IRS Collections Due Process Program and Collections Appeal Procedures

With the economic downturn in recent years, many taxpayers have found it hard to keep up with their income tax obligations. It is hard to recover when people are getting notices everyday and are feeling hopeless.  The IRS has two programs to help in the appeal process when there is nothing left but to lien, levy, or seize a person’s property. The Collections Appeals Program (CAP) and the Collections Due Process (CDP) are two ways a taxpayer has a chance to stop collection and appeal the process.

According to the IRS, taxpayers can use the CDP process when they have received one of the following letters:

  • Notice of Federal Tax Lien Filing and Your Right to Hearing Under IRC 6320
  • Final Notice-Notice of Intent to Levy and Notice of Your Right to a Hearing
  • Notice of Jeopardy Levy and Right to Appeal
  • Notice of Levy on Your State Tax Refund-Notice of Your Right to a Hearing
  • Post Levy Collection Due Process (CDP) Notice.

Taxpayer, who experience one of the following problems, has the CAP available for them:

  1. Before or after the IRS files a Notice for Federal Tax Lien
  2. If property has received a lien or levy
  3. If the IRS has terminated, proposed to terminate, rejected, modified, or proposed to modify an installment agreement.

The first step is to take action. Contact your CPA immediately. They can help you figure out which appeal process will work best for you situation. With immediate action collective activities can be frozen long enough to collect your thoughts and information. Request an “account transcription” form the IRS to be able to review all the transactions and outstanding balances for the account.

If the taxpayer chooses to go through the CDP process then there is 30-days from the initial notice letter to request a hearing. If the 30-day window is missed there can be a request for an “equivalent hearing”, but this will not suspend collection procedures.

The CAP hearing can be requested at any time, but cannot go on to tax court if the taxpayer contests the decision. The taxpayer can go on to CDP hearings, but only if they have not already pursued this option. By picking the right appeals process, the taxpayer and IRS can both can be happy with the results.