If IRS files a tax lien against you, you have a right to stop them. One way is by “Due Process of Law”, but without the help of a skilled tax lawyer, you don’t always get the chance to exercise that right. And that’s a problem.
This legal term, “Due Process”, basically means fair treatment through a normal justice system. This is certainly a person’s right with regard to IRS tax liability, liens, and other collections. Anyone who has been placed under IRS collection enforcement should have the opportunity to be heard, and have his or her facts considered before any collection action occurs or continues. This due process hearing can often cause IRS to stop to completely stop collection action. A person faced with IRS liens or levies does have some protections. Due process is the person’s right.
Within the U.S. Tax Code, there are statute sections that allow for a “Due Process Hearing” in situations where someone is subject to collections on existing tax liability. Specifically, 26 U.S.C. Section 6320 allows “Notice and opportunity for hearing upon filing of notice of lien”. That means that IRS must provide fair warning of a lien filing, and a person’s opportunity to object to or otherwise discuss that lien, prior to the lien’s taking any legal effect. There is a similar section, 26 U.S.C Section 6330, which allows notice and opportunity for hearing before levy (or seizure of property).
These taxpayer safeguards are actually referred to as “appeal rights”, created under IRS’s Collection Due Process (CDP). These rights are actually built in as part of the Tax Code.
Note: One way to exercise that right – to request a hearing, is to complete the IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing.
Here is one problem though, and I see this month after month. Not everyone has the opportunity to exercise that right before damage is done.
And for those that do not flex their rights, they may receive unfair treatment. This treatment could mean federal tax liens that affect one’s credit scores, attach to their homes and assets, and create public embarrassment. Maybe even worse, unfair treatment could mean seizures (levies) that consume bank accounts, paychecks, Social Security payments, and even seizure of assets (such as cars, work equipment, even real estate).
Why wouldn’t a person exercise their rights? There are lots of reasonable explanations why the Hearing often does not happen. Sometimes the person thinks:
- The problem will correct itself after making a payment to IRS.
- This IRS notice is a mistake, and that nothing further will happen.
- Another person (like the spouse, business partner, or accountant) is handling the problem.
- There is nothing further that can be done, and therefore does nothing farther.
But in my opinion, the worst of these reasons is when the person under collection treatment never actually receives those early IRS letters. Without fair notice of pending IRS collections, the person never has opportunity to retain a tax lawyer and request a hearing before the pending action occurs.
Local Example: Illinois’ DuPage County residents are serviced by IRS’s Butterfield Avenue office in Downers Grove. One of the Revenue Officers sent inquiries, then Notices of Determination of Trust Fund Penalty unknowingly to a business address for a person to be responsible for payroll taxes. The person the Officer deemed to be responsible had no knowledge of the business activities, and did not receive any actual notices. Once IRS began enforcing collection by levy, the person then contacted IRS. But it was too late. The levy on the family’s bank account consumed the funds to pay next month’s mortgage payment. However, if the person had been given actual notice (ie: a letter to the home), a Due Process Hearing could have avoided the IRS levy.
Unfair collection treatment can be undone. Usually, with a good IRS tax attorney, collections can stop and levies can be refunded. But there is always some unnecessary inconvenience, hardship, and cost. Still, be encouraged, that IRS problem can be undone. At Tax Law Offices, we specialize in finding ways to disrupt IRS cases against our Downers Grove, Naperville, and Chicago-area clients, arriving at resolutions that satisfy both them and the IRS. Contact us today to learn how we can help you!
Remember, the IRS collections Due Process Gearing. It’s your right.