The IRS sends many letters during the collection phase. Two of the most common letters alerting a taxpayer of the Intent to Levy and notice of Federal Tax Lien. If you pay careful attention to the small print there you will see a window of opportunity to debate the levy or lien. The window of opportunity is the time in which you are able to dispute via a CDP or Collection of Due Process Hearing. I am a big advocate of clients exercising their rights and a CDP hearing is the perfect place to do just that.
A few reasons to request a CDP hearing.
- You are unable to pay in full and would like a collection alternative.
- You want to dispute the tax the IRS is claiming you owe.
- You want an IRS to subordinate from the first lien position in order to refinance a home loan.
- You want the IRS to discharge a lien on a property so you can sell it.
- You wish the IRS to withdraw their lien from your public record.
- You want to request lien removal because you believe your spouse or ex-spouse is responsible.
- You have a doubt as to your liability of the tax owed.
- You feel you have a right to waive some or all of the penalties that have accrued.
- You feel that the tax bill has already been satisfied.
Things to Consider:
- Did the IRS follow proper procedures?
- What would the appropriate collection alternative be?
- Does the proposed collection action balance the need for effective tax collection?
- Are you all filed and compliant, if so are you ready to make an offer of alternative collection?
- Are you prepared with all the proper documentation to support your case?
The mission of CDP Hearings and Appeals is to make taxpayers feel they have an arena to bring their tax concerns to the attention of officials. In order for citizens to feel that the government doesn’t just arbitrarily impose taxes, the government feels these new appeal processes will afford taxpayers with that right. Simply put the government has opened up CDP hearings to impose fairness to tax payers and to intervene in tax controversies before they have to go to court.
What can be done?
The CDP hearing is one level below actual litigation. The IRS issues a notice of levy or lien and you generally have a 30 day window in which to dispute. During this time the IRS may not file a lien or levy on you until you have a chance to be heard. You can request a CDP hearing by filing Form 12153. The next step is to discuss your appeal with a collections due process associate. A taxpayer or their attorney can debate the amount owed, request installment agreement, request offer in compromise, currently non collectable, or other collection alternative. If no mutual agreement can be reached with the associate the next step is speaking with an Appeals Officer. Appeals can be a long process you’re your paperwork must be put into good order. We do not suggest that you try to appeal a case on your own. Finally if a resolution is not reached during the CDP appeal process that last step would be taking that matter the US Tax Court. Most times we find we can help our clients in the very early stages of CDP hearing. Our goal is to swiftly but effectively resolve your tax matter. If you should require representation in US Tax Court please be aware only an Attorney can represent you.