A Collection Due Process (CDP) hearing, Form 12153, provides taxpayers the opportunity to go to appeals on either a final notice of federal tax lien or a proposed or actual levy. The problem with filing a CDP on the notice of federal tax lien is that the lien has already been filed with the County Recorder’s Office and is public record. Unfortunately, with a CDP, the taxpayer can exercise their appeal rights after the notice of federal tax lien has been issued. If the Collection Due Process appeal is filed within 30-days, it is a timely CDP Hearing which protects the specific tax periods from any further collection action until the taxpayer has the opportunity to be heard. It also preserves the taxpayer’s right to file a petition in Tax Court if he/she does not agree with IRS Appeals’ determination. However, caution must be exercised not to use these procedures for the simple purpose of delay.
However, if the request for a hearing, Form 12153, is filed on the 31st day, or any time up to one year, the request for an appeal becomes an Equivalency hearing. The taxpayer’s case will still be forwarded to appeals, and the taxpayer can request collection alternatives. However, the taxpayer’s account is not necessarily protected from further collection action while waiting for their hearing. Once Appeals decides, the determination is final, and the taxpayer does not have the right to file a petition with Tax Court.
Like the Equivalency hearing, the taxpayer does not have the right to go to court if they disagree with Appeals in a CAP. However, unlike a CDP, a CAP allows the taxpayer to appeal the proposed action, for example, before a federal tax lien is filed. Since the taxpayer can appeal a proposed action, the IRS will process the request for CAP much faster than a request for a CDP hearing. A CAP can take a few weeks, but a CDP hearing can take several months, so the IRS will toll the collection statute.
In the case of an IRS wage garnishment or bank levy, the taxpayer does not want to wait months to have a hearing with IRS Appeals. The taxpayer wants the matter resolved quickly. If the Collections Division does not want to release or modify the levy, the taxpayer can file a CAP to have their case go to Appeals. Once the case is in Appeals, the taxpayer must be prepared to show that the wage garnishment and/or bank levy is creating a financial hardship.
In the case of modifying or terminating an installment agreement, the taxpayer can exercise their appeal rights by filing a CAP, not a CDP. The taxpayer must explain why they disagree and offer a solution. The CAP will place a hold on any collections (unlike an Equivalency hearing) until IRS Appeals has decided. Note that once the determination is made, IRS Collections is notified within days of the decision. The taxpayer must be prepared to deal with IRS Collections if the matter is not resolved in Appeals.
Form 12153 Instructions
Filing a CDP Form 12153 is a mostly straightforward process. To complete the 2-page application, you will need the following information ready:
- Your name
- ID number
- Address
- Your phone number and the most appropriate time to contact you
You will also need information supplied on the notice for the tax lien or levy that was sent by the IRS. The notice of tax lien or levy will inform you the type of taxes you owe, the years in which you owe taxes, and the IRS forms that were used when the debt was accrued. As a result, you will need this form when appealing all or certain tax years.
When filing Form 12153, you may also consider whether you are filing to request innocent spouse relief. When a taxpayer requests innocent spouse relief, they could be relieved of their burden to pay taxes and penalties that were incurred due to an accidental or intentional omission made by their spouse or former spouse on a previous tax return. Note, however, that innocent spouse relief is only available for individual income or self-employment taxes. A taxpayer will be liable for other types of taxes that do not fall under this exception.
If you are not filing for an innocent spouse relief exemption, you will need to provide a valid reason to support your request for a hearing. The following are valid grounds that could be used to request a CDP hearing:
- The taxpayer would like to negotiate a payment plan to manage their tax liability
- The taxpayer does not have the means to pay their tax debt and would like to file for a hardship exception
- The taxpayer has developed a terminal illness and cannot manage their tax debt and medical bills
The Tax Law Offices of David W. Klasing could help you file your CDP Form 12153.
Tax Form 9243 Instructions and Where to File
Tax Form 9243, entitled “Collection Appeal Request,” could be used to appeal tax liens, levies, seizures, and rejection, modification, or the termination of installment agreements. Specifically, a taxpayer could use this form to file an appeal under the following circumstances:
- Levy or seizure actions by the IRS
- Denial of a request to issue a lien certificate (e.g., subordination, withdrawal)
- Notice of a federal lien that was filed or will be filed
- Disallowance for taxpayer’s request to return the levied property
This is not an exhaustive list.
To make an appeal of a levy, lien, or seizure using Form 9243, you will need a conference with the manager of the IRS employee that decided to proceed with the levy or lien. If an IRS manager does not get back to you, you could still submit Form 9243 to the IRS collection office. When submitting the form, you need to identify the collection action you are challenging and the reason for your challenge. You will also need to present an alternative to handle your unpaid tax debt.
If you are appealing a decision regarding an installment agreement, Form 9243 must be provided to the office or revenue officer who made a decision regarding the installment agreement. Note that an appeal of a rejection, modification, or termination of an installment agreement must be submitted within 30 calendar days of the decision.
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See our Liens Levys and Garnishments Q and A Library
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Questions and Answers on Tax Liens, Levys and Tax Garnishments
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