Taxation & Estate Planning

Can the IRS take my property without telling me first?

By howardlevy

In most every case, the IRS cannot take your property until they send you a letter stating their intentions.  This letter – called a “Final Notice of Intent to Levy” - is the government’s last attempt to reach you before they start levying your wages, bank accounts or other property.

The Final Notice of Intent to Levy gives you very important rights to stop the levy and resolve your case.

Here is what you need to know:

1.     If the IRS has not sent the Final Notice of Intent to Levy to you, you are protected.  If you are unsure if you have received it, the IRS can be contacted to determine if it has been sent and what action needs to be taken.  Here is what the IRS final notice looks like.

2.     If the IRS has sent you the final notice, they have to wait 30 days after the letter is sent to start collection.  During this 30 day window, you have the right to file a request for an administrative meeting with an IRS appeals officer.  The purpose of the meeting is to discuss alternatives with the IRS to property seizure.  This is known as a collection due process appeal.

3.     The IRS is legally prohibited from taking your property until your appeal is completed. Typically, it takes the IRS about four to six months to have your case assigned to appeals officer and for your conference.

4.     IRS appeals officers tend to be best equipped to resolve your case in a manner that is fair to you. You will have one person assigned to your case and can have a face-to-face meeting if you request.  This is impossible if you go through the IRS automated collection 1-800 systems for resolution.  Meeting with an IRS appeals officer usually gives you the best chance at reaching a fair resolution – that is their job.

5.     Solutions you can request from appeals include an installment agreement, hardship “uncollectible status,” offer in compromise or innocent spouse claim.

6.     If you cannot agree with IRS appeals over how to resolve your case, you have the right to have an independent Tax Court judge review your case. If you have a strong case and can show that the IRS is being unreasonable, the hold on collection will continue while your Tax Court case is pending and decided.

If it has been more than 30 days since the IRS sent you the Final Notice of Intent to Levy, you still have options. IRS administrative policy (see Internal Revenue Manual 5.1.9.3.2.3) is to process a late-filed collection due process appeal if it is filed within one year after the final notice is sent.  Filing your appeal late gives you the same administrative rights as filing timely – a hold on collection and meeting with an appeals officer.  You lose the right to go to Tax Court by filing late.

Exercising your rights to a collection due process hearing allows you to achieve a solution with an IRS appeals officer without the threat of collection.  This levels the playing field during negotiations – no IRS  levy or seizure – and puts you in the best place for resolution.

Full post as published by IRS and the Law on December 28, 2009 (boomark / email).