IRS CDP (Collection Due Process) Hearing: When to Request and What to Expect

A Collection Due Process (CDP) hearing is your right to challenge IRS collection action before it happens. When the IRS files a federal tax lien or proposes a levy, it must send you a notice and give you 30 days to request a hearing before an independent Appeals officer. The hearing lets you challenge the underlying liability (in some cases), propose collection alternatives (installment agreement, OIC, CNC), and raise procedural objections. If you disagree with the Appeals decision, you can petition Tax Court. The CDP hearing is one of the few points in the collection process where you have leverage, but it is also frequently misused, and a poorly timed request can make your situation worse.

What triggers the right to a CDP hearing?

Two IRS actions trigger the CDP right:

Notice of Federal Tax Lien Filing (Letter 3172 or equivalent). Under IRC 6320, when the IRS files a Notice of Federal Tax Lien, it must send you a notice within five business days. You have 30 days from the date of that notice to request a CDP hearing.

Notice of Intent to Levy (Letter 1058, LT11, or equivalent). Under IRC 6330, before the IRS can levy (seize) your property, it must send a Final Notice of Intent to Levy and a notice of your right to a CDP hearing. You have 30 days from the date of that notice to request the hearing.

The 30-day deadline is strict. If you miss it, you can still request an “equivalent hearing” (same process, but you lose the right to petition Tax Court afterward, and the levy is not suspended during the hearing). The equivalent hearing is better than nothing, but the full CDP hearing is significantly more powerful.

How do I request a CDP hearing?

File Form 12153 (Request for a Collection Due Process or Equivalent Hearing) within 30 days of the date on the lien or levy notice. The form asks:

• Which notice you received (lien, levy, or both)
• The tax periods involved
• Why you disagree with the collection action
• What collection alternative you propose (installment agreement, OIC, CNC, etc.)
• Whether you want to challenge the underlying tax liability

Mail or fax the form to the address shown on the notice. Keep proof of delivery (certified mail or fax confirmation). The date of mailing is the filing date under the mailbox rule (IRC 7502).

What can I raise at the hearing?

The CDP hearing covers several categories:

The underlying liability. You can challenge the tax itself, but only if you did not receive a statutory notice of deficiency for that tax period (or did not otherwise have a prior opportunity to dispute it). If you received a notice of deficiency and did not petition Tax Court within 90 days, you cannot challenge the tax at the CDP hearing. This rule prevents using CDP as a second bite at the apple.

Collection alternatives. You can propose an installment agreement, an Offer in Compromise, Currently Not Collectible status, or any other collection alternative. The Appeals officer evaluates the proposal and can direct the IRS to accept it if it is viable.

Appropriateness of the collection action. You can argue that the IRS did not follow proper procedures, that the levy would cause undue hardship, or that the IRS should have considered less intrusive collection methods before levying.

Spousal defenses. If you are requesting innocent spouse relief, you can raise it at the CDP hearing.

What happens during the hearing?

The CDP hearing is not a courtroom proceeding. It is an informal conference with an IRS Appeals officer, usually conducted by phone (though you can request in-person). The process:

1. You receive a hearing date. The Appeals officer contacts you (or your representative) to schedule the hearing, usually 30 to 90 days after the request is filed.

2. You present your case. Provide financial information (Form 433-A if proposing an installment agreement or CNC, Form 656 and 433-A OIC if proposing an offer), documentation supporting your position, and your arguments.

3. The Appeals officer evaluates. The officer reviews the IRS’s case, your arguments, and the collection alternatives. The officer has settlement authority and can direct the IRS to accept a collection alternative, release or withdraw the lien, or stop the levy.

4. You receive a determination letter. The Appeals officer issues a written determination explaining the decision. If you disagree, you have 30 days to petition Tax Court.

During the entire process (from filing Form 12153 through the determination and any Tax Court proceeding), the IRS cannot levy. The levy suspension is the immediate practical benefit of a timely CDP request.

When is a CDP request strategic?

When you need time. The levy suspension gives you breathing room to gather financial information, prepare a collection alternative, or negotiate with the IRS. Without the CDP request, the IRS can levy as soon as the 30-day notice period expires.

When you want to challenge the liability. If you never received a notice of deficiency (common for assessments under the substitute-for-return program, where the IRS filed a return for you), the CDP hearing may be your first opportunity to challenge the tax.

When you have a viable collection alternative. If you can propose a reasonable installment agreement, OIC, or CNC, the CDP hearing gives you a structured forum to present it, with an Appeals officer who has authority to accept it.

When you want Tax Court access. The CDP hearing preserves your right to petition Tax Court if the Appeals officer’s determination is unfavorable. Without a CDP hearing, you generally cannot access Tax Court for collection disputes.

When is a CDP request counterproductive?

When the CSED is close to expiring. A CDP request tolls the 10-year collection statute. If you have 18 months left on the CSED and the CDP hearing and any subsequent Tax Court proceeding take 12 months, the CSED is extended by 12 months. If you were planning to wait out the CSED, the CDP request works against you.

When you have no viable alternative to propose. If you cannot afford an installment agreement, do not qualify for an OIC, and are not in a hardship situation (CNC), the CDP hearing produces a determination letter confirming the IRS can proceed with the levy. You have delayed the levy but not changed the outcome, and you have tolled the CSED.

When you already had a chance to dispute the liability. If you received a notice of deficiency and did not petition Tax Court, you cannot challenge the underlying tax at the CDP hearing. The hearing is limited to collection alternatives and procedural issues.

How does this work for cross-border filers?

For Canadian residents, the CDP hearing has practical complications:

The hearing is with IRS Appeals. The hearing is conducted by phone, which works for Canadian residents. Request a phone hearing on Form 12153.

The levy suspension protects US assets. While the CDP request is pending, the IRS cannot levy US bank accounts, US retirement accounts, or other US property. For Canadian assets, the IRS would need treaty collection assistance (Article XXVIA), which is a separate process not directly affected by the CDP suspension.

The CSED tolling interacts with the absence-from-US tolling. If the CSED is already tolled because you live outside the US (under IRC 6503(c)), a CDP request adds another layer of tolling. The combined effect can extend the collection period substantially.

What should I do next?

If you received a Notice of Federal Tax Lien or Notice of Intent to Levy: check the date and count 30 days. If you have grounds to challenge the liability or a collection alternative to propose, file Form 12153 before the deadline. If you are considering whether the CSED tolling is worth it, calculate the remaining CSED and weigh the benefits against the extension. If you missed the 30-day window, you can still request an equivalent hearing, but you lose Tax Court access and the levy is not automatically suspended.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.