For the IRS to issue a tax levy to garnish bank accounts, wages or other assets it, generally, must first issue a Collection Due Process or CDP Notice. The CDP Notice is required by Internal Revenue Code Section 6330. The CDP notice is generally issued by the IRS on either Form LT-11 or Letter 1058, and it is titled "Notice of Intent to Levy and Right to Request A Hearing." These letters give a taxpayer, who owes the IRS money, 30 days to file a request for a hearing with the Internal Revenue Service's Appeals Division. More on this in a moment.
If the taxpayer doesn't request a Collection Due Process hearing IN WRITING within the 30-day period, then the IRS may immediately begin seizure of bank accounts, accounts receivable, or any other assets. The IRS may even seize someone's home, although this requires a lot more paperwork, and the approval of a federal district court judge.
An IRS internal document known as an IRS Program Manager Technical Assistance recently provided information on what will happen if the request for a CDP hearing is mailed timely to an incorrect office. The short answer is that the CDP hearing will be denied, and the IRS is legally free to begin levies and seizures. However, a taxpayer in this situation is, generally, permitted an "equivalent" CDP hearing; however, an equivalent CDP hearing does not carry with it the right to appeal to the United States Tax Court. It is only a timely filed request for a CDP hearing that will be appealable to the Tax Court if the IRS Appeals decision is not to the taxpayer's liking.
In order for a CDP hearing request to be timely it must either be received by the correct IRS office within 30 days of the date of the CDP notice, OR be mailed timely to the correct office. In order to prove that the request has been mailed timely the best practice is to mail it by certified mail, return receipt requested, and obtain a stamp from the Postal Service showing the date on which the CDP request was mailed. Alternative delivery services such as FedEx may be used also, but the rules are a bit tricky.
Typically the CDP hearing requests must be sent to one of the four automated collection sites (ACS) maintained by the IRS around the country. However, cases assigned to an IRS revenue officer require that the request be sent to the Revenue Officer. In any event, the letter itself will explain where the CDP request should be sent, and if those instructions are followed, there won't be a problem.
A CDP hearing is a valuable right which should almost never be waived. At a CDP hearing the Appeals Officer will consider:
• Collection alternatives such as installment agreement or offers in compromise.
• Whether the IRS has followed all laws and procedures
• Subordination or discharge of a lien.
• Withdrawal of Notice of Federal Tax Lien.
• Innocent Spouse defenses
• In limited situations, the correctness of the tax liability.
So if you receive a Notice of Intent to Levy and Right to Request a Hearing, make sure that you request a hearing within the 30-day time frame.
Contact our experienced criminal tax attorneys at 1- 800 Tax Litigator for a confidential consultation to discuss available options if you have been contacted by the IRS in connection with civil or criminal tax fraud or tax evasion, or any other high stakes tax problem.
Click here to Subscribe to the Free Online Publication, The Tax Terminator. It will keep you abreast of events that are making the news and perhaps affecting you or your business.