand correctly—The IRS must hand-deliver these notices. Or, the IRS must send the notice via registered mail to your last known address and get a receipt that you received it.
- Whether or not a tax lien will take place
- Whether or not a levy will happen
- The details of any payment arrangements decided upon during the hearing.
- Whether or not the IRS accepted your request for innocent spouse relief or any similar defenses.
- Whether or not tax relief was offered.
After receiving the Notice of Determination, you have 30 days to appeal to the Tax Court or the US District Court.
When Do You File a Request for a Collection Due Process Hearing (Form 12153)?
Taxpayers can request a Collection Due Process hearing if they receive a Notice of Federal Tax Lien or a Notice of Intent to Levy. Usually, the IRS sends one of the following notices:
- Letter 1058 (Final Notice of Intent to Levy and Notice of Your Right to a Hearing)
- Letter 11 (Final Notice of Intent to Levy and Notice of Your Right to a Hearing)
- CP90 (Final Notice of Intent to Levy)
- CP92 and CP242 (Notice of Levy Upon Your State Tax Refund)
- Letter 3172 (Notice of Federal Tax Lien Filing and Your Right to a Hearing)
The IRS does not allow taxpayers to request these hearings for “frivolous” reasons. That includes refusing to pay tax on religious or moral grounds.
What Are Some Legitimate Reasons to Request a CDP Hearing?
You can't apply for a CDP based on frivolous reasons. So what are the legitimate reasons to request this type of hearing after you receive a notice of intent to levy or issue a lien? If any of these situations apply, you may want to apply for a hearing.
- You want to seek payment alternatives such as a payment plan or an offer in compromise. To get these plans accepted, you must file all delinquent returns.
- You have a terminal illness and overwhelming medical bills.
- You can’t pay because you’re living on Social Security or unemployment.
- You can’t afford to pay with your income—the IRS has strict guidelines on this type of hardship arrangement.
- You want to apply for a lien subordination. That’s when the IRS agrees to put its lien as subordinate to another lien. For instance, if you want to take out a home equity loan to cover a tax bill, the lender may only give you the loan if the lien takes precedence over the IRS lien.
- You want the lien discharged so you can sell the underlying asset and pay the IRS.
- You need the lien removed from your credit report because you already paid in full or you are currently in a payment arrangement.
The IRS may be willing to accept other reasons, but those are some of the most common. When you talk with a tax professional, they can let you know the best reasons to apply for a CDP in your situation.
What If You Don’t Agree With the Amount Due on Your Notice?
You may also request a Collection Due Process hearing (form 12153) to challenge your tax liability. However, you can only do that in rare situations. Namely, you can only challenge the amount due if:
- you didn’t receive a statutory notice of deficiency,
- you didn’t receive a notice to file a Tax Court petition,
- or if you didn’t have a chance to dispute your liability previously.
You cannot bring up issues that have already been heard.
If you don’t meet those criteria, there are only three ways to appeal the amount due at this point:
- Pay the taxes in full. Then, file a refund claim and appeal when the IRS denies your refund.
- Request an audit reconsideration with new information.
- File an Offer in Compromise for doubt as to liability.
All of the above options are complicated, and you may want to get professional help in all of those situations.
How Do You File a CDP Request?
To request a Collection Due Process Hearing, you need to complete Form 12153 (Request for a Collection Due Process or Equivalent Hearing). This form is pretty straightforward. It requests your name, ID number, address, phone number, and the best time to reach you. You also have to include information from your tax lien or levy notice.
You can tick a box if you want to apply for innocent spouse relief. Otherwise, you need to write in your reason for requesting a hearing. It is an essential part of the form, and you won’t obtain a hearing if you don’t supply a sound reason. You can use any of the reasons listed above or any that were brought forth by your tax professional.
Send the form to the collection office that started the compliance action. Usually, this is a small business or self-employed collection division of the IRS. The notice that you receive should have specific instructions on which IRS address to send this form to.
What If You Don’t Meet the 30-Day Deadline?
You have 30 calendar days to request a levy hearing after you receive a Notice of Intent to Levy. You have five business days plus 30 calendar days if the IRS issues a notice of federal tax lien. The IRS is strict about both of these deadlines. The IRS will only respond to your request if you postmark the IRS form by the last day of the 30-day period (or the last day of the 30-day plus five business days) after receiving your Intent to Levy or Tax Lien notice.
If you don’t submit the form within the correct time frame, you still have options. At this point, you can request an Equivalent Hearing. You have one year and five business days from the filing date of your Federal Tax Lien to make this request or one year from the date of your levy notice. In these cases, the levy may go forward, and the IRS can take your assets, but if the hearing is successful, the IRS will stop the levy.
How to Apply for an Equivalent Hearing
You can apply for an equivalent hearing using Form 12153 as well. Simply, look at the second question on the form. It asks if you want to apply for an equivalent hearing. You just need to tick the box. Note that you must tick the box on the application. If the IRS receives your request for a CDP hearing late, the agency won't automatically convert your request for a CDP hearing to an equivalent hearing. You must specifically ask the agency for this type of hearing. If you're not sure whether or not you're applying by the deadline, you can request the CDP hearing. Then, you can also mark that you want an equivalent hearing if your CDP application isn't received in time.
If you apply for an equivalent hearing, the IRS will not release the lien or stop the levy. The IRS also won't pause the clock on the statute of limitations. These are the two main drawbacks of asking for an equivalent hearing instead of a CDP. Generally, you only want to take this option if you missed the deadline, but in either case, you should consult with a tax pro to figure out the best option in your situation.
What Happens After You Request a CDP Hearing?
Once the IRS receives this form, all collection activity stops, and the 10-year statute of limitations pauses. If there is a levy against you, it will be suspended while the process is pending. For instance, if the IRS is garnishing your wages, that will stop when you file Form 12153 to request a hearing. In rare situations, however, the levy may stay in place -- this typically only happens if the tax collection is in jeopardy.
The statute of limitations on collections is also paused while the hearing is pending. Normally, the IRS has 10 years to collect on a tax debt, and once this window passes, the IRS can no longer collect on the bill. When the statute gets paused, the time gets added back on once the statute is no longer paused. To give you an example, imagine that you request a CPD hearing, and the IRS has five years and one month left to collect on the tax debt. The time that passes while the state is paused doesn't count. When the hearing process is complete, the statute will be unpaused, and the IRS will still have five years and one month to collect, even if several months have passed.
How the IRS Processes CDP Hearing Requests
Once you submit the request, the collection officer may choose to continue working with you. They can work with you for up to 90 days at their discretion. If you haven't reached a resolution after 90 days, they must forward the CDP hearing request to appeals. However, the collection function employee doesn't have to wait this long. They can opt to send your hearing request to the appeals office immediately.
If you want to speed up the process, tell the collection employee that you want them to send in the CDP hearing request. They are supposed to send it to appeals when you request them to do so. After appeals receives your request, a hearing settlement office will issue a contact letter. The letter will let you know that you have the opportunity to talk with appeals about why you disagree with the lien or levy. It also informs you that you get to discuss alternatives. For instance, you might want to suggest monthly payments instead of having the IRS issue a levy against you.
How You Get the Results of a CDP Hearing
After the CDP hearing, appeals will issue a Notice of Determination letter. This outlines what was decided in your situation. In particular, it tells you if the lien or levy is going to happen and/or if your alternative payment options have been accepted. After an equivalent hearing, appeals issues a Decision Letter. You may receive additional letters depending on the situation.
What If You Don't Agree With the Results of the CDP Hearing?
If you don't agree with the outcome of the CDP hearing, you have the right to petition the US Tax Court. Then, the Tax Court will review the decision made by appeals. After the Tax Court makes its decision, it's final. Unfortunately, with an equivalent hearing, you don't have the option to appeal to the tax court.
Requirements for Collection Due Process Hearings
Appeals must meet strict criteria when processing CDP requests and holding hearings. To protect taxpayer's rights, appeals must comply with the following requirements:
- Following established procedures based on whether taxpayers request a CDP hearing or an equivalent hearing.
- Ensuring taxpayers only get one hearing for the tax period related to the lien or levy.
- Providing an impartial hearing officer unless the taxpayer waives this requirement.
- Including documentation in the case file to show that the legal or administrative procedures were met.
- Updating the case file to reflect that the taxpayer was allowed to talk about the unpaid tax, the proposed lien or levy, innocent spouse relief if applicable, collection alternatives, and the tax liability at the hearing.
- Documenting in the case file that the hearing office balanced efficient tax collection with the taxpayers concern about the collection actions.
When the Treasury Inspector General for Tax Administration looked over these processes in 2022, it discovered that appeals was following the majority of the rules. However, it discovered some issues with pausing the collection statute of limitations. ITs report estimates that the collection statute is incorrect on between 2500 and 3200 taxpayers who request CPD hearings every year. To protect your rights, you should work with a tax professional who can help to ensure that the IRS is processing everything correctly.
Help With a CDP Request
Here at TaxCure we have a network of tax professionals from around the country. Each professional has their own specialties and agencies they service. We have a unique algorithm that ranks professionals based on their work experience. To find the top-rated professionals in helping with CDP requests, follow this link here to see the search results, or start your search below where you can filter by agency, problems, solutions and more.