The IRS can place liens on property, levy wages and seize valuable items. However, if the IRS does want to levy upon assets of a taxpayer or files a Notice of a Federal Tax Lien, a taxpayer has a change to request a hearing with the IRS Appeals Division to discuss the collection of those taxes. The purpose of that hearing is to give the taxpayer the opportunity to do several things.
- Find a way to resolve the case without a levy;
- Convince the IRS that payment will cause significant hardship;
- There is a better way to collect the taxes or, in some cases, that the taxes are not due and should not be collected.When you ask for a hearing from the IRS, it is called a Collection Due Process Case, or CDP case. If you petition the Tax court for a redetermination of this kind of case, it is called a Collection Action, or in some instances, a Lien or Levy Action.
It is important to issue a cautionary note about contesting tax liability. If you have doubts about the validity of your case, you should consult a tax attorney. The Tax court has the authority to impose sanctions on taxpayers who bring what the Court deems is a frivolous or groundless petition, or who file a case for the purpose of delay. Avoiding frivolous cases allows the Court to spend time with petitioners who want to resolve their valid disagreements with the IRS.
Important deadlines exist for filing appeals. You can find them on the letter you receive from the IRS. In most cases you must mail the Petition within 90 days from the date a Notice of Deficiency is mailed to you. There is one major exception to the 90-day rule. That is a taxpayer only has 30 days to file a Petition after the Notice of Determination Concerning Collection Action.
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