A Collection Due Process hearing gives taxpayers an opportunity to challenge certain IRS collection actions before the IRS Independent Office of Appeals. These hearing rights may be provided through notices such as CP90, CP297, LT11, Letter 1058, or a Notice of Federal Tax Lien filing. Requesting the hearing on time can give you a formal setting to raise collection concerns and propose another way to address the debt.
A CDP hearing is not limited to explaining why you cannot pay the full balance. Depending on the circumstances, you may discuss collection alternatives, payment errors, penalty relief, innocent spouse relief, discharged taxes, and disagreements about the underlying liability. However, some issues can only be considered when specific legal requirements are met.
What Does IRS Appeals Review During a CDP Hearing?
The IRS Independent Office of Appeals reviews the lien filing or proposed levy covered by the hearing request. Appeals considers whether the IRS followed the required legal and administrative procedures before taking collection action. It must also consider whether the proposed action balances the need to collect the tax with the taxpayer’s concern that the action may be more intrusive than necessary.
This review may uncover problems with the notices, assessments, collection deadlines, or other required procedures. However, finding a procedural error does not necessarily eliminate the tax debt. Appeals may require the IRS to correct the problem before collection action continues.
Can You Propose a Different Way to Resolve the Tax Debt?
You may use a CDP hearing to propose a collection alternative instead of the levy or lien action being reviewed. Common options include an installment agreement, an offer in compromise, or currently not collectible status when paying would prevent you from meeting basic living expenses. Appeals will review your financial condition and determine if the requested option meets IRS requirements.
An installment agreement allows you to make payments over time rather than paying the entire balance immediately. An offer in compromise may allow you to settle the liability for less than the full amount when you qualify under the program’s rules. Currently not collectible status temporarily delays active collection when your financial records show that you cannot pay without creating hardship.
Appeals may require Form 433-A for an individual taxpayer or Form 433-B for a business. You may also need to provide filed tax returns and records supporting your income, expenses, assets, and debts. Sending complete and current information can help Appeals evaluate the proposal without unnecessary delays.
Can You Raise Errors or Challenge the Amount Owed?
A CDP hearing can be used to address payments that were made but not properly credited to the tax account. You should provide canceled checks, bank records, payment confirmations, or other documents showing the payment amount and date. Appeals can review the account and determine whether the IRS applied the payment correctly.
You may also request penalty relief if you had reasonable cause for filing or paying late. The explanation should describe what happened, when it happened, and how the circumstances prevented you from meeting your tax obligation. Supporting records may be needed to show that the failure was caused by circumstances outside your control rather than neglect.
Other issues may include innocent spouse relief or taxes that were discharged in bankruptcy. Form 12153 specifically allows taxpayers to identify these issues as reasons for requesting the hearing. Each claim should be supported by the appropriate forms, court documents, account records, or other evidence.
You may be able to dispute the existence or amount of the underlying tax liability, but this right is limited. The IRS generally allows the issue to be raised when you did not receive a statutory notice of deficiency and did not previously have an opportunity to dispute the liability before Appeals or a court. A CDP hearing is not automatically a second opportunity to reopen a tax assessment that was already challenged or could have been challenged earlier.
What Happens After the CDP Hearing?
Appeals will consider the issues and documents properly presented during the hearing before issuing its determination. The decision may uphold the proposed collection action, require a change to that action, or approve a collection alternative. Issues that are not properly raised before Appeals may be difficult to introduce later during judicial review.
A timely CDP hearing request generally prevents the IRS from proceeding with the levy action covered by the hearing while the case is pending. It also suspends the IRS collection period for the affected tax liabilities until the determination becomes final. Interest and applicable penalties may continue to increase during this time.
If you disagree with the final Appeals determination, you generally have 30 days to petition the United States Tax Court. This right to court review is connected to a timely CDP hearing request. Missing the petition deadline may allow the IRS to resume the collection action approved by Appeals.
Final Thoughts
A CDP hearing is not simply a chance to ask the IRS for more time. It is a formal opportunity to put specific collection issues in front of Appeals and, in some cases, propose a different path forward. That makes preparation important. The issues you raise, the explanation you give, and the documents you provide can all affect how Appeals reviews the case.
The deadline is just as important as the substance of the hearing. If you received a notice giving you CDP rights, waiting too long can mean losing the opportunity for a timely hearing and possible Tax Court review.
At the Law Office of Steven N. Klitzner, we can review the notice with you, help identify the issues that may be raised, prepare the necessary supporting information, and represent you before the IRS Independent Office of Appeals. Contact us to discuss your case before the deadline on your notice passes.
Steven N. Klitzner, P.A. is a tax attorney based in Miami, Florida. He has been practicing tax law for over 40 years, and currently holds a 10.0 rating by Avvo. Mr. Klitzner was appointed to the IRS Service Advisory Council in 2021 and is... 
