FLAT FEE TAX RELIEF
Coast to Coast - IRS Help
IRS Tax Relief - Tax Debt Help
Due to COVID, the IRS has been trying to play "catch-up" over the past two years. Because the IRS is overwhelmed, the Agency has been relying heavily on its Automated Collection System (ACS). The ACS is the IRS computer system that keeps track of just about everything. The ACS sends out the IRS Notices and they are sending them out "fast and furiously."
If the IRS sent you a letter titled Final Notice of Intent to Levy and Notice of Your Right to a Hearing (LT11 or Letter 1058). What should you do now? This article will, hopefully, help you understand the importance of this notice, assess whether the IRS followed the proper procedures, and explain what you should do.
WHAT HAPPENED BEFORE THE IRS SENT A FINAL NOTICE OF INTENT TO LEVY?
When the IRS sends out a Final Notice of Intent to Levy means that you are in "advanced stages" of the IRS collection/enforcement actions. The first step to IRS collection is an assessment. An assessment is the process of the IRS recording tax that you owe in its computer system (ACS). Assessments may be based on income tax returns that you filed, IRS audits, Tax Court decisions, or an IRS determination that you made a math error.
The IRS generally satisfies this requirement with one of its many form letters. The IRS must either leave the notice and demand at the taxpayer's residence or usual place of business or mail it to the taxpayer at his or her last known address.
THE IRS IS NOT OBLIGATED TO ENSURE THAT YOU ACTUALLY RECEIVE A NOTICE.
The last known address generally means the address that appears on the taxpayer's most recently filed and properly processed Federal tax return, unless the Internal Revenue Service (IRS) is given clear and concise notification of a different address. See Treas. Reg. § 301.6212-2. The IRS will send anywhere from one to four letters that satisfy the notice and demand requirement.
Once again, one of the most important things to remember when it comes to an IRS Notice is that there is no requirement that the IRS proves that you actually received the notice and demand. The IRS only must show that it sent notice and demand to your last known address.
WHAT IS AN IRS LEVY (GARNISHMENT)?
An IRS levy is the order that the IRS issues to seize property. Federal tax liens are not self-executing. Although a tax lien will protect the government's interest in real property, it doesn't automatically result in funds being transferred to the government's coffers. The order to levy is the procedure that actually captures the money out of your bank account, and transfers it to the government's bank account.
A tax levy is an administrative enforcement action. The IRS does not need a judgment to take your money or property. The Agency simply sends the appropriate IRS notice. to the holder of the property that it is levying the property. Generally, an IRS levy is issued through Form 668-A or Form 668-W (Notice of Levy) to take a taxpayer's property. For example, the IRS will send these forms to a bank or employer to levy a bank account or wages.
If the taxpayer's property is in the possession of the taxpayer, the IRS will need to seize the property. For example, if the taxpayer owns a car, the IRS will seize the car by forcibly taking control over it, rather than issue a Form 668-A to the taxpayer for the car.
What happens if a third party, like an employer, fails to abide by the IRS levy?
They become personally liable for the lesser of (1) the value of the property not surrendered, or (2) the amount of tax for which the levy was served. I.R.C. § 6332(d)(1). In addition to liability for the property not surrendered or the tax, the recipient of the tax seizure is liable for interest on the amount not surrendered and may be held liable for a 50% penalty of the amount of personal liability. I.R.C. § 6332(d)(2). The recipient of a levy may have a reasonable cause argument for not honoring the levy.
YOU DO HAVE RIGHTS. THESE ARE YOUR RIGHTS?
The IRS Restructuring and Reform Act of 1998 (RRA 1998) requires that the IRS provide notice of its intent to levy 30 days prior to the tax levy, and inform the taxpayer about Collection Due Process (CDP) rights. The IRS satisfies this requirement through its Final Notice of Intent to Levy and Notice of Your Right to a Hearing (LT11 or Letter 1058). The LT11 is the final notice issued by the IRS's Automated Collection System (ACS), whereas a Letter 1058 is generally issued by a Revenue Officer (you do not want to have a Revenue Officer).
A taxpayer is entitled to one CDP notice, one CDP hearing for one tax lien, and one levy per tax period and tax. This means that a taxpayer may have a right to two CDP notices and hearings, assuming the IRS files a Notice of Federal Tax Lien and pursues a levy, per tax and tax period. There are some exceptions, as noted above, including jeopardy levies, levies on state tax refunds, disqualified employment tax levies, and levies on federal contractors.
Once a taxpayer receives a CDP notice, the taxpayer has 30 days to file a timely CDP hearing request. The 30 day period generally starts on the date printed on the notice unless the IRS mails it after the date printed, then the 30 day period starts on the date of mailing. Weiss v. Commissioner, 147 T.C. No. 6 (2016). When you mail your CDP request, you must ensure that the request is postmarked within the 30 day response period.
The IRS prefers that taxpayers submit Form 12153 to request a hearing, but that form is not required. The request must, however, be in writing and contain the following information:
1. Taxpayer's name
2. Taxpayer's identification number (SSN, ITIN, EIN)
3. Taxpayer's address
4. Taxpayer's daytime telephone number
5. Be dated and signed by the taxpayer or a taxpayer's authorized representative
6. Specify the tax and tax periods involved
7. Include a statement that the taxpayer requests a hearing with Appeals for the lien or proposed levy
8. Provide the reasons why the taxpayer disagrees with the proposed collection action
If a timely request is submitted but does not contain all of the requested information, the IRS will attempt to contact the taxpayer to cure the defect. Note that if the IRS determines that the submission is frivolous, you may be subject to a penalty of $5,000 for frivolous submissions under I.R.C. § 6702.
A premature CDP hearing request—one that is submitted before the IRS provides CDP rights—is invalid.
The taxpayer should mail the CDP hearing request to the address listed on the notice. If the notice does not contain the address, the taxpayer can call 1-800-829-1040 to determine the appropriate address.
What if your CDP request is not timely?
You may request a CDP equivalent hearing. The IRS will generally treat your untimely CDP hearing request as a request for an equivalent hearing, but if you know your request is not a time when you submit it, you should request an equivalent hearing, and provide all of the same information that you would provide for a CDP hearing. You have one year from the date of the CDP levy notice to request an equivalent hearing.
What is the difference between a CDP hearing and an equivalent hearing?
Your rights to challenge Appeals' determination in a court. If you are unhappy with Appeals' determination in your CDP hearing, you may appeal the determination to the United States Tax Court. If you are unhappy with Appeals' determination in your CDP equivalent hearing, you have no right to petition a court.
What if the IRS levied your property, and you think it was wrongful?
I.R.C. § 7426 allows any person who claims an interest in property to bring a wrongful levy suit. A wrongful levy suit must be initiated within 9 months of the date of the levy under I.R.C. § 6532(c). But if a person requests that the IRS return the property under I.R.C. § 6343(b), then the 9 month period is extended for 12 months from the date of filing of the request, or for 6 months from the date that the IRS denies the request, which is shorter. I.R.C. § 6532(c)(2).
WHAT THE HECK SHOULD I DO NOW?
In all honesty, if you are facing an IRS levy, you really should have an experienced IRS professional handle your IRS problem. An IRS levy can be stopped and released in as little as one day. To get that a levy release accomplished is complicated for a novice. There are many tax relief options that need to be factored in. Are all of your tax returns filed? Are you compliant? Will entering into an IRS Installment Agreement be the right solution? If you get into an IRS payment plan is the payment more than you should be paying? Can you be placed into Currently Not Collectible (CNC) status? Is an Offer in Compromise (tax settlement) available to you? Should you be placed into CNC status while submitting an Offer in Compromise?
These are questions that need to be explored. An experienced IRS Attorney can "cut to the chase" and get you to a resolution quickly. The tax professionals at Flat Fee Tax can answer the above questions. Call our team for your free consultation. There's no obligation.