There are definite pros and cons of an Equivalency Hearing (EH) as opposed to a Collection Due Process (CDP) hearing with IRS Appeals. These appeals rights come into play after the IRS issues a tax lien. The other situations arise before or after the IRS issues a tax levy. Taxpayers will be mailed a notice informing them of their right to appeal the underlying tax or to propose an alternative to full payment of the tax liability.
I wrote about Collection Due Process (CDP) hearings yesterday and you can read about it here:
When a taxpayer does not respond within the 30 day time frame to request a Collection Due Process (CDP) hearing, they may apply for an Equivalency Hearing (EH) up to one year after the notice date. There are distinctive differences between a Collection Due Process (CDP) hearing and an Equivalency Hearing (EH). During an Equivalency Hearing (EH):
- Collection enforcement does not stop. The IRS may continue to levy the taxpayer. Tax levies are essentially the seizure of income or assets. This can include wages, commissions, retirement accounts, pensions, etc.
- Collection statutes continue to run. The time the IRS has to collect the tax by law is not frozen during the Equivalency Hearing (EH).
- No judicial review rights. Taxpayers that disagree with the decision from the IRS Appeals office cannot take their case to the US Tax Court. IRS Appeals' decision is final.
These three items stand in contrast to a Collection Due Process (CDP) hearing where:
- Collection enforcement stops.
- Collection statutes are frozen and thus toll.
- Taxpayers can petition the US Tax Court if they disagree with IRS Appeals' decision.
There are many different factors that come into play when deciding which of the two hearings to choose if you are able to respond within the 30 day window. Otherwise, if the one year window is open, you only have the Equivalency Hearing (EH) option. If you do not respond within one year, you will not be able to choose either of these hearings and will have to find another way to resolve your tax dispute.
With that said, dealing with an IRS Appeals Settlement Officer (SO) may be preferred due to their high degree of education, training and experience compared to IRS call center employees with the Automated Collection System (ACS).