IRS Collection Due Process (CDP) Procedures in San Jose, CA

The focus of my practice is in providing taxpayers like you with the guidance and oversight necessary to get resolve to complex tax and financial issues that you may be experiencing. We can be your representative and state your case in Appeals within the IRS to come to a settlement of an offer or agreement.

The Collection Due Process (CDP) hearing gives the taxpayer an independent review to verify that the filing of a Notice of Federal Tax Lien (NFTL) and/or the issuance of a Notice of the Intent to Levy against them are appropriate and warranted. The IRS is required to provide a written notice that the taxpayer has the right to appeal and be heard through the CDP, and will provide Form 12153 "Request for Collection Due Process or Equivalent Hearing".

• The right to appeal under the CDP is available if any one of the following is received by the taxpayer:
• Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing.
• Letter 11, Final Notice of Levy and Notice of Your Right to a Hearing. This letter is normally used by the Automated Collection System (ACS).
• Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing This letter is normally used by a revenue officer.
• CP 90, Final Notice of Intent to Levy and Notice of Your Right to a Hearing which is issued before a Federal Payment Levy Program (FPLP) levy.
• CP 91, Final Notice Before Levy on Social Security Benefits.
• Notice of Jeopardy Levy and Right of Appeal.
• CP 92 and CP 242, Notice of Levy upon Your State Tax Refund, Notice of Your Right to a Hearing.

There are some exceptions where the IRS is not required to fulfill the pre-levy notice requirements.

• If the collection of taxes is deemed to be in jeopardy.
• A levy is served on a state to collect federal tax liability from a state tax refund.
• Levy on a federal contractor is served.

The taxpayer is given the opportunity for a CDP hearing within what is deemed as reasonable time after the levy was received.

If the taxpayer fails to request a CDP hearing in a timely manner, all is not lost. A request can be made for an Appeals Equivalent Hearing (EH). Generally there is a one year period of time from the CDP date in which the request needs to be made. The EH request needs to be made in writing and if not done in a timely manner, it will be denied. The drawback to an EH is that the decision is final, and the taxpayer will not have the opportunity to appeal the decision as is available with the CDP decision.

When the taxpayer requests a CDP hearing, the levy action will cease for the time periods included in the CDP. This includes levies on state income tax refunds, and is in affect from the CDP request through the Appeals period, and for any further action that may take place in Tax Court. The levy action is also suspended during the time that the taxpayer has a right to a CDP hearing.

It is essential that the taxpayer be in compliance otherwise there is nothing Appeals can do. All missing returns need to be filed, and current taxes need to be paid in timely manner. As with any correspondence with the IRS, it is of first and foremost importance to be prepared with all that is requested by the IRS and not leave anything out. It’s about being ready with an answer and documentation for any inquiry from the Settlement Officer.

The appeals conference can be done in person or over the phone. Generally a phone call is all that is needed to express and explain our stand and reasoning in the case. But, if there are more complex issues where a face to face would make for a better presentation of material, then a meeting at a local IRS office can be requested.

Some people have a fear of going to Appeals, and will accept whatever decision and assessment is made. There is no reason to accept anything that you feel is not right, and you can look at Appeals as your friend. It offers you another chance to state your case, but this time it will be with a Settlement Officer who has more leeway to make decisions and compromises that can result in a fair and equitable solution for both sides.

If you have any questions regarding the CDP process in San Jose, CA feel free to contact me at (408) 627-8079 or email me at dan.ohara@oharataxes.com.