IRS Form 12153 Collection Due Process Hearing Guide
If you receive a notice that the IRS intends to place a tax lien or levy your assets, you can request a Collection Due Process (CDP) hearing. Taxpayers can file IRS form 12153. These hearings allow you to appeal the IRS’s collection actions. They can potentially stop the lien or levy from happening.
What is a Collection Due Process Hearing?
A Collection Due Process hearing allows taxpayers to appeal IRS liens and levies. It is an informal hearing which can happen in person or over the phone. Oaths are not involved, and no transcript gets taken.
The hearing looks at the validity of the notice and relevant issues related to the unpaid tax. At the CDP hearing, you can attempt to obtain innocent spouse relief— that’s where you argue that your spouse or ex-spouse was exclusively responsible for the debt. You may also work out a payment plan or suggest collection alternatives.
Essentially, the purpose of a Collection Due Process hearing is to figure out a compromise between the IRS’s need to collect taxes and your concerns about the collection activity. After the hearing, the IRS issues a Notice of Determination. It outlines the following elements:
- Whether or not the IRS delivered the lien or levy demand correctly—The IRS must hand-deliver these notices. Or, the IRS must send the notice via registered mail to your last known address and get a receipt that you received it.
- Whether or not a tax lien will take place
- Whether or not a levy will happen
- The details of any payment arrangements decided upon during the hearing.
- Whether or not the IRS accepted your request for innocent spouse relief or any similar defenses.
- Whether or not tax relief was offered.
After receiving the Notice of Determination, you have 30 days to appeal to the Tax Court or the US District Court.
When Do You File a Request for a Collection Due Process Hearing (Form 12153)?
Taxpayers can request a Collection Due Process hearing if they receive a Notice of Federal Tax Lien or a Notice of Intent to Levy. Usually, the IRS sends one of the following notices:
- Letter 1058 (Final Notice of Intent to Levy and Notice of Your Right to a Hearing)
- Letter 11 (Final Notice of Intent to Levy and Notice of Your Right to a Hearing)
- CP90 (Final Notice of Intent to Levy)
- CP92 and CP242 (Notice of Levy Upon Your State Tax Refund)
- Letter 3172 (Notice of Federal Tax Lien Filing and Your Right to a Hearing)
The IRS does not allow taxpayers to request these hearings for “frivolous” reasons. That includes refusing to pay tax on religious or moral grounds.
What Are Some Legitimate Reasons to Request a CDP Hearing?
- You want to seek payment alternatives such as a payment plan or an offer in compromise. To get these plans accepted, you must file all delinquent returns.
- You have a terminal illness and overwhelming medical bills.
- You can’t pay because you’re living on Social Security or unemployment.
- You can’t afford to pay with your income—the IRS has strict guidelines on this type of hardship arrangement.
You want to apply for a lien subordination. That’s when the IRS agrees to put its lien as subordinate to another lien. For instance, if you want to take out a home equity loan to cover a tax bill, the lender may only give you the loan if the lien takes precedence over the IRS lien.
- You want the lien discharged so you can sell the underlying asset and pay the IRS.
- You need the lien removed from your credit report because you already paid in full or you are currently in a payment arrangement.
The IRS may be willing to accept other reasons, but those are some of the most common.
What If You Don’t Agree With the Amount Due on Your Notice?
You may also request a Collection Due Process hearing (form 12153) to challenge your tax liability. However, you can only do that in rare situations. Namely, you can only challenge the amount due if:
- you didn’t receive a statutory notice of deficiency,
- you didn’t receive a notice to file a Tax Court petition,
- or if you didn’t have a chance to dispute your liability previously.
You cannot bring up issues that have already been heard.
If you don’t meet those criteria, there are only three ways to appeal the amount due at this point:
- Pay the tax debt in full. Then, file a refund claim and appeal when the IRS denies your refund.
- Request an audit reconsideration with new information.
- File an Offer in Compromise for doubt as to liability.
All of the above options are complicated, and you may want to get professional help in all of those situations.
How Do You File a CDP Request?
To request a Collection Due Process Hearing, you need to complete Form 12153 (Request for a Collection Due Process or Equivalent Hearing). This form is pretty straightforward. It requests your name, ID number, address, phone numbers, and the best time to reach you. You also have to include information from your tax lien or levy notice.
You can tick a box if you want to apply for innocent spouse relief. Otherwise, you need to write in your reason for requesting a hearing. It is an essential part of the form, and you won’t obtain a hearing if you don’t supply a sound reason. You can use any of the reasons listed above or brought forth by your tax professional.
Once the IRS receives this form, all collection activity stops, and the 10-year statute of limitations pauses. The IRS will only respond to your request if you postmark the IRS form by the last day of the 30-day period after receiving your Intent to Levy or Tax Lien notice.
What If You Don’t Meet the 30 Day Deadline?
If you don’t submit the form within the 30 days, you can request an Equivalent Hearing. You have one year and five business days from the filing date of your Federal Tax Lien to make this request or one year from the date of your levy notice. In these cases, the levy may go forward, and the IRS can take your assets, but if the hearing is successful, the IRS will stop the levy.