The Internal Revenue Service has issued new rules revising the IRS collection process, effective July 7, 2025. The update affects how Collection Due Process hearings are handled, ensuring faster reviews of tax disputes and greater protection of taxpayer rights. The changes aim to streamline referrals within IRS Appeals and clarify procedures before cases reach the United States Tax Court.
Under the revised guidance, the IRS has established more explicit rules for managing Collection Due Process hearings when taxpayers challenge a tax issue or dispute an underlying liability. Taxpayers have 30 days after receiving a formal notice of lien or levy to request a hearing. During that hearing, taxpayers may raise concerns about tax debts, penalties, or enforcement actions, and in some cases, challenge whether they actually owe the federal income tax in question. These safeguards remain rooted in the taxpayer bill of rights, guaranteeing a fair and impartial review.
The memorandum explains how specific collection actions will be referred from Collection Appeals to Examination Appeals when questions about liability are raised. IRS employees now follow established timelines: a status report may be requested after 90 days, and if no progress is made, managers may directly contact the Examination office after 120 days. This ensures that cases are reviewed more quickly and consistently, reducing confusion over where a tax matter should be resolved. Officials explained that the procedures were designed to balance efficiency with respect for taxpayer rights.
While the process for IRS employees has changed, the deadlines for taxpayers remain the same. Individuals must still file a petition with the United States Tax Court within 90 days if they disagree with an appeals determination. This safeguard ensures that an independent court considers tax disputes if a resolution is not reached during appeals. Taxpayers who owe taxes but cannot pay in full may also request payment agreements, file refund claims, or seek assistance through the Taxpayer Advocate Service. These options remain critical to resolving disputes fairly, and taxpayers retain meaningful opportunities to appeal IRS decisions under the Internal Revenue Code.
The modern IRS collection process is built on a framework created by Congress to balance tax enforcement with taxpayer protections. The Taxpayer Bill and the Taxpayer Bill of Rights established guarantees such as the ability to file an appeal, request a review, and resolve disputes fairly. These provisions ensure that taxpayers are treated respectfully during proceedings and that remedies are available before property is seized.
The collection process begins when taxpayers owe federal income tax and fail to pay on time. After a notice is mailed, the IRS may take specific collection actions, including liens against property or levies, to secure payment. These steps are outlined in the Internal Revenue Code and explained in IRS Publication 594. Thousands of taxpayers face enforcement action each tax year when tax debts are not resolved voluntarily.
Collection Due Process hearings allow issues to be reviewed by IRS Appeals before taxpayers turn to the United States Tax Court. If an agreement cannot be reached, a petition may be filed, and court proceedings follow. This safeguard ensures that tax matters, including penalties and disputes, receive independent judicial review.
In its memorandum, the Internal Revenue Service said the updated procedures are designed to strengthen the collection due process framework by clarifying when tax issues must be transferred between Collection Appeals and Examination Appeals. The agency emphasized that these steps will streamline the handling of disputes, reduce delays, and provide taxpayers with a fairer review process. Officials noted that the changes also align with the taxpayer bill of rights, ensuring that enforcement action is carried out consistently and respectfully.
The Taxpayer Advocate Service has long raised concerns about delays and inconsistent handling of tax disputes within the IRS collection process. In its recent reporting, the office explained that clearer procedures are essential to protecting taxpayer rights and avoiding unnecessary hardship for individuals facing enforcement action. Advocates said the updated framework represents progress but stressed that continued oversight will be necessary to resolve tax matters fairly and efficiently.
Tax attorneys and representatives noted that the guidance provides more predictable timelines for appeals, which may reduce uncertainty for taxpayers facing penalties or collection actions. They also explained that clearer procedures could lessen the number of cases that ultimately reach the United States Tax Court, saving taxpayers and the government time and resources.
When taxpayers receive a formal notice of lien or levy, deadlines remain critical. Individuals must request a Collection Due Process hearing within 30 days, and if they disagree with the outcome, they have 90 days to petition the United States Tax Court. Missing these deadlines can affect taxpayer rights and limit options for appeal.
Those who owe taxes but cannot pay in full may still resolve their tax debt by requesting an installment agreement, filing a refund claim, or seeking assistance from the Taxpayer Advocate Service. Officials clarified that these technical procedures aim to review disputes reasonably and efficiently. The IRS will incorporate the new guidance into the Internal Revenue Manual within two years.
Taxpayers seeking further guidance on the IRS collection process and their rights during collection due process hearings can consult the following resources:
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