Collection Due Process (CDP)
Another option in the representatives toolbox is the CDP Hearing request. Unlike the CAP, the reasons for requesting a CDP Hearing are more limited. They have strictly to do with Liens and Levies.
Timing is a critical factor in this process. Timely filing of the request preserves the taxpayers rights to Judicial Review of the decision made by the Appeals Division. If you, as a representative, are not brought in until after the time lines are blown, you may still file a request for a hearing but it will be an Equivalent Hearing (EH) and the right of Judicial Review is not available.
Timing for the filing of a CDP hearing request are as follows:
1. Postmarked by no later then the date indicated on the NTFL letter or
2. Postmarked within 30 days of the date after the date on the Final Notice of Intent to Levy letter or Notice of Your Right to a Hearing After an Actual levy letter
3. If the time for filing has expired you may file for an EH within one year plus five business days from the NFTL or
4. For a Levy or Final Notice of Levy one year from the date on the notice.
During the time a CDP Hearing is in process, the decision is being rendered, or Judicial Review is being pursued, the ASED/CSED times are tolled or suspended. This means the time clock stops. As with the other timing issues involved with any representation case, consideration of the CSED in relation to things that toll the statue are imperative.
For example: How does it help a client who is less then 18 months from the CSED date on an assessment, to file a CDP on a levy unless there is Doubt as to Liability? And, assuming there is Doubt as to Liability there are other avenues to approach that without using the CDP hearing process, avenues that do not toll the statute that is almost expired in any case.
On the other hand, if the statute has 9 years to run and the CDP Hearing process may take up to two years, why not give it a shot if you have a decent case?
Because a CDP hearing not only tolls the statute, it also stops lien or levy action, in most cases, the IRS has started taking a hard line on “frivolous” requests. This includes repetitive requests for the same notice or period, filed only for the purpose of delaying collection, or filing only to impede the administration of tax laws. This can not only get you, the representative, in hot water, it can negate your clients rights to further administrative or Judicial Review of their case. (Try explaining that to your E&O company!)
Assuming your CDP hearing request was filed in a timely manner and you are unhappy with the Appeals Officers decision, you then fall under the Tax Court Petition standards.
Next: Releasing a Lien or Levy