If you owe the IRS money, they may pursue aggressive collections actions against you. Unlike private lenders, they don’t have to go through the court to place liens on your property, levy your bank account, or garnish your wages. They do, however, have to provide you with notice of their intent to do so. If you disagree on the amount the IRS claims you owe, you can request a Collection Due Process hearing by filing IRS Form 12153. But you will have to act quickly.
What Is a Notice of Federal Tax Lien or Notice of Levy?
These notices are either hand-delivered to your door or sent via certified mail to your home. They include:
- Final Notice of Intent to Levy and Notice of Your Right to a Hearing (Letter 1058 and Letter 11)
- CP90 Notice: Final Notice of Intent to Levy
- CP92 and CP242: Notice of Levy Against Your Tax Refund
- Letter 3172: Notice of Intent to File a Tax Lien
What Is a Collections Due Process Hearing?
A CDP hearing allows taxpayers to appeal an IRS lien, levy, or garnishment. The hearing doesn’t take place in a courtroom; it can be done in person or over the phone. No transcript is taken and you are not required to take an oath.
Purpose of the CDP Hearing
During the hearing, you can make several claims to question the validity of the notice. For example, you can apply for innocent spouse relief or otherwise contest the amount of money owed. Additionally, you can work out a repayment plan or suggest other alternatives for collection of the debt.
The purpose of the hearing is to reach a compromise so that the IRS can collect taxes and you can address your concerns about the collection activity.
Notice of Determination
Upon the completion of the Collection Due Process hearing, the IRS will issue a notice of determination, which outlines the following:
- Has the IRS delivered the intent to levy notice properly? The notice must be issued in person or sent via certified mail to your last known address.
- Will a tax lien or levy take place?
- Has repayment been arranged? If so, the notice of determination will outline the specifics of a repayment plan.
- Was tax relief offered?
- Did the IRS rule on a request for innocent spouse relief?
If you disagree with any of the IRS’s determinations, you have 30 days to file an appeal in either Tax Court or the U.S. District Court.
Why Should I Request a Collection Due Process Hearing?
After the request for the hearing, the IRS will not take any action against your property and offer you the chance to make payments in some other way.
You can also request tax relief due to hardship or illness. Hardship requests have strict guidelines. You can request a hardship exemption if:
- You are terminally ill and have crushing medical debt;
- You’re on Social Security or unemployment; or
- You simply don’t have the income to repay.
In some cases, you can work out an arrangement with the IRS by taking out a home equity line of credit against your home. The lender may not offer you the loan unless the IRS lien is subordinated to their own. In other words, if you default, the private lender’s lien would take precedence over the IRS’s. You can use the loan to repay the IRS and then make payments on your home equity loan.
Additionally, you ask the IRS to discharge the lien so that you can sell the asset without the title being clouded, then use the money from the sale to repay your outstanding tax debt.
How Do I Request a CDP Hearing?
You will have 30 days from the date of receipt of the IRS notice of intent to levy to request a Collection Due Process hearing.
To do this, you simply fill out IRS Form 12153 with your name, address, phone numbers, Social Security number, and the reason why you are requesting the hearing. The IRS will then schedule the meeting and collections activities against you will stop until the situation is resolved.
Speak to a Fairfax VA Tax Attorney Today
To learn more about how to resolve a problem with the IRS, contact the Sodowsky Law Firm, PC.