Collection Due Process (CDP) Hearing — Definition Glossary

Defined by Sarah Mitchell, CPA | Reviewed by: James Okafor, EA

Full Definition

A Collection Due Process (CDP) hearing is a formal IRS appeals procedure that a taxpayer can request within 30 days of receiving a Final Notice of Intent to Levy (CP90 or Letter 1058) or within 30 days of a Notice of Federal Tax Lien filing. Requesting a CDP hearing stops IRS levy action during the appeals process. During the CDP hearing, the taxpayer can propose collection alternatives — installment agreement, Offer in Compromise, CNC status — or challenge the underlying tax assessment if they have not had a prior opportunity to do so. If the taxpayer disagrees with the CDP determination, they can appeal to the US Tax Court.

Why This Matters for Businesses With Tax Debt

Understanding Collection Due Process (CDP) Hearing is essential for any business owner navigating IRS enforcement. This term directly affects the options available for resolving business tax debt — including whether tax debt financing is available, how lien subordination works, and what enforcement the IRS can take.

Related Terms

Final Notice of Intent to Levy, IRS Bank Levy, Tax Court

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Type of Tax Debt *-- Select Tax Debt Type --IRS 941 Payroll Tax DebtFederal Tax LienIRS Bank Levy (Active Now)Trust Fund Recovery Penalty (TFRP)State Tax DebtOIC Bridge FinancingMultiple Types

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Sources: IRS.gov; Internal Revenue Code (IRC); IRS Publication 594 (The IRS Collection Process); IRS Publication 1 (Your Rights as a Taxpayer). Tax Funds is a financing marketplace — not a lender, CPA firm, or law firm. This content is for informational purposes only.