Perhaps the most daunting thing about getting a letter from the Internal Revenue Service (IRS) is trying to wade through the extremely formal and legal language of the letter itself. Okay, aside from the sinking feeling you get when you see the return address on the envelope — that’s worse.
When you get a letter letting you know that the IRS is really not kidding around anymore about those back taxes and they are taking steps to collect the money they say you owe — the official name for this official document is either the “Final Notice of Intent to Levy” or “Notice of Federal Tax Lien”. And for the layman, it’s full of convoluted language and seemingly conflicting information on lien and levy notices.
So, you take a deep breath, read the first couple of paragraphs, put the letter down, and resign yourself to losing all of your property because the IRS says they’re taking it. But buried deep in the letter is the acknowledgment that you, the taxpayer, have the right to due process–in IRS speak, it’s called Collection Due Process (CPD). There are also instructions–the IRS loves Instructions–on how to initiate your due process rights and appeal the lien or levy.
That’s right — you can appeal the lien or levy and work out some sort of agreement with the IRS to pay off the debt. Because here’s the thing–the IRS wants your money. They don’t want the hassle of liquidating your assets because your money is worth a lot more than your boat or your vintage jewelry collection.
We’ve broken down the gobbledygook of US Treasury-speak and outline how you can appeal a lien notice using your right to CPD. If you have questions after you read through the process, please call Silver Tax Group.
Lien vs Levy
First, let’s differentiate a lien from a levy.
- A lien is a legal claim against your property. If the IRS puts a lien on your house, they get paid first when you sell.
- A levy means the IRS will literally seize the property from you to satisfy the debt.
If you get a Lien Notice, you basically have 30 days after the Notice is filed to generate the appeal process. Here’s how the IRS puts it–the Form or letter must have a timely postmark and be addressed to the appropriate office–the one that is somewhere in the third or fourth page of the Notice.
That address is embedded in one of the pages of the notice and is frequently confused as there are other addresses listed on the letter.
For Levy Notices, you’ll get an Intent to Levy Notice 30 days before they plan to come and take your property (your home is usually excluded).
So here’s what you do, in five steps. Please notice we did not say easy or quick — it’s a straightforward but time-consuming process.
- Gather and organize all your documentation in that 30 day period. Complete and mail (certified is best) Form 12153, Request for Collection Due Process or Equivalent Hearing, to the address listed in your Notice. You can also send a letter with the relevant information. If you have missed the 30-day deadline, you can check the Equivalent Hearing box on Form 12153, or write a letter.
- Contact the Collection office that sent the Notice and try to work out a solution within the 30 day period. This could be an installment agreement to pay. The telephone number is on the Notice.
- Appeals will contact you–there is no time frame on their end–to schedule a conference, either via phone, mail, or in person. To get the in-person option, you must demonstrate you’re serious about working out a solution and plan to bring financial statements and your own copies of tax returns.
- An independent Office Of Appeals will consult with the Collection Function office to review their opinion on the new information you submit–will they accept the solutions you’ve worked out.
- They will then share the comments and you have another chance to respond, perhaps providing more information. You may request another in-person hearing, and the Appeals Office will let you know if you qualify.
After the CPD hearing, Appeals will issue their conclusion, unless you have withdrawn the request. If you do not agree with the Appeals ruling, you can request a judicial review via a petition to the US Tax Court within the time period specified in the Appeals letter.
A crucial point — you may not bring new information to the Tax Court. Everything you bring to them must have been included in the prior documentation you submitted to Appeals.
Appeals do keep jurisdiction over their decision. If you think the Collection function did not adhere to Appeal’s ruling or if your circumstances change, you may go back to Appeals for further clarification, but first, you must demonstrate your attempts to work with Collection.
Time Is of the Essence
If you fail to inform the IRS of your intention to appeal the lien or levy within the allowed 30-day period and your communication is postmarked on the 31st day, the clock keeps running and the levies and liens can take effect. This does not mean that Appeals will not hear your case, but that their ruling is final and you have no further recourse but to abide by their ruling.
Call an Experienced Tax Attorney
Working through your tax issues with the IRS is not for the faint of heart–per American Bar Association, only 2.1% of taxpayers who received Notices bothered to take advantage of the CPD process.
The structure and language of any communication is fairly tortured at best, and the structure of the Notices may well be designed to confuse you. This is why you do need to contact an experienced tax attorney if you receive a Notice of a lien or levy from the IRS. We have the expertise to deal with the bureaucracy and the professional distance to act without stress or emotion.
Silver Tax Group are nationally recognized experts in dealing with the IRS and welcome the opportunity to help you work through your IRS issues. Contact us to learn more.