What can you raise at a CDP hearing?

A CDP hearing is not just a pause. Appeals is required by law to do specific things, and a taxpayer can put specific issues on the table.

1. Verification that the IRS followed the rules

Appeals must verify that all legal and procedural requirements were met before collection proceeds.

IRC §6330(c)(1)

Appeals must verify that all legal and procedural requirements were met — a valid assessment, a statutory notice of deficiency mailed to the last known address, a notice and demand issued, and a CDP notice properly sent. If the deficiency notice went to a wrong address, the assessment itself can be challenged.

2. The underlying liability — in limited cases

You can contest how much you owe only if you did not receive a notice of deficiency and had no prior opportunity to dispute it.

IRC §6330(c)(2)(B)

The underlying liability can be contested only if the taxpayer did not receive a notice of deficiency and had no prior opportunity to dispute it. Where this matters most: the Trust Fund Recovery Penalty when Letter 1153 was never received; assessable penalties with no deficiency procedure (information- return penalties under §6721/§6722, §6707A, and foreign-reporting penalties under §6038); and substitute-for-return balances where the deficiency notice was never received.

3. Collection alternatives

You can propose a way to resolve the balance short of levy. These must be raised to be preserved.

Installment agreement
Partial-pay installment agreement
Offer in compromise (including doubt as to liability)
Currently not collectible status

4. The balancing test

Appeals must weigh the government's need to collect against how intrusive the action is.

IRC §6330(c)(3)(C)

Appeals must find that the collection action balances the need for efficient collection against the taxpayer's legitimate concern that any collection action be no more intrusive than necessary.

5. Economic hardship

A levy must be released where it creates economic hardship.

IRC §6343(a)(1)(D) · Vinatieri v. Commissioner, 133 T.C. 392 (2009)

Levies must be released where they create economic hardship. In Vinatieri v. Commissioner, 133 T.C. 392 (2009), the Tax Court held that Appeals abused its discretion by sustaining a levy against a taxpayer in hardship even though she was not in filing compliance.

6. Spousal defenses and innocent spouse relief

You can raise spousal defenses, including innocent spouse relief.

IRC §6330(c)(2)(A)(i)

A taxpayer may raise spousal defenses at the hearing, including a claim for innocent spouse relief.

7. Interest abatement

Where the law allows, you can seek abatement of interest.

IRC §6404

Interest abatement may be requested where interest was attributable to unreasonable IRS error or delay in performing a ministerial or managerial act.

8. Any other relevant issue

You can raise any other issue relevant to the unpaid tax or the proposed collection action.