When a business or individual owes unpaid taxes, the IRS will eventually seek to collect the tax through forced means. The first step is usually contacting the taxpayer to encourage payment, the second step is to file a lien on the taxpayer’s property and the third step is to levy on bank accounts, garnish wages or seize assets (all known as a levy).
When the IRS issues a Notice of Federal Tax Lien or a Final Notice of Intent to Levy, the taxpayer has the right to challenge the collection action in a Collection Due Process hearing (also known as a CDP hearing). Note: while it is called a hearing, there is no court proceeding or formalized hearing. Rather, a Collection Due Process hearing is simply a meeting or a phone conference in which the issues are discussed.