If the IRS has sent a Final Notice of Intent to Levy or a Notice of Federal Tax Lien filing, a Collection Due Process hearing can be one of the few structured opportunities to slow the collection process and put specific issues in front of the IRS Independent Office of Appeals. In general terms, a CDP hearing is not just about saying “I disagree.” It is about identifying the issues Appeals is legally allowed to consider, backing them up with documents, and preserving the record for possible court review.
In this post, you’ll learn eight issues taxpayers commonly raise in a CDP hearing, why those issues matter, and where people often run into procedural limits. If you want a fuller overview of how the process works from start to finish, this guide on protecting your rights in an IRS collection appeal pairs well with what follows.
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Under Internal Revenue Code section 6330, Appeals generally addresses three core areas in a CDP case: whether the IRS followed required procedures, any relevant issues the taxpayer raises, and whether the proposed collection action appropriately balances efficient tax collection against the taxpayer’s concern that the action be no more intrusive than necessary. The IRS and the Taxpayer Advocate Service both describe CDP hearings as a forum where taxpayers may raise relevant collection issues, including alternatives to enforced collection and certain liability-related arguments. 26 U.S.C. § 6330; IRS Publication 1660; Taxpayer Advocate Service overview
That matters because taxpayers usually cannot count on Appeals — or later, the Tax Court — to consider issues that were never properly raised during the hearing. The IRS’s own internal guidance notes that, in general, a taxpayer seeking Tax Court review can ask the court to consider only issues raised at the CDP hearing. IRS Internal Revenue Manual 35.3.23
One of the most common CDP issues is the simplest: did the IRS do everything the law requires before filing the lien or moving forward with a levy?
Appeals is required to obtain verification that the requirements of applicable law and administrative procedure have been met. That can include reviewing whether the right notice was issued, whether the notice was sent properly, whether timing rules were followed, and whether required approvals were obtained where applicable. 26 U.S.C. § 6330(c)(1); IRS Collection Due Process Deskbook; IRS IRM 5.12.6
This issue comes up often when taxpayers say they never received the notice, received it at the wrong address, or believe the IRS moved too quickly. In levy cases especially, timing matters because a timely hearing request typically suspends levy action while the CDP case is pending. The IRS describes the hearing right in its CDP FAQs and Form 12153 materials. IRS CDP FAQs; Form 12153
Here’s what this often means in practice: even if a taxpayer is also asking for a payment alternative, it may still be worth identifying any procedural defects. In some cases, those defects shape what Appeals can sustain and what gets remanded or reconsidered.
Many taxpayers want to use the CDP hearing to argue that the tax bill itself is wrong. That can be one of the most important issues in the case — but only in limited circumstances.
The statute allows a taxpayer to challenge the existence or amount of the underlying tax liability if the taxpayer did not receive a statutory notice of deficiency for that liability and did not otherwise have an opportunity to dispute it. IRS guidance explains that a prior opportunity can include a prior conference with Appeals, whether offered before or after assessment. 26 U.S.C. § 6330(c)(2)(B); IRS IRM 35.3.23
This issue is especially common where the IRS assessed tax from a substitute for return, imposed certain penalties, or assessed trust fund recovery penalties or other liabilities the taxpayer says were never properly disputed before collection began. The IRS CDP Deskbook and Appeals guidance discuss liability issues in detail, including when they are precluded and when they can still be considered. IRS CDP Deskbook; IRS IRM 8.22.8
The catch is important: if the taxpayer had a prior meaningful chance to dispute the liability, Appeals may treat the issue as barred in the CDP case. That procedural line is one reason many people look closely at how to raise collection alternatives and liability arguments effectively before the hearing record is set.
A request for an installment agreement is one of the most frequently raised CDP issues. IRS Publication 1660 specifically lists installment agreements as a collection alternative that may be raised during a hearing. IRS Publication 1660
In practical terms, this issue asks Appeals to consider whether the tax debt can be resolved through monthly payments rather than levy or continued lien enforcement. Appeals often looks for current financial information, filed returns, and proof that the taxpayer is in ongoing compliance. IRS internal guidance notes that taxpayers generally qualify only for collection alternatives available to similarly situated taxpayers, and that Appeals may require supporting financial documentation before deciding the issue. IRS Internal Revenue Bulletin 2005-43; IRS IRM 8.22.7