Notice of Right to a Collection Due Process Hearing – Is the IRS Trying to Hide the Ball?

The IRS must give a taxpayer written notice, sent by certified mail, at least 30 days before it takes any collection action like a bank levy or a wage levy. IRC Section 6331(d). In 1998, Congress added the requirement that the IRS advise the taxpayer of his or her right to a Collection Due Process (CDP) hearing, that being a meeting with a Settlement Officer in the Appeals Division of the IRS. IRC Section 6330.

To accomplish this, the IRS previously sent one notice clearly identified as a Notice of Intent to Levy and Notice of Your Right to a Collection Due Process Hearing (IRS Notice 1058). This was very helpful to the taxpayer. It explained the IRS could start levy action 30 days after the date of the letter and told the taxpayer about their right to request a CDP hearing with a Settlement Officer in the IRS Appeals Division to object to the levy and offer an alternative to a bank or wage levy or other seizure action.

Recently, the IRS split this Notice 1058 into two notices, the Form CP504 and the LT11. The Form CP504, which the IRS sends first, tells the taxpayer that the IRS intends to levy the taxpayer’s assets, but it does not to give the taxpayer information about his or her rights to request a meeting with a Settlement Officer. As far as the taxpayers know, the IRS is about to levy their bank account or wages. Only later does the IRS send the LT11 which tells the taxpayer about their right to have a CDP hearing with the Settlement Officer. However, the language giving the taxpayer these rights, is not obvious in the LT11 and can easily be missed by the taxpayer.

This splitting of the Notice 1058 into two notices has not gone unnoticed by the legal community. Click Here. The question has been raised, what is the IRS trying to do with these notices? I respectfully submit that the IRS is trying to save money (a good thing) by pushing or scaring taxpayers into action with a Revenue Officer or another IRS representative before they know their legal rights (a bad thing).

When IRC Section 6330 was first created, the Revenue Officers issued the CDP notice almost immediately. Taxpayers, often feeling they had no choice but to request the CDP hearing, filed this request and removed their case from the Revenue Officer’s inventory. This was good for the IRS as it reduced the burden on the Revenue Officers or made room for more cases to be handled by the existing Revenue Officers.

Now, it appears the IRS is trying to reverse that trend. Settlement Officers seem overwhelmed and these new notice procedures delay the case going to the Settlement Officers and put the burden back on the Revenue Officers in the field.

I certainly appreciate the IRS trying to distribute its limited resources wisely, but why did they have to make it more difficult for the taxpayer to learn of their rights? The intended or unintended result of the new notices may be unnecessarily confusing, misleading, or misinforming the taxpayers. The taxpayers still have the right to a CDP Hearing, but the Form CP504 does not explain this right. Then, when the IRS does issue the notice explaining and granting the right to a CDP hearing, it buries the explanation of those rights on the second page.

I accept that it is the IRS’s job to collect taxes, but with the adoption of IRC Section 6330, it is clear that when they do this, they should be fair to the taxpayer who has no legal education. Hopefully, the IRS will correct this situation and make it easier for the taxpayer to learn of and understand their rights.