Legal Memorandum: Collection Due Process Hearing

Issue: Whether a taxpayer can demand a hearing prior to collection of a tax liability by levy.

If requested by a taxpayer, a collection due process (“CDP”) hearing is required prior to collection of a tax liability by levy and upon filing of a notice of federal tax lien.  See 26 U.S.C. §§ 6320, 6330.  Notice of a right to a hearing prior to the levy, or upon filing of a notice of tax lien, must be sent to the taxpayer.  Id. §§ 6320(a), 6330(a).  The law guarantees the taxpayer a fair hearing before an impartial officer from the IRS Office of Appeals.  Id. §§ 6320(b), 6330(b.)  At the hearing, a taxpayer may raise “any relevant issue relating to the unpaid tax or the proposed levy,” including “challenges to the appropriateness of collection actions” and “offers of collection alternatives, which may include . . . an offer-in-compromise.”  Id. § 6330(c)(2)(A.)  The appeals settlement officer (“ASO”) must consider whether any proposed collection action “balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.”  Id. 6330 (c)(3)(C). 

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