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Collection Due Process and Taxpayer Rights

Earlier this year, the IRS adopted a newly formulated Taxpayer Bill of Rights. The rights themselves - such as the right to be informed and the right to challenge the IRS's position and be heard - were not new. What was new was the way that the rights were formulated, in a way that was modeled after the Bill of Rights to the U.S. Constitution.

In this post, we will look at one specific aspect of taxpayer rights: collection due process, which is known by the acronym CDP. This process places detailed obligations on the IRS when the agency seeks to collect tax debt.

Let's say you received a lien or levy notice from the IRS in the mail. It may be a Notice of Federal Tax Lien. It may be another type of notice of collection action, such as a final notice to levy on (i.e., to take or seize) specified property from you.

If this happens, keep in mind that you have a legal right to contest that action. There are actually two different procedures that can be used to raise objections to a collection action at the outset.

One of these procedures is Collection Due Process (CDP), by which you can request a hearing within the IRS. The other is the Collection Appeals Program (CAP). An experienced tax lawyer can advise you on how to proceed so that your concerns about the IRS's proposed actions

Both CSP and CAP are handled within the IRS Office of Appeals. This office is separate from the IRS office that handles collections.

Let's take an example to illustrate how CDP rights can work. Let's say you received a notice about a federal tax lien in the mail from the IRS. The full title of the notice was probably Notice of Federal Tax Lien and Your Right to a Hearing under IRS 6320.

You can request a hearing by mailing a request for one. Just be sure you do so within 30 days of receiving the tax lien notice.

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