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Collection Due Process Hearing

When the IRS identifies unpaid taxes, they can undertake serious actions like levying bank accounts, seizing property or issuing wage garnishments. However, they must follow a structured process to ensure taxpayers’ rights are protected.

Pre-Levy Notice

Before initiating a levy against any property, the IRS, as mandated by the Tax Code, Section 6330(a), sends a written notice to the taxpayer. This notice specifies the amount of unpaid taxes and informs the taxpayer of their right to a Collection Due Process Hearing (CDP Hearing). If a taxpayer requests a CDP Hearing within 30 days of receiving the notice, the IRS can’t enforce the levy until the hearing’s conclusion.

Appealing the Levy at the CDP Hearing

The CDP Hearing allows taxpayers to contest the IRS’s levy action. Here, they can discuss the collection action’s appropriateness and propose alternatives. Options such as installment agreements, offers in compromise, “currently not collectible” status or innocent spouse relief can be considered.

During the hearing, a settlement officer evaluates:

  • The government’s adherence to all legal and administrative requirements.
  • Issues raised by the taxpayer.
  • Weighing the invasiveness of the proposed collection action against the necessity for effective tax collection.

Review by the US Tax Court

Post-hearing, the settlement officer releases a Notice of Determination about the discussed collection action. If the taxpayer has appropriately requested the CDP Hearing within the 30-day window, they can challenge this determination in the US Tax Court. The Tax Court will scrutinize the IRS’s decision for any abuses of discretion. If a CDP request is made post the 30 days but within a year, the determination by the settlement officer stands final. This late hearing is termed an “equivalent hearing.”

Need Legal Help?

Receiving an IRS notice can be daunting, but taxpayers have the rights and mechanisms to challenge and discuss proposed actions. Engaging promptly and understanding the process can prevent potential complications.

Act swiftly if you face such notices or complications with back taxes—the Law Offices of Todd S. Unger, Esq. LLC specializes in assisting with IRS levies and determining the most suitable tax resolution for your situation. Contact our office to navigate your specific tax concerns effectively.