Letter 4381, Disregard CDP/EH Request, means the IRS Independent Office of Appeals decided your Collection Due Process or Equivalent Hearing request was based only on frivolous positions or was filed solely to delay collection. Under IRC Section 6330(g), the request is disregarded. Legally, it is as if you never filed it.
What That Means in Practice
No hearing will be held. Collection action is no longer suspended, so levies can be served. The collection statute is not suspended by a disregarded request. And because no Notice of Determination will issue, there is nothing to petition the Tax Court about. The IRS may also assess a $5,000 penalty under IRC Section 6702(b) for the frivolous submission.
What You Can Still Do
The right to a CDP hearing is gone for the tax periods covered, but resolution is not. You can still propose an installment agreement, an offer in compromise, or currently not collectible status directly to the collection function. If a levy causes economic hardship, IRC Section 6343 still requires its release. These options are available to anyone willing to provide real financial information.
If you received Letter 4381 because of advice you got from a promoter or an online program, stop following that advice. It has just cost you your hearing rights.
If you received Letter 4381, call us at (813) 229-7100. We can still put a legitimate resolution in place.