When the IRS sends you a notice about a lien or levy, time is of the essence. You have only 30 days to file a Collection Due Process (CDP) request. Missing this deadline can lead to serious consequences. You could lose protections and your chance to challenge the IRS’s actions. Here’s why it’s crucial to file your CDP request on time.
1. Immediate Protection from IRS Actions
Filing your CDP request forces the IRS to pause collection actions. This includes levies on your bank account or wages. This pause gives you time to address your tax situation. Without it, the IRS can seize your assets. However, this protection only applies if you file within the 30-day window. Miss the deadline, and the IRS can move forward with their plans.
2. Your Right to Be Heard
A CDP hearing is your chance to present your case. You’ll meet with an independent Appeals Officer who wasn’t involved in the initial decision. This is your opportunity to explain why the IRS’s actions are unfair. You can suggest alternative solutions or dispute the tax debt itself. But you only get this chance if you file your CDP request on time.
3. Negotiating Better Terms
The hearing also lets you negotiate more favorable terms. You might secure an installment agreement or an Offer in Compromise. If you’re struggling financially, you can request temporary relief. The hearing is your opportunity to discuss these options. But to negotiate, you must file your CDP request promptly.
4. Preventing Further Financial Damage
Ignoring the IRS’s notice won’t make the problem disappear. If you don’t file a CDP request, the IRS can continue its collection actions. This could lead to severe financial consequences, like extra penalties, interest, and the loss of assets. Filing your CDP request is a critical step in protecting yourself from these outcomes.
5. Preserving Your Legal Rights
Filing a CDP request also keeps your right to take your case to court. If you don’t agree with the outcome of the hearing, you can appeal in the U.S. Tax Court. This legal option is only available if you file on time. Miss the deadline, and you lose this important right.
Act Now—Don’t Miss the Deadline
If you miss the 30-day deadline to request a Collection Due Process (CDP) hearing but file within one year, you can still request an “Equivalent Hearing.” This allows you to present your case and discuss your situation with the IRS. However, unlike a timely CDP hearing, an Equivalent Hearing does not automatically stop collection actions, and you lose the right to appeal the decision in the U.S. Tax Court. While you can still negotiate payment arrangements or alternative resolutions, the absence of judicial review and other protections means acting within the initial 30-day window is crucial whenever possible.
