Collection Due Process (CDP) is a statutory right under IRC Sections 6320 and 6330 that gives taxpayers the opportunity to challenge IRS collection actions (federal tax liens and levies) through an independent hearing with the IRS Office of Appeals.
Two types of CDP notices: - Notice of Federal Tax Lien (NFTL) filing (6320): Taxpayer has 5 business days from the filing to request a CDP hearing. - Final Notice of Intent to Levy (CP 90/523): Taxpayer has 30 days to request a CDP hearing before the IRS can proceed with the levy.
What you can raise at a CDP hearing: - Appropriateness of collection action (is it the least intrusive method?). - Spousal defenses (innocent spouse relief). - Collection alternatives (installment agreement, OIC, CNC, lien subordination). - Challenge to the underlying tax liability IF not previously disputed.
The right to go to Tax Court: If dissatisfied with the CDP hearing result, the taxpayer can petition the U.S. Tax Court within 30 days of the Notice of Determination.
Equivalent Hearing: If the taxpayer misses the CDP request deadline, they can request an Equivalent Hearing (EH) within 1 year. However, an EH does NOT preserve the right to go to Tax Court.
Collection suspended during CDP: The IRS cannot proceed with the levy while a timely CDP hearing request is pending (and during any Tax Court review).
> Exam tip: CDP preserves the right to Tax Court review. An Equivalent Hearing does NOT. The 30-day deadline for levy CDP requests is critical. Know the difference between CDP and EH for the EA Part 3 exam.