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Collection Due Process Procedure

Collection Due Process Procedure

Each year many people face hefty tax obligations. For some, the ability to pay these bills could be impossible due to their income, financial changes, or any number of other reasons. So what happens when the IRS is beating down on your door and demanding immediate payment?

Luckily, the Collection Due Process (CDP) procedure was created by the 1998 Reform Act in order to give taxpayers rights to appeal lien and levy actions, and that happens to be a great thing if you are unexpectedly slapped with a tax bill. The IRS has extremely broad collection powers and can easily access your bank account or garnish your hard earned wages once it has determined you owe money. As a result, a taxpayer can gain some power back from the IRS through a collection due process appeal and in this way, the IRS must respect certain constitutional rights. Among some of the benefits that can be earned include the chance to:

  • Formulate a tax repayment plan
  • Argue against the filing of the tax lien and tax debt
  • Dispute the interest and penalties that you face
  • Raise an innocent spouse defense

There are actually a number of other ways a collection due process hearing could benefit your tax circumstances, and consulting with a reputable tax attorney could prove to ensure your most favorable outcome. In addition, if you happen to be unsuccessful at the hearing stage, there is still hope. You may appeal the outcome to the United States Tax Court, where your case will be decided by a tax court judge.

Timeline

Once it is determined that you owe unpaid back taxes to the IRS, the agency is required to notify a taxpayer in writing within five days after it files a Notice of a Tax Lien. Furthermore, the taxpayer is also notified at least 30 days prior of a Notice of Levy.   These documents will state the taxes due and also will outline how the taxpayer can request a collection due process hearing within 30 days. In essence, at this point you are given the right to reach a resolution of your case, before the IRS ensnares your property. Accordingly, while your appeal is pending and negotiated for solutions, the IRS cannot move forward in seizing your property.

If for whatever reason you do not file within the 30 day timeframe for a collection due process hearing, you can then request an equivalent hearing through the IRS collection appeals program within one year from the notice. However, you should be aware that because you waited, you no longer have some of the benefits you were allotted from before. Namely, you can no longer challenge the tax debt, nor will you be granted a hold on collection efforts while your case is reviewed. Therefore, do yourself a favor and do not wait once you receive notice, instead act immediately.

Resolution

An appeal of an IRS impending seizure on taxes due in a collections due process hearing could allow you avoidance of unwarranted collection action. Timing is of the essence when it comes to garnering advantages. Dallo Law Group could assist you in carefully considering your case no matter how complex. Our experience with the IRS and the appeals process makes our attorneys your best partner to ensure an equitable process.   The worst thing you can do is ignore an IRS notice.

Whether you are within the 30 day window or have missed it, there can still be benefits for you in pursuing a late filed collection due process appeal, and they should not be ignored. Our attorneys at Dallo Law Group are also CPAs who can help you navigate all your alternatives. Our aim is the most favorable resolution to your tax problems. As always, your first consultation with us is free; give us a call at 619-795-8000.