Congress Just Strengthened Your Right to a Collection Due Process Hearing: Here Is What Changed

Congress just passed a bill that closes two dangerous loopholes in the rules that protect you during an IRS collection fight. If you have ever received a notice threatening a levy on your wages or bank account, this change matters to you. Here is what happened, why it happened, and what you should do if you are currently in a dispute with the IRS.

What Is a Collection Due Process Hearing?

Before the IRS can seize your property, it is required by law to give you a warning and an opportunity to push back. That opportunity is called a Collection Due Process hearing, or CDP hearing for short.

How it works: According to the House Ways and Means Committee, before the IRS levies your property, it must send you a notice explaining that you have the right to request a CDP hearing to challenge the IRS decision. That notice triggers a 30-day window for you to act.

To request the hearing, you file Form 12153, the Request for a Collection Due Process or Equivalent Hearing, with the IRS Service Center that issued the notice, or with any revenue officer assigned to your case. If you file on time, the IRS must suspend collection efforts while the hearing is pending, and the 10-year statute of limitations on collection is also paused during that time.

At the hearing itself, an independent IRS Appeals Officer reviews your case. You can challenge whether you actually owe the debt, propose a payment plan or an Offer in Compromise, or raise concerns about IRS procedure. If you still disagree with the outcome, you can appeal the decision to the U.S. Tax Court within 30 days of receiving the Notice of Determination.

Missing the 30-day deadline to request a CDP hearing means losing the full CDP protections. You can still request what is called an Equivalent Hearing, but that process does not stop a levy and does not suspend the collection statute of limitations.

A Supreme Court Ruling Created a Serious Problem for Taxpayers

In June 2025, the U.S. Supreme Court issued a ruling that left many taxpayers in a far more vulnerable position than they realized.

On June 12, 2025, the Court decided Commissioner of Internal Revenue v. Zuch, holding that the Tax Court loses jurisdiction over a proceeding to challenge a proposed tax levy once the possibility of that levy is off the table. In plain terms: if the IRS changes its collection strategy mid-dispute, or if the contested balance disappears for any reason, your Tax Court appeal can be thrown out entirely, even if your underlying disagreement with the IRS has never been resolved.

The case involved a taxpayer named Jennifer Zuch. During the lengthy appeals process, Zuch filed multiple tax returns reporting overpayments that entitled her to refunds. Instead of issuing those refunds, the IRS credited the overpayments to her account, effectively applying her own money against the disputed balance. When the disputed amount dropped to zero as a result, the Tax Court ruled it no longer had jurisdiction to hear her case.

Justice Gorsuch’s dissent warned the decision creates a “trap for the unwary taxpayer,” noting that losing CDP jurisdiction can lead to costly and complicated litigation. The ruling also raised the separate risk that while a taxpayer was tied up in a CDP proceeding, the standard three-year window for filing a refund claim could quietly expire, leaving them with no way to recover money they were legitimately owed.

The Taxpayer Due Process Enhancement Act: What Congress Did

The Taxpayer Due Process Enhancement Act (H.R. 6506), introduced by Representative Nathaniel Moran (R-Texas) and Representative Terri Sewell (D-Alabama), passed the House unanimously on May 19, 2026. It passed the House Ways and Means Committee by a vote of 41 to 0 before that. The bill now awaits action in the Senate.

The legislation directly addresses the problems the Zuch ruling exposed. It makes three concrete changes to the law:

1. Your refund deadline is frozen while you fight

The bill suspends the period of limitations for refund claims during a dispute with the IRS, so that taxpayers do not lose their right to pursue a refund while the issue is ongoing in another forum. Under current law, the clock keeps ticking on your three-year window to file a refund claim even while you are tied up in a CDP proceeding. This bill stops that clock.

2. The IRS cannot use your refund against you without your consent

The bill would also prevent the IRS from applying an overpayment from one period to another when that other period is being contested, so that disputes do not become legally moot because of an offset. In other words, if you are owed a refund for one tax year while you are disputing a balance for a different year, the IRS cannot take your refund and apply it to the disputed balance without your agreement. That is exactly what happened to Jennifer Zuch. Unless you consent, your overpayment stays protected.

3. The Tax Court gets broader authority over CDP cases

The bill also expands the Tax Court’s CDP jurisdiction, addressing the core gap the Zuch ruling created by stripping the court’s authority to hear a case when the IRS shifts collection tactics. This gives taxpayers a more reliable path to judicial review even when the IRS changes course during a dispute.

Why This Bill Matters If You Owe the IRS Right Now

If you are currently behind on taxes, have an outstanding balance, or have already received a levy notice, these changes could affect your situation significantly, depending on your circumstances.

Before this bill, a taxpayer who requested a CDP hearing and pursued an appeal was taking on a hidden timing risk: the refund claim deadline kept running, and the IRS could quietly offset overpayments to drain the disputed balance, ending the Tax Court’s jurisdiction and leaving the taxpayer without a forum to fight in. The taxpayer could win every procedural step and still end up with no avenue for relief.

The bill was passed by the House unanimously, reflecting genuine bipartisan concern about these risks. That kind of consensus in Congress is rare, and it signals how serious the problem had become.

It is important to understand that the bill has passed the House but has not yet been signed into law. It must still clear the Senate. If you are in an active collection dispute right now, you are still operating under the existing rules. That means the 30-day window to request a CDP hearing after receiving a levy notice is still strict, refund deadlines are still running, and the IRS can still offset overpayments against disputed balances unless and until this bill becomes law.

What to Watch for on Your IRS Notices

The IRS collection process follows a defined sequence of notices. A CP 504 notice is an urgent notice that warns of a potential levy, but it does not by itself give you CDP rights. The notices that do trigger your formal CDP rights include the Final Notice of Intent to Levy (Letter 1058), a Notice of Federal Tax Lien Filing, and a Notice of Levy on Your State Tax Refund, among others.

When you receive one of these notices, the 30-day deadline to submit Form 12153 begins. That form must be filed with the IRS Service Center listed on the notice, or with the revenue officer assigned to your case. Every argument you want to raise at the CDP hearing should be included in that form or in a supplement filed before the hearing. You only get one CDP hearing per tax period and collection action type, so the preparation you put in before the hearing matters.

What to Do Next

If you are facing IRS collection action, whether it is a levy notice, a federal tax lien, or an escalating balance you cannot resolve on your own, this is not the moment to wait. The legal landscape around CDP hearings is actively changing, and a misstep with deadlines or paperwork can cost you the right to appeal entirely.

At Clear Start Tax, we work with individuals and businesses who owe the IRS and need a clear path forward. Depending on your circumstances, you may qualify for a payment plan, an Offer in Compromise, currently-not-collectible status, or other resolutions. The right approach depends on your specific situation, which is why every case starts with a consultation.

If you have already received a levy notice, or if you are unsure whether you have missed a deadline, contact Clear Start Tax today. The sooner you understand your options, the more of them you are likely to have.