Tax Levies and Liens
Regarding unpaid taxes, the IRS typically employs two main strategies to collect: tax levies and federal tax liens. People often confuse the two. Essentially, through a tax levy, the IRS seizes assets, which could mean wage garnishments, foreclosures, bank levies, etc. On the other hand, a federal tax lien is the IRS’s way of securing its claims against your personal and real estate properties.
This lien is a public record filed in the local county courthouse linked to you or your property. Importantly, the IRS must inform you in writing upon filing a tax lien and alert you to your right to a Collection Due Process Hearing.
Collection Due Process Hearing
Aside from signaling you owe back taxes, an IRS lien can severely impair your credit score, affect your ability to secure loans, and even result in employment complications. Fortunately, the Collection Due Process Hearing, or CDP hearing, offers you a chance to contest this federal tax lien. This hearing enables you to:
- Challenge the tax amount protected by the lien, especially if you haven’t had a prior opportunity to contest the sum you owe;
- Verify that the IRS abided by proper legal protocols when instituting the lien;
- Advocate for spousal defenses like Innocent Spouse Relief;
- Propose an IRS payment plan, bargain an offer in compromise, or argue for a “currently not collectible” status;
- Question the aptness of IRS collection actions;
- Present any additional issues pertinent to resolving your tax case.
A settlement or appeals officer will render a verdict at the hearing’s end. Depending on when you filed the CDP request, the decision might be final or can be contested in the United States Tax Court.
Turning to the United States Tax Court
If you disagree with the settlement officer’s conclusions, and provided you filed the hearing within the stipulated 30 days from the lien notification, you can escalate the matter to the US Tax Court. Here, a judge reviews the officer’s decisions to ensure they are justifiable, logical, and legal.
Should you not have previously had an opportunity to challenge the tax amount, the Tax Court will examine the foundational liability. In most cases, a prior chance usually means that you were allowed to challenge the amount in the US Tax Court after an audit. Without this last chance, the court reviews the case anew.
Prompt Action is Crucial
Being proactive is best when you discover the IRS intends to attach a lien for owed back taxes. Early response not only provides more options but also minimizes complications.
The Law Offices of Todd S. Unger, Esq. LLC is equipped to assist with IRS liens, guiding you through the most suitable action and aiming for a favorable tax resolution. Please get in touch to explore how we can help with your situation. (877) 544-4743