Appealing an IRS Tax Levy. Appeal a Federal Tax Levy
If you have received a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing” you will have 30 days to either pay your taxes, settle your taxes, or file for an appeal in order to prevent the tax levy from taking effect. It is important that you file an appeal within 30 days or the levy process will begin and any money or assets seized, you will not get back. You can appeal the levy after it has taken effect but it will prove to be very difficult to get back any assets that have been seized by the IRS.
How to Request an Appeal for a Tax Levy
If you do not agree with the notice then it is important that you request a Collection Due Process hearing with the Office of Appeals by filing a request for a Collection Due Process hearing with the IRS office that is listed on the notice you received. You may also be able to work out a solution with the collection office that sent the notice over the phone but it is always a good idea to request a hearing as well by filing for it to just be safe. You can always cancel your hearing if you get the problem cleared up before then.
When to Consider Appealing a Tax Levy
Once you receive your final notice letter you will have to make a decision if you think you will be able to appeal the levy. There are many reasons why you can appeal a levy, below are a few of the most common reasons tax levies are appealed:
- Taxes were paid in full – Sometimes the IRS makes mistakes and it is a possibility that they didn’t apply your tax payment the right way. If you have paid the taxes in full prior to the notice of levy being sent out it is important that you file for a Collection Due Process hearing to ensure the IRS does not levy your assets.
- You already entered into an installment agreement as a collection alternative – If you have entered into an installment agreement prior to the notice being issued then you should be considered in good standing with the IRS. This could happen if the IRS made a mistake.
- You already submitted for an offer in compromise as a collection alternative – The IRS must review and issue you a determination of your offer in compromise filing prior to them taking any further collection actions against you.
- A procedural error was made – It is required that the IRS follow a strict set of procedures before issuing a tax levy. If they do not follow this or miss a step along the way then the levy should not take place. In order for the IRS to levy they must meet the following three requirements:
- The IRS assessed a tax liability and sent you a notice to demand payment.
- You neglected or refused to pay the amount that was assessed.
- The IRS sent you a final notice of levy and notice of your right to a hearing 30 days prior to starting the levy.
- The notice was sent while you were in bankruptcy – Bankruptcy puts a halt on collection actions, including tax debt collections. If the IRS assessed the tax liability and sent the notice of intent to levy during bankruptcy then the levy should be voided.
- The statute of limitations has expired – The IRS only has a limited time to collect taxes and if they do not collect in that time then the taxes are no longer due. The typically statute of limitations on IRS taxes is a 10 year period. If the statute expired before the notice was sent then the levy should be voided.
- No opportunity was given to dispute the tax liability
- You wish to make a spousal defense – If you believe you should not be held liable for the taxes owed because the taxes owed are the fault of your spouse or former spouse then you should request an appeal. You may be able to qualify for innocent spouse relief and have the total liability transferred to your spouse or former spouse.
- You want to discuss alternative collection options – There are many other ways to settle your taxes owed. Even if you cannot pay in full the IRS has various payment methods and settlement methods available to those taxpayers that cannot afford to pay their taxes in full. If you believe you are a good candidate for a tax settlement or IRS payment plan then it is important to file an appeal to discuss these alternatives.
How to File a Request for a Collection Due Process Hearing
In order to request a collection due process hearing you must complete IRS form 12153, Request for a Collection Due Process or Equivalent Hearing, or other written request with the same information on form 12153. You must send it in to the address showing on the notice of intent to levy. In the filing you must identify your alternatives to, or your reasons for not agreeing with the levy. You can use any of the reasons listed above, but not limited to just them.
Once you file for an appeal the IRS will typically stop collection actions until the appeal process is done. They will only continue with collection actions if they believe the collection of the tax is at risk.
After the hearing the Office of Appeals will issue a determination about your case. If you do not agree with their determination you will have another 30 days to bring suit to contest the determination.
It is suggested that when you receive a “Final Notice of Intent to Levy” that you talk with a tax professional about your options. A tax professional can analyze your tax situation and make a determination of the best plan of action for you. They can also act on your behalf and go through with the appeals process and find the best way to resolve your tax problem.