If you owe the IRS, one of the most powerful enforcement tools of the IRS is the tax levy Tax Levies include bank levies, wage garnishments, or other asset seizures. When taxpayer’s come into our Richardson, TX tax office and have received a Final Notice of Intent to Levy from the IRS, often a notice LT11 or Letter 1058, they have rights that are available to them that through those notices. Those include CDP Rights and the right to an Equivalent Hearing. While both provide critical rights to the taxpayer, there are important differences between the two.
Whenever the government issues a final notice of threat to levy, the taxpayer has 30 days to invoke their CDP rights and request a Collection Due Process (CDP) hearing with an appeals officer. They do this by filing IRS Form 12153, Request For a Collection Due Process or Equivalent Hearing. It is important to file Form 12153 properly or it will be rejected.
There are several benefits to invoking your CDP rights timely:
- Collection Activity ceases for the years in question pending the CDP hearing,
- The case is forwarded to an appeals officer for a hearing where you will have the opportunity to have your case heard, and
- The tapayer has protected their right to take their case to the United States Tax Court should they not agree with the Appeals Officer's decision.
If you miss the deadline for your CDP hearing, you still have up to one year to request an Equivalent hearing. An Equivalent hearing allows you to take your case to appeals, but does not require the IRS to cease collection activities and does not protect your right to take the case to US Tax Court. To request an Equivalent Hearing, you will file Form 12153 within one year of the date of the notice.
CDP Rights vs. Equivalent Hearing
While both alternatives give the taxpayer the right to be heard before appeals, the additional benefits that come with requesting CDP rights can be critical. One advanatage is when a taxpayer invokes their CDP rights, they have the ability to come to an agreement with the IRS, while the hearing is pending (typically more than six months), without the fear of an IRS Levy or Lien. Another is the right to go before the US Tax Court. While most taxpayer’s don’t go to US Tax Court, having that right gives the taxpayer additional leverage when working with appeals. I ALWAYS recommend invoking a taxpayer’s CDP rights when given the opportunity.
Do You Need Help?
If you need help with an Appeal or any other IRS Collection issue, we’d be happy to meet with you. Please give me a call at (972) 821-1991 or email me at bob@jablonskyandassociates.