Collection Due Process Hearings to Challenge Tax Debts
If you owe back taxes to the IRS, the agency may try to collect the debt by garnishing your wages, levying from your bank account, or placing a lien on your property. As long as you act within the required deadline, you can challenge the amount of tax that you owe to the IRS by filing a request for a Collection Due Process Hearing. This will pause collection activities until the hearing, which will be conducted by an impartial officer. You must make your request within 30 days after receiving IRS Letter 3172 or IRS Letter 1058. While IRS Letter 3172 notifies a taxpayer that the IRS plans to put a lien on their property, IRS Letter 1058 notifies a taxpayer that it plans to impose a levy on their bank account. If you do not meet the 30-day requirement, you will automatically waive your right to a hearing. You still can ask for an Equivalency Hearing, but the IRS can continue trying to collect the debt before that hearing.
The process of filing a request for a hearing involves submitting Form 12153. You will need to explain on this form why the IRS should not place a lien on your property or levy from your bank account. Since the IRS will reject a form that is not accurately or thoroughly completed, you should make sure to fill out the form carefully. You should send it to the address on the Letter 3172 or Letter 1058 that you received, after contacting that department of the IRS to ask whether you should address the form to any specific individual.
Notices of Federal Tax Lien
If the IRS places a lien on your home for unpaid taxes, you may not be able to sell the home while the lien remains on it, and you may not be able to refinance your home. However, the IRS will not be able to force you to sell your home in most cases. The lien allows the IRS to collect the tax debt from funds received when the home is sold or goes through foreclosure.
Notices of Intent to Levy
This notice means that the IRS is planning to immediately take money out of your bank account. It can take as much money as needed to satisfy the debt, which can be disastrous for your financial wellbeing. Even if you know that you owe some tax debt, you should promptly seek a Collection Due Process Hearing if you disagree with the amount of debt that the IRS is claiming.
If the levy is imposed, you can try to have it removed within the next 21 days. Sometimes the IRS takes too much money out of a taxpayer’s account, in which case they can ask for a refund. The IRS will not automatically identify this mistake and issue a refund. You should prepare for a protracted, contentious series of interactions if you are asking for a refund.