Form 12153: Collection Due Process Hearing (CDP)

Collection Due Process Hearing (CDP)

Steps for Preparing Form 12153 Collection Due Process Hearing (CDP): The Collection Due Process hearing request form 12153 is a relatively newer International Revenue Service tool that Taxpayers have available to them when it gets to the point of the IRS dropping the hammer — and going in for a Levy of an account — or after a Notice of Federal Tax Lien has been filed. The Collection Due Process hearing provides a taxpayer with an opportunity to bring their case before Settlement Officer (SO) at the IRS Office of Appeals — to review and assess whether the process was done properly — and whether Reasonable Cause exists to abate the penalties. What makes the tool somewhat complicated to use is that Taxpayers do not qualify to use the Collection Due Process Hearing request until the IRS has issued a final notice of intent to levy or the Notice of Federal Tax Lien (NTFL) has already been issued. In the meantime, the Internal Revenue Service still pursues collection and the taxpayer will still receive a barrage of unnecessarily scary notices such as a CP504 Notice. Lets’s review the IRS Form 12153 Collection Due Process Hearing Request.

What is Included on the CDP Form 12153?

1. Taxpayer name (Taxpayer 1)

• • Taxpayer Identification
  • Number Current address
  • City
  • State
  • ZIP code

2. Telephone number and best time to call during normal business hours

• • Home ( ) – am. pm.
  • Work ( ) – am. pm.
  • Cell ( ) – am. pm.

3. Taxpayer name 

• • Taxpayer Identification Number
  • Current address (if different from address above)
  • City
  • State
  • ZIP code

4. Telephone number and best time to call during normal business hours

• • Home ( ) – am. pm.
  • Work ( ) – am. pm.
  • Cell ( ) – am. pm.

5. Tax information as shown on the lien or levy notice 

• • Type of Tax (Income, Employment, Excise, etc. or Civil Penalty)
  • Tax Form Number (1040, 941, 720, etc.)
  • Tax Period or Periods

6. Basis for hearing request

• • Filed Notice of Federal Tax Lien
  • Proposed Levy or Actual Levy

7. Equivalent Hearing 

• • I would like an Equivalent Hearing – I would like a hearing equivalent to a CDP Hearing if my request for a CDP hearing does not meet the requirements for a timely CDP Hearing.

8. Check the most appropriate box for the reason you disagree with the filing of the lien or the levy. See page 4 of this form for examples. You can add more pages if you don’t have enough space.

• • If, during your CDP Hearing, you think you would like to discuss a Collection Alternative to the action proposed by the Collection function it is recommended you submit a completed Form 433A (Individual) and/or Form 433B (Business), as appropriate, with this form. See www.irs.gov for copies of the forms. Generally, the IRS Independent Office of Appeals will ask the Collection Function to review, verify and provide their opinion on any new information you submit. We will share their comments with you and give you the opportunity to respond.
    • Collection alternative
    • Installment Agreement
    • Offer in Compromise
    • I Cannot Pay Balance
    • Lien
    • Subordination
    • Discharge
    • Withdrawal
  • My spouse is responsible Innocent Spouse Relief (attach Form 8857, Request for Innocent Spouse Relief, to your request) Other (for examples, see page 4) Reason (you must provide a reason for the dispute or your request for a CDP hearing will not be honored. Use as much space as you need to explain the reason for your request. Attach extra pages if necessary)

9. Signatures: I understand the CDP hearing and any subsequent judicial review will suspend the statutory period of limitations for collection action. I also understand my representative or I must sign and date this request before the IRS Independent Office of Appeals can accept it. If you are sign

What is Required in the Form CDP 12153?

When it comes to filing the IRS Form 12153, it is absolutely crucial that the taxpayer does not miss the filing deadline. If the taxpayer misses the deadline they are still entitled to an “Equivalent Hearing (see below) — but that does not provide the same benefits of the collection due process hearing — namely, the halting of the enforcement — which is initiated when the CDP hearing is requested timely.

• • • What Is the Deadline for Requesting a Timely Collection Due Process (CDP) Hearing?

      • Your request for a CDP hearing about a Federal Tax Lien filing must be postmarked by the date indicated in the Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320 (lien notice).

      • Your request for a CDP hearing about a levy must be postmarked within 30 days after the date of the Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice) or Notice of Your Right to a Hearing After an Actual Levy.

• • • Your timely request for a CDP hearing will prohibit levy action in most cases. A timely request for CDP hearing will also suspend the 10-year period we have, by law, to collect your taxes. Both the prohibition on levy and the suspension of the 10-year period will last until the determination the IRS Independent Office of Appeals makes about your disagreement is final. The amount of time the suspension is in effect will be added to the time remaining in the 10-year period.

    • For example, if the 10-year period is suspended for six months, the time left in the period we have to collect taxes will be extended by six months. You can go to court to appeal the CDP determination the IRS Independent Office of Appeals makes about your disagreement.

What Is an Equivalent Hearing?

If for one reason or another a Taxpayer missed the opportunity to timely file a Collection Due Process Hearing, they can still qualify for an Equivalent Hearing. And, while there are some benefits to and Equivalent Hearing — it does not provide the same overall impact a filing a timely collection due process hearing — because it does not prohibit the enforcement of the levy.

• If you still want a hearing with the IRS Independent Office of Appeals after the deadline for requesting a timely CDP hearing has passed, you can use this form to request an equivalent hearing.

• You must check the Equivalent Hearing box on line 7 of the form to request an equivalent hearing. An equivalent hearing request does not prohibit levy or suspend the 10-year period for collecting your taxes; also, you cannot go to court to appeal the IRS Independent Office of Appeals’ decision about your disagreement.

You must request an equivalent hearing within the following timeframe:

• • • Lien Notice—one year plus five business days from the filing date of the Notice of Federal Tax Lien.

    • Levy Notice—one year from the date of the levy notice.

    • Your request for a CDP levy hearing, whether timely or Equivalent, does not prohibit the Service from filing a Notice of Federal Tax Lien. 

Where Should You File Your CDP or Equivalent Hearing Request?

It is important to make sure that the Collection Due Process Hearing Request Form 12153 is sent to the proper location –which is the address identified on the lien or levy notice. The IRS also accepts fax as well — but will not accept if the form is submitted directly to the office of appeals. With the IRS Office of Appeals, letters are normally sent first to the IRS — which are then forwarded to the IRS Office of Appeals.

• • • File your request by mail at the address on your lien notice or levy notice. You may also fax your request. Call the telephone number on the lien or levy notice to ask for the fax number.

    • Do not send your CDP or equivalent hearing request directly to the IRS Independent Office of Appeals, it must be sent to the address on the lien or levy notice.

    • If you send your request directly to Appeals it may result in your request not being considered a timely request. Depending upon your issue the originating function may contact you in an attempt to resolve the issue(s) raised in your request prior to forwarding your request to Appeals.

What Are Examples of Reasons for Requesting a Hearing?

One nice benefit of the collection due process hearing, is that it allows the Taxpayer and Settlement Office to get to the heart of the matter, and request that appeals take a whole another look at the situation in total. This is especially beneficial in situations in which a person has received an international tax penalty and Tax Court may not be available.

• • You will have to explain your reason for requesting a hearing when you make your request. Below are examples of reasons for requesting a hearing. You want a collection alternative— “I would like to propose a different way to pay the money I owe.” Common collection alternatives include:

    • Full payment—you pay your taxes by personal check, cashier’s check, money order, or credit card.

    • Installment Agreement—you pay your taxes fully or partially by making monthly payments.

    • Offer in Compromise—you offer to make a payment or payments to settle your tax liability for less than the full amount you owe.

Examples of When a CDP Request May Work

• “I cannot pay my taxes.” Some possible reasons why you cannot pay your taxes are: (1) you have a terminal illness or excessive medical bills; (2) your only source of income is Social Security payments, welfare payments, or unemployment benefit payments; (3) you are unemployed with little or no income; (4) you have reasonable expenses exceeding your income; or (5) you have some other hardship condition. The IRS Independent Office of Appeals may consider freezing collection action until your circumstances improve. Penalty and interest will continue to accrue on the unpaid balance.

• You want action taken about the filing of the tax lien against your property—You can get a Federal Tax Lien released if you pay your taxes in full.  You also may request a lien subordination, discharge, or withdrawal. See www.irs.gov for more information.

• When you request lien subordination, you are asking the IRS to make a Federal Tax Lien secondary to a non-IRS lien. For example, you may ask for a subordination of the Federal Tax Lien to get a refinancing mortgage on your house or other real property you own. You would ask to make the Federal Tax Lien secondary to the mortgage, even though the mortgage came after the tax lien filing. The IRS Independent Office of Appeals would consider lien subordination, in this example, if you used the mortgage proceeds to pay your taxes.

• When you request a lien discharge, you are asking the IRS to remove a Federal Tax Lien from a specific property. For example, you may ask for a discharge of the Federal Tax Lien in order to sell your house if you use all of the sale proceeds to pay your taxes even though the sale proceeds will not fully pay all of the tax you owe.

• When you request a lien withdrawal, you are asking the IRS to remove the Notice of Federal Tax Lien (NFTL) information from public records because you believe the NFTL should not have been filed. For example, you may ask for a withdrawal of the filing of the NFTL if you believe the IRS filed the NFTL prematurely or did not follow procedures, or you have entered into an installment agreement and the installment agreement does not provide for the filing of the NFTL. A withdrawal does not remove the lien from your IRS records.

• Your spouse is responsible—“My spouse (or former spouse) is responsible for all or part of the tax liability.” You may believe that your spouse or former spouse is the only one responsible for all or a part of the tax liability. If this is the case, you are requesting a hearing so you can receive relief as an innocent spouse. You should complete and attach Form 8857, Request for Innocent Spouse Relief, to your hearing request.

• Other Reasons—“I am not liable for (I don’t owe) all or part of the taxes.” You can raise a disagreement about the amount you owe only if you did not receive a deficiency notice for the liability (a notice explaining why you owe taxes—it gives you the right to challenge in court, within a specific timeframe, the additional tax the IRS says you owe), or if you have not had another prior opportunity to disagree with the amount you owe.

• “I do not believe I should be responsible for penalties.” The IRS Independent Office of Appeals may remove all or part of the penalties if you have a reasonable cause for not paying or not filing on time. See Notice 746, Information About Your Notice, Penalty and Interest for what is reasonable cause for removing penalties.

  “I have already paid all or part of my taxes.” You disagree with the amount the IRS says you haven’t paid if you think you have not received credit for payments you have already made.

Collection Due Process (CDP) for Another Bite of the Apple

In conclusion, the Collection Due Process hearing request is a great opportunity for Taxpayers who are at the end of the line against the Internal Revenue Service on a tax or penalty collection matter — and needs a chance to seek redress. The CDP Request allows the Taxpayer to bring their matter before a Settlement fficer who will then take a look at the case to determine whether or not the enforcement procedures were proper, whether penalties should be issued — and whether Reasonable Cause is sufficient to show there was no willful neglect, and therefore no penalty should have been issued.

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