IRS Appeals

    IRS Collection Due Process Appeal Hearing – A useful tool to deal with IRS Levy and IRS Lien Problems

    by Michael S. Anderson, P.C. on April 13, 2011

    Collection Due Process Hearings

    If the IRS has recorded a lien or has decided to levy an account or paycheck, it must provide some type of notice to the taxpayer.  These notices are very important because unless the IRS sends them by certified mail to your last known address, it can’t complete the levy or lien process.   Further,  you have the right to file a request for a hearing to challenge the action.  The two types of notices that are relevant to most taxpayers are the:

    The type of hearing requested is called a “collection due process” hearing, and you would have thirty days from the date of the notice mailing to request it.   This deadline is important because if you don’t file within that time period you will lose all sorts of “rights”.  The most important is the ability to stop the levy process.  Secondarily, the right to appeal the case to tax court if lost.

    The hearing requested is heard by and presided over by an IRS appeals officer and the taxpayer must typically prove that the IRS can use a less intrusive measure to collect the tax then the one they are proposing.  In a lien related hearing other arguments are made, that primarily have to do with the same thing the levy hearing is based on…i.e. is there another way to deal with this?

    This hearing must be requested via IRS form 12153 and mailed to the IRS address provided on the notice. Again, the filing of the request stops collection activity while the hearing date is pending.

    Most taxpayers get these notices and ignore them.  In most cases they need to be used.   I use the collection due process hearing as a tool to slow collection activity while  analyzing the best legal alternate option to propose to the IRS.  We also use it to negotiate alternate options with the more reasonable IRS appeals officer as opposed to the collection division of the IRS.

    If you owe tax debt look for these two documents.  Responding to them correctly may make a big difference in your case.

     

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    TAX COURT OVERTURNS APPEALS ON AN OFFER IN COMPROMISE

    by Michael S. Anderson, P.C. on December 19, 2007

    In a recent case “Samuel v. Commmissioner of Internal Revenue Service, No. 8431-05L (U.S.T.C. 10/15/2007) (U.S.T.C.illustration_court-stairs.jpg 2007)” the taxpayer who was a doctor, was sent a final notice of intent to levy by the IRS.

    He requested a “due process hearing”, and then filed an offer-in-compromise.

    At a meeting with IRS appeals, he disclosed that he had recently sold his interest in a medical center, for $108,000 and used the funds to pay legal fees back business expenses including taxes, and family support debts.

    The IRS rejected his offer, primarily on the ground that the value of the dissipated funds should be included in the offer.

    The Tax Court acknowledged that the IRS Manual provides, under the right circumstances, that the value of dissipated assets may be a factor in calculating an acceptible offer, the Court observed “It is not totally clear how dissipated assets can be ‘no longer available to pay the tax liability’ while at the same time included in the ‘reasonable collection potential calculation.’”

    The Court then examined what the taxpayer represented he had spent the proceeds on, and which the IRS did not acknowledge. The Court held it was an abuse of discretion for Appeals to not deduct from the figure for dissipated funds, his payments for estimated taxes, payments made in connection with a civil lawsuit the taxpayer was engaged in, and amounts paid for delinquent child support. Noting that the liquidation value of the taxpayer’s medical practice was negligible, and there was no equity in his residence, the Court found that the demand by the IRS should be based primarily on his income, rather than the value of the dissipated assets.

    It is clear from these types of stories that the IRS does what it can to reject an offer. They can be very complicated and therefore, anyone with serious tax debt should speak to an experienced attorney before proceeding.

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