settlemytax's posterous http://settlemytax.posterous.com Most recent posts at settlemytax's posterous posterous.com Thu, 21 Jul 2011 00:14:20 -0700 Tax Levy and the Collection Due Process Hearing: What is It? http://settlemytax.posterous.com/tax-levy-and-the-collection-due-process-heari http://settlemytax.posterous.com/tax-levy-and-the-collection-due-process-heari

A few weeks ago, we mentioned what notice was required before the IRS canlevy on taxpayer property.  Today, we will examine the Collection  Due Process (CDP) procedures in more detail.  Prior to 1998, the IRS did not have to hold a hearing before taking taxpayer property.  But after major tax procedure reforms by Congress that year, this changed.  Today, before the IRS can levy on the taxpayer’s property, it must give the taxpayer an opportunity for administrative review of the IRS’s collection actions.  The IRS Appeals Division conducts this review, and some adverse decisions can be appealed to the Tax Court

How to Get a Hearing:  The taxpayer first has to request a CDP hearing.  Once requested, the collection process by the IRS is suspended.  Once the CDP request is received, a CDP hearing time is determined.  The CDP hearing is informal; it may even be conducted over the telephone.

What Occurs At the Hearing:  At the CDP hearing, the Appeals office will verify that the IRS followed the correct procedures when it created the tax lien and proposed levy.  In addition, the taxpayer may also raise any issue relevant to the lien or levy action, including innocent spouse claims; collection alternatives, such as offers in compromise and installment agreements; and suggestions as to which of the taxpayer’s assets should be levied upon to satisfy the outstanding liability.  The taxpayer is generally not allowed to challenge the underlying tax liability, and only in rare circumstances will such a challenge be allowed.  Taxpayers must be careful because if they raise claims that are frivolous, the Courts can penalize the taxpayer up to $25,000 for wasting the government’s time and resources.

Appealing The Decision:  If, after the CDP hearing, the Appeals officers finds for the government, the taxpayer may challenge  that ruling in court.  The taxpayer may raise the same types of issues as at the CDP hearing.

If you have received a thirty-day notice of intention to levy or a notice of a right to a collection due process hearing, consider handling the dispute yourself using the software from SettleMyTax.  Or consider hiring a tax professional from RocketRelief to handle the dispute for you.

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