Collection Due Process Hearing

a. Collection Due Process Hearings (CDP)

The Collection Due Process hearing provisions give taxpayers an opportunity for an independent review to ensure that the levy or lien action by Collection is warranted and appropriate. (There is no right to a hearing when child support obligations are being collected.) The IRS will usually contact you or the attorney and propose alternative methods for resolving the case, such as installment agreements and offer in compromise, which should be considered before levy or lien action is initiated. The Internal Revenue Code gives taxpayers the right to request a hearing during the 30-day period that begins on the day after the five-business-day period after the filing of a Notice of Federal Tax Lien or Levy which will be given in person, left at the dwelling or usual place of business, or sent by certified or registered mail. This notice is required only once for the taxable period and unpaid tax which is the subject of the lien or pre-levy filing. A second notice is required if a new lien or levy is filed for an additional assessment of tax made for the tax period after the original letter was issued (not including new assessments of interest and penalty accruals).

b. Notice of Collection Due Process Hearing Rights

1. The Collection Due Process hearing provisions give taxpayers an opportunity for an independent review to ensure that the levy or lien action by Collection is warranted and appropriate. In the Collection Field function, attempted contact with you and propose alternative methods for resolving the case, such as installment agreements and offer in compromise, should be considered before levy or lien action is initiated.

2. The Internal Revenue Code (IRC) 6320 gives taxpayers the right to request a hearing during the 30-day period that begins on the day after the five-business-day period after the filing of a Notice of Federal Tax Lien.

a. Letter 3172(DO), Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, will be given in person, left at the dwelling or usual place of business, or sent by certified or registered mail to the last known address not more than 5 business days after the day of the filing of the Notice of Federal Tax Lien.

b. This notice is required only once for the taxable period and unpaid tax which is the subject of the lien filing. A second notice is required if a new lien is filed for an additional assessment of tax made for the tax period after the original Letter 3172 was issued (not including new assessments of interest and penalty accruals).

c. For a joint income tax liability, each spouse will individually be sent to each taxpayers last known address, a Letter 3172 explaining the right to a hearing. Two separately addressed notices are sent even if both spouses are at the same address.

2. The Internal Revenue Code (IRC) 6320 gives taxpayers the right to request a hearing during the 30-day period that begins on the day after the five-business-day period

a. This Notice of Intent to Levy and Notice of Your Right to a Hearing will be given in person, left at the dwelling or usual place of business, or sent by certified or registered mail, return receipt requested, to your last known address not less than 30 days before the day of the first levy.

b. Information regarding how the notice was sent, delivered, or left at the dwelling or business must be documented in the Internal Revenue Service case history. You should keep both the envelope and the notices and the enclosures.

c. This notice is required only once for the taxable period and unpaid tax which is the subject of the pre-levy notice.

d. A second notice is required if levy action is planned to collect additional taxes that were assessed for the taxable period after the original notice was issued (not including new assessments of interest and penalty accruals).

e. For a joint income tax liability, when a Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, is issued in the field, each spouse will individually be given or sent, to his and her last known address, the letter explaining the right to a hearing. Two separately addressed notices are sent even if both spouses are at the same address.

f. For a partnership employment or excise tax liability, the Letter 1058 is issued to the partnership when partnership assets are to be levied. If the IRS intends to levy on the property of the individual general partners to collect the employment or excise taxes, then the Letter 1058 will be issued to the individual general partners.

4. There are three exceptions to the pre-levy notice requirements of IRC 6330. They are:

a. When the collection of tax is in jeopardy under section 6331(a), or
b. A levy is served on a State to collect a Federal tax liability from a State tax refund, or
c. A disqualified employment tax levy is served.

In each of the above situations, you will be given the opportunity for a CDP hearing within a reasonable period of time after the levy.

5. There is no right to a hearing when child support obligations are being collected. You will receive a Notice of Intent to Levy for Child Support Obligations.

c. The Request for a CDP Hearing (and equivalency hearings)

If contact is made with your attorney or other representative, after the issuance of the CDP notice of rights, the IRS will attempt to resolve the account or issue with the attorney or other representative. In some situations it may be useful to have the group manager intercede in discussions in an effort to resolve the case. Discussions with Collection do not suspend the running of (or otherwise extend) the 30-day period during which taxpayers may request a CDP hearing. When applicable, the Michael Ablan Law Firm, LLC. will consider requesting consider Fast Track Mediation (FTM) as an option for resolving the issues.

1. The Request for a Hearing must be in writing;

2. It must be filed on or before the date that is 30 days after the date of the Notice of Intent to Levy and Notice of Your Right to a Hearing, or on or before 30 days after the five-business-day period following the filing of the Notice of Federal Tax Lien; and

3. If the hearing request is filed late, you may be entitled to an equivalent hearing but only if specifically requested. You must submit a written request for an equivalent hearing within the one-year period commencing the day after the date of the CDP Notice issued under IRC 6330 (CDP levy notice). This period is slightly different from the period for submitting a written request for an equivalent hearing with respect to a CDP Notice issued under section 6320. For a CDP Notice issued under section 6320, you must submit a written request for an equivalent hearing within the one-year period commencing the day after the end of the five-business-day period following the filing of the NFTL. If the request is received or if mailed and postmarked after the one-year period:

a. You can request an equivalent hearing either by checking the Equivalent Hearing box on Form 12153, Request for a Collection Due Process or Equivalent Hearing, or other written request, or

b. Confirming that he/she wants an untimely CDP hearing request to be treated as an equivalent hearing when notified by Collection of an untimely CDP hearing request.

c. The equivalency hearing is handled essentially as is the CDP hearing, except there is no right to judicial review.

4. The Michael Ablan Law Firm, LLC. generally uses Form 12153, Request for Collection Due Process or Equivalent Hearing, to request the hearing. This form is included with the CDP notice. Don’t worry if you have lost the form, we have them available at the Michael Ablan Law Firm, LLC.

5. The written request for a hearing must be dated and must include the following information:

a. Your name, address, daytime telephone number (if any), and your identification number (SSN, ITIN, or EIN).

b. The type of tax involved.

c. The tax period(s) at issue.

d. A statement that you request a hearing concerning the proposed levy or in the case of post levy CDP requests, the actual levy action, or the filing of the Notice of Federal Tax Lien.

e. The reason(s) why you disagree with the action. Section 6330 was amended in 2006 to permit the IRS to disregard any portion of a hearing request that includes a reason that appears to be frivolous or reflects a desire to delay or impede the administration of federal tax laws. Under these circumstances, you may be denied a hearing.

f. Your signature of you or your authorized representative’s.

6. For the tax liability involving a partnership:

a. If the CDP notice is issued to a partnership, then our law firm will represent any partner with authority to represent the partnership when requesting a hearing for the partnership.

b. If a CDP lien notice is issued to an individual partner, then that partner will be represented by the Michael Ablan Law Firm, LLC. when requesting a hearing as an individual partner.

c. If a CDP levy notice is issued to a general partner because the IRS intends to levy the individual property of the general partner, then our law firm will represent the general partner when requesting a hearing as an individual partner.

The CDP hearing request must include all applicable periods listed on the CDP notice even if not listed on the hearing request. You can exclude a specific tax period on the CDP notice if you are not disputing the collection action for a specified tax period.

a. If you include periods that are not subject to the CDP hearing, the Michael Ablan Law Firm, LLC. will request an equivalent hearing for the other periods. If the you are not entitled to a CDP hearing or an equivalent hearing, i.e., have not been issued a CDP hearing notice, previously received a CDP hearing or the time frame has expired for requesting an equivalent hearing, your lawyer will inform the you of your available rights such as those available through CAP or retained jurisdiction.

8. If you received a CDP notice for both lien filing and proposed levy action, you have the right to appeal both notices. Appeals should consolidate the requests for the CDP hearing.

9. Then you or the Michael Ablan Law Firm, LLC. must send or deliver the CDP hearing request to the IRS office and address as directed on the CDP notice. If the address of that office does not appear on the CDP notice, the you should obtain the address of the office to which the written request must be sent or delivered by calling the toll-free number on the notice or by calling toll-free, 1-800-829-1040 and providing the your identification number (SSN, ITIN, or EIN). If you wish to fax the CDP hearing requests, you may request the fax number of the appropriate office from one of these toll-free numbers. You may also hand-deliver the request to the local you assistance center within the 30-day period. If the CDP notice does not include the address of the office that sent the notice, and you send the hearing request to the wrong IRS office, timeliness should be determined by the postmark date of the request.

d. Timeliness of the CDP Hearing Request

1. Collection makes the initial determination about the timeliness of a request for hearing from a CDP levy notice or CDP lien notice, but Appeals must make the final timeliness determination.

2. For a CDP levy hearing request to be timely, you must submit a written request for a CDP levy hearing within the 30-day period commencing the day after the date of the CDP levy notice. If the request for the hearing is made after this 30-day period, you may be entitled to an equivalent hearing.

3. The time frame for filing a timely CDP lien hearing request is different than for a CDP levy request. For a CDP lien hearing request to be timely, you must submit a written request for a CDP hearing within the 30-day period that commences the day after the end of the five-business-day period following the filing of the NFTL. Any request filed during the five-business-day period (before the beginning of the 30-day period), will be deemed to be filed on the first day of the 30-day period. The Letter 3172, provides the date for you to file a timely CDP lien hearing request. If a request is filed within that time period, it is considered timely. If the request for the hearing is late, you may be entitled to request an equivalent hearing. (The date on the Letter 3172 considers the NFTL filed three business days after the NFTL is mailed to the recording office.)

4. A timely filed request for a hearing suspends the statutory period of limitations on collection, criminal prosecutions, and other suits for the period that is being appealed. The suspension begins on the receipt date of the CDP hearing request.

5. The request for a CDP hearing will be stamped with the received date.

6. The IRS will use the date received in the office listed on the CDP hearing notice to determine the timeliness of the CDP hearing request. If the received date is after the time frame for filing a timely CDP hearing request but the request was postmarked timely, use the postmark date as the receipt date. Timely mailing constitutes timely filing if you request for a CDP hearing is correctly addressed to the IRS office listed in the CDP hearing notice. If the address of that office does not appear on the CDP notice, the Michael Ablan Law Firm, LLC. will obtain the address to which the written request should be sent or hand delivered or you can obtain it by calling toll-free, 1-800-829-1040, and providing your identification number (SSN, EIN, or ITIN). When the postmark is illegible or the envelope is missing, the IRS will ascertain a reasonable period for mail delivery from the origin of the request to the receiving office and deduct that amount of time from the received date. If the 30th day is a Saturday, Sunday, or federal holiday, and the postmark is for the next business day, it is timely. The IRS will keep the envelope in which the hearing request was mailed and associate it with the hearing request.

7. Your request for a CDP hearing can be submitted via facsimile (fax) to the office listed on the notice. The transmission date will be the received date. The transmittal sheet should be retained along with the CDP hearing request.

8. The IRS can disregard any portion of a hearing request that includes a reason that appears to be frivolous or reflects a desire to delay or impede the administration of federal tax laws. If a hearing request seems untimely, the request must be sent to Appeals for a separate timeliness determination. If a request for a CDP hearing is filed timely, but needs to be perfected, you can request time to allow perfection, generally 15 calendar days. So if you forgot to sign the request or failed to furnish required information, you may perfect the request by supplying the missing signature or by providing the missing information. If the request is signed on your behalf by your spouse or other unauthorized representative, you may perfect the request by affirming in writing that the request was submitted on your behalf.

9. If the timely but incomplete CDP hearing request is processable when received, then it is timely even if you perfect the request late or only perfects the request partially or does not respond. A CDP hearing request is processable unless the request is:

a. Not signed.

b. Signed but the signer is not authorized to sign on behalf of you (example: an unenrolled return preparer or spouse).

c. Signed but the signer does not have proper authorization (no Power of Attorney on file).

d. It does not have a valid SSN, ITIN or EIN and one could not be identified.

e. Does not include a reason for the request.

If the timely but incomplete CDP hearing request is not processable when received, and, within the reasonable time period specified, you perfect your request or partially perfect the request so the request is processable, then the CDP hearing request is timely filed. If not, you would still be entitled to an equivalent hearing if specifically requested. The equivalent hearing will be held by Appeals and generally will follow Appeals procedures for a CDP hearing. Appeals will not, however, issue a Notice of Determination. Under such circumstances, Appeals will issue a Decision Letter and you are not entitled to judicial review.

A request for CDP hearing is untimely if:

a. The request was not received within the required time period.

b. The timely but non-processable request is made processable by you after the reasonable time period given for perfection. (For example: The hearing request was received within the 30-day period in section 6330, but was not able to be processed because you failed to sign the request and was given 15 days to provide a signed copy of the request. You provide the signature 16 days after the perfection request and as a result the request is untimely.)

c. When a hearing request is untimely, the request must be sent to Appeals for a separate timeliness determination. Appeals will either agree or disagree with Collection’s timeliness determination. Sometimes they will partially agree if there are multiple modules. If Appeals agrees that the request was untimely, the Michael Ablan Law Firm may elect to have the CDP hearing request treated as an equivalent hearing request. If Appeals disagrees with the timeliness determination, then the CDP hearing will be considered timely and will be processed accordingly, under normal procedures.

e. Levy Action during the Period of the CDP or Equivalent Hearing

If you file a timely request for a CDP hearing during the IRC 6330 notice period, levy actions on the periods that are the subject of the CDP notice, except in jeopardy situations, levies on state income tax refunds or disqualified employment tax levies, must be suspended during the appeal period and while any court proceedings are pending. Levy Action during the Period of the CDP or Equivalent Hearing. An appellant court has the power to allow the IRS to continue collection in limited circumstances. The suspension applies only to the specific matters appealed.

f. Things to Present at the Hearing

1.During the appeal process, the Michael Ablan Law Firm, LLC. may raise at the hearing, any relevant issue relating to the unpaid tax or the proposed levy, including:

a. Appropriate spousal defenses;

b. Challenges to the appropriateness of collection actions; and

c. Offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

2. The law firm may also raise issues related to an economic hardship determination.

3. The law firm may also raise challenges to the existence or amount of the underlying tax liability including a liability reported on a self-filed return for any tax period specified on the CDP notice if you did not receive a statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

g. After the Appeals Determination

a. After Appeals makes its determination in a CDP hearing, you may, within 30 days of the date of the determination letter, petition the Tax Court.

b. To allow time to be notified of any court petitions, Appeals will hold cases subject to Tax Court review for an additional 30 days (60 days after issuance of the Notice of Determination). If you reach an agreement with Appeals and do not wish to go to court, the law firm will use Form 12257, which serves as a summary Notice of Determination, and waives the right to go to court and the suspension of levy action. If you waive the right to judicial review, the determination is final and the case can be returned to collection.

c. If you file an appeal to Tax Court, Appeals updates the CDP tracking system to Stage 8, Tax Court Appeal. Collection can check the status on the CDP tracking system to identify cases where a judicial appeal has been filed or they can call the Appeals office to determine the status of the case.

d. Once Appeals issues the notice of determination, you may raise collection alternatives with Collection, even if you have an appeal pending in Tax Court.

e .In an equivalent hearing, the decision is final when Appeals issues its decision letter, except as it relates to certain spousal defenses under IRC 6015, denials of interest abatement under IRC 6404.

f. The revenue officer will review the determination and document a plan of action with respect to the determination. The agent will keep the CDP case open until all closing actions are taken by Appeals or the case is returned to inventory.

If you or you business have been contacted by the IRS and if you are looking for a tax lawyer to compromise, negotiate, or effectively deal with the IRS, or if you or your business is in need of tax litigation, or tax defense, we, the Michael Ablan Law Firm can help you. With an experienced and aggressive yet honest, trustworthy and friendly legal team consisting of a lawyer with 35 years of experience, specialized paralegals, and a tax accountant, the Michael Ablan Law Firm in La Crosse, WI can help you. We also have offices in La Crescent, Minnesota and Hayward, Wisconsin. Contact us for a free consultation. Our expert legal services are available to you anywhere in the State of Wisconsin including but not limited to the counties of La Crosse, Trempealeau, Monroe, Crawford, Vernon, Grant, Jackson or any other county in Wisconsin or in the state of Minnesota, including all counties surrounding La Crescent, MN, such as Houston and Winona and any other county.

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, if any U.S. federal tax advice contained in this communication, (including any attachments) is not intended or written to be relied upon or used, and cannot be relied upon or used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction of matter addressed herein.