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Collection Due Process Hearings: Fight like a champ

Tax problems can arise in a number of ways. It may be profit from the sale of a company in one year or something that accumulates over several years of limited liquidity.

For Floyd Mayweather, Jr., it was in part how he was paid for a 2015 fight against Manny Pacquiao. He remained undefeated with a decision win in the boxing match. But after earning as much as $250 million, he is now facing off against the IRS. The boxer will be squaring off against the Service by contesting a purported $22 million tax lien in a Collection Due Process (CDP) Hearing. What happens at these hearings?

 

Taxpayer rights and time limits

No matter how the tax problem arose in the first place, each taxpayer has certain rights. But many of them are time sensitive.

The right to request a CDP hearing is one of these. The IRS does not start collection actions without first sending written notice through the mail. The notices that precede collection action are the IRS Notice of Federal Tax Lien or Notice of Intent to Levy.

In the fine print of these notices, you are informed about the right to a CDP hearing. You have 30 days to request your hearing. This preserves your right to present your argument to the Court.

If you do not receive the notice within the 30 day window or only become aware of the notice after 20 days, you may still seek an Appeals hearing. But your options are limited if you do not agree with the Appeals decision. It is crucial to act quickly before a lien is filed, because a wage or bank levy might be the next step.

How long does it take to get a CDP hearing?

It generally takes more than 60 days for the hearing to be scheduled.

The hearing is an opportunity to argue why the amount listed on the lien notice might be incorrect or why changed circumstances preclude you from ever being able to pay the balance due.

Additional time afforded by requesting a CDP hearing may also provide an opportunity to put together a plan to solve the tax problem. A skilled taxation attorney can provide candid, individualized legal guidance to find the best possible solution.

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