Appealing a Tax Lien that was Filed. Appeal Federal Tax Lien
Once a tax lien is filed the IRS is required to send a notice of the lien to the taxpayer within 5 days of the lien being filed. In this notice is a request you will be given the option to request a hearing. This request must be made within 30 days after the fifth day of the lien being filed. In order to appeal you must ask an IRS manager to review your case or request a Collection Due Process hearing with the office of appeals. In order to be considered for an appeal you must request the appeal by the date noted on the notice you received from the IRS. If you appeal the lien and win, the lien will be released.
It may also be possible to work out a solution with the Collection office that sent the notice to you. If you call the phone number on the notice and explain to the IRS employee why you disagree with the notice it is possible to have it appealed. Note, this contact doesn’t extend the 30 day period you have to make a formal written request for a collection due process hearing, so it is a good idea to do both. If you are able to resolve your issues over the phone you can later withdraw the request you submitted for a hearing. If you are unable to resolve over the phone then you will have hte chance to work with the office of appeals.
When the IRS will Consider Appealing a Lien
Once a tax lien is filed there are few options in order to get it appealed. If you fall into any of these categories it is important that you make the filing for the appeal within 30 days of receiving your notice. When the request is filed here are some of the issues that can be discussed in order for the IRS to consider appealing the lien:
- The taxes were paid in full prior to the lien being filed
- There was an error made in the process of the lien being filed
- You were going through bankruptcy when the lien was filed and taxes were subject to the automatic stay
- The statute of limitations has expired on the taxes that are owed before the lien was filed
- You were never given the opportunity to dispute the amount that was assessed by the IRS
- The tax lien was filed in error and the IRS made a processing error when processing your return
- You wish to make spousal defenses by claiming that your spouse should be liable for the taxes owed
- You want to discuss the different collection options (i.e. offer in compromise or an installment agreement)
How to Request a Hearing with the Office of Appeals
In order to request a hearing with the office of appeals you must complete IRS form 12153, Request for a Collection Due Process (CDP) or Equivalent Hearing, or with a written request that contains the same information as form 12153 and send it to the address that is listed on the notice of federal tax lien. In your request you must point out alternatives to the lien or you must identify your reasons for not agreeing with the lien that was filed. If you are going to discuss alternatives to the lien you can include some of the following alternatives:
- You will enter into other collection alternatives such as an installment agreement or settle taxes through an offer in compromise
- Spousal defenses. You can claim that your spouse is liable for the taxes owed and file for innocent spouse relief if you meet those specific requirements
- You acknowledge there is an amount due but you never received the opportunity to dispute the tax liability
- Subordination or discharge of lien
- Withdrawal of Notice of Federal Tax Lien
What Happens after you request a CDP or equivalent with the Office of Appeals?
Once the appeals receives your form or letter they will contact you to schedule a conference. The initial conference will either consist of a phone conference or a face to face meeting. After the initial conference there will likely be one or more correspondence that will be handled ind writing or orally.
At the closing of the hearing the office of appeals will issue a determination letter. This determination may go in your favor and the lien will be released, many times the decision supports the initial decision of the lien and continues the existence of the tax lien. If you still do not agree with the determination of the office of appeals you may request a judicial review by the United States Tax Court. This petition must be made no more than 30 days after the office of appeals issued their determination letter. If you don’t act before the 30 days is up you cannot go to court even if you disagree with the Appeal’s office decision.
If your appeal is successful with the IRS your lien will be released but the filing of the lien will still exist on your credit report. It is likely that you will have to contact all three of the major credit bureaus and ensure a copy of the release of the lien gets in your file. If your credit suffers greatly and you suffered direct economic damages because of the IRS actions failure to properly release the lien it is possible to sue the IRS for damages. One thing to note is that the law makes it very difficult to prove your case or receive a large sum of money from the IRS through suing them.
Who Can Represent me in an appeal?
When appealing a tax lien through a a Collection Due Process or Equivalent hearing the following people can represent yourself
- Tax Attorney
- Certified Public Accountant
- Enrolled Agent
- Member of Immediate Family
- For a business: A full time employee, General partner or bona-fide officers
- Low Income Tax Clinic (if you qualify)
Even though you may represent yourself it is highly suggested that you hire a trained tax professional to represent you. The chances of success greatly increase by using a tax professional. The IRS even prefers to work with qualified tax professionals rather than ordinary taxpayers because it creates less work on the side of the IRS because the tax professional is familiar with all of the procedures involved with the appeal.