What’s At Issue In Reviewing The Determination Of A Collection Due Process Hearing?

Jackson v. Comm’r, T.C. Memo. 2022-50 | May 12, 2022 | Vasquez, J. | Dkt. No. 19634-18L


Short Summary:  Petitioners, a married couple residing in Kansas, timely filed their Forms 1040, Individual Income Tax Returns, for 2012, 2013, 2014, 2015, and 2016 but did not fully pay the tax shown on those returns.  The Internal Revenue Service (“IRS”) assessed the balance of the unpaid tax, plus additions to tax and interest.

In January 2017, petitioners submitted a Form 9465, Installment Agreement Request, and Form 433-F, Collection Information Statement.  Petitioners requested a monthly installment payment of $556.  The IRS rejected this request on the grounds that petitioners had enough cash or equity to pay at least part of the balance due. The IRS also told petitioners that they would need to make all required estimated tax payments in order to become eligible for an installment agreement.

In July 2017, the IRS issued petitioners a notice of federal tax lien for 2012 through 2016. In November 2017, the IRS also issued a notice of federal tax lien for 2016. Both notices informed petitioners of their right to request a collection due process (“CDP”) hearing within 30 days of the date of the notices.  Petitioners did not request a CDP hearing within that timeframe.

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TEFRA Audits, IRS Taxes And Penalties, Notice Of Federal Tax Lien And Collection Due Process Hearing

Goldberg v. Comm’r, T.C. Memo. 2021-119 | October 19, 2021 | Paris, J. | Dkt. No. 12871-18L

Short Summary:  Mr. Goldberg was an investor and partner in two oil and gas partnerships.  The two partnerships were subject to TEFRA audits, and the IRS timely assessed taxes and penalties related to the TEFRA audits against Mr. Goldberg.  Later, the IRS issued notices of federal tax lien (NFTL) with respect to the taxes and penalties.  Mr. Goldberg failed to timely challenge the NFTL.  Later, after the IRS issued a notice of intent to levy, Mr. Goldberg timely filed a request for a Collection Due Process (CDP) hearing.  During the CDP hearing, Mr. Goldberg challenged the amount of taxes and penalties that he owed.

Key Issues:

  • Whether Mr. Goldberg is prohibited from challenging his underlying tax liabilities in the CDP hearing?

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Venar Ayar

The Collection Due Process (CDP) hearing is one of the most important rights given to taxpayers. It’s your final opportunity to stop an IRS levy of your assets or the filing of a federal tax lien against your property.

Requesting The CDP Hearing

The IRS is only required to give you a CDP hearing if you request it. You should receive a Notice of Intent to Levy in the mail which explains your CDP rights. The IRS can only seize your assets without sending this notice in rare cases, such as when collection of the tax is at risk.

The notice will tell you that you have 30 days to request a CDP hearing. You need to request the hearing in writing and by the deadline.

If you miss the deadline, you may receive what is known as an equivalent hearing, but you will lose some important rights.

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Venar Ayar On IRS Financial Hardship

If you’re already having financial problems, IRS collection actions can make your situation even more difficult. Fortunately, the IRS will consider your financial issues if you ask for a collection alternative.

Request A CDP Hearing

The IRS won’t know about your financial hardship unless you tell them. If your assets are about to be seized, you should make sure you request a Collection Due Process (CDP) hearing to explain your situation.

The IRS is usually required to send a Notice of Intent to Levy in the mail before your assets can be seized. You have 30 days to respond to this notice and request a CDP hearing. At the hearing, you can propose collection alternatives, and the IRS won’t levy your assets until the CDP process is complete.

Make sure you read every IRS notice you get and pay careful attention to any deadlines mentioned in the notice.

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What is A Collection Due Process Hearing?

A collection due process (CDP) hearing gives you one last chance to avoid a federal tax lien or tax levy. You will know you have a right to request a CDP hearing because you will receive a CDP notice. This notice is sent when any of the following IRS collection actions are being taken:

  • Filing of a Federal tax lien
  • Bank account levy
  • Jeopardy Levy
  • Levy on Your State Tax Refund

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