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IRS Collection Newsletters

Newsletter For Businesses And Individuals — IRS COLLECTION SURVIVAL GUIDE

In order to best survive and plan your defense against IRS levy actions {involuntary taking of assets or income}, you must understand the statutory law of IRS collection procedure.

IRS Levy And Collection Due Process Rights. IRS cannot levy seize assets or income until at least 30 days after the first Final Notice of Intent to Levy date. There are a few limited exceptions to this that rarely apply. I advise that any taxpayer stop IRS levy action by certified mail filing form 12153 Request for Collection Due Process Hearing, within 30 days of the first Final Notice of Intent to Levy date. It is CRITICAL that you accept or retrieve all IRS certified mail so you can best defend against an IRS levy. All that IRS must do is to certified mail its Final Notice of Intent to Levy to the last taxpayer address known to IRS. It doesn’t matter if the taxpayer did not receive or accept the Final Notice of Intent to Levy.

After IRS assesses (charges) tax against an individual or against a business entity, sooner or later IRS will begin a five collection letter sequence. The first three letters, CP14, CP501, CP503, all regular mailed, have no important procedural significance. The fourth letter CP504 is the first to be certified mailed and announces that IRS may levy seize your state tax refunds.

The fifth IRS collection letter is procedurally CRITICAL, the Final Notice of Intent to Levy, which is certified mailed. It is in your best interests to accept or retrieve all IRS certified mail or you will forever loose very important defense procedural rights you will later regret. IRS’ Final Notice of Intent to Levy is usually an IRS letter 1058 or 11. Other Final Notice of Intent to Levy letters include CP92/CP242 {state tax refunds levied}, and CP90/297 {federal payments, like Social Security levied}.

Stop sign IRS logoHow To Prevent An IRS Levy And Obtain The Best Defense Procedural Rights. Any taxpayer has 30 days from the date on IRS’ Final Notice of Intent to Levy, to file for Collection Due Process rights [CDP], using IRS form 12153. I advise that all CDP requests be filed only by certified mail, return receipt requested, to the address on the Final Notice of Intent to Levy, in case IRS later abusively claims no timely CDP rights were filed. Keep in a safe place the U.S. Postal Service date stamped Certified Mail Receipt (PS Form 3800), and return receipt (PS Form 3811), as filing proof. If you fail to file for CDP rights within 30 days of a Final Notice of Intent to Levy, you loose your CDP rights, and beginning on day 31 IRS is able to levy seize your assets/income without any further notice.

If any taxpayer certified mail files for CDP rights within 30 days (timely) of a Final Notice of Intent to Levy, such taxpayer will usually get 5 to 18 months of additional delay free from levy seizures. Timely filed CDP rights, by law, requires IRS’ Collection Division to transfer the collection case to IRS’ Appeals Division. Later, at an advantageous time, whatever collection remedy you desire will be filed directly to IRS Appeals whom will accept or reject it by Notice of Determination. There are two primary critical reasons why it is best to timely certified mail file for CDP rights, {1} doing so prohibits IRS as a matter of law from levy action during the pendency of the CDP case plus 30 days after it ends much later by IRS Appeals’ Notice of Determination, and {2} if IRS Appeals later rejects your collection remedy request, you have litigation jurisdiction in United States Tax Court to challenge IRS Appeal’s rejection. Only through CDP procedure can IRS rejected collection remedies like offer in compromise or installment agreement, be litigation challenged in U.S. Tax Court, so you have a much higher probability of an IRS accepted collection remedy through CDP procedure. Any taxpayer should be lawyer represented to obtain the best collection remedy results.

IRS Tax Lien And CDP Rights. There is little any taxpayer can do to prevent the IRS from filing a federal tax lien short of full payment. Any taxpayer may also file for CDP rights within 30 days from the date on IRS Letter 3172(DO), Notice of Federal Tax Lien Filing. Usually, IRS files a federal tax lien first before certified mailing the first Final Notice of Intent to Levy discussed above. Care must be taken in the tactical decision whether or not to file for CDP rights in response to a Notice of Federal Tax Lien Filing, or wait later to file for CDP rights in response to the first Final Notice of Intent to Levy, if the First Notice of Intent to Levy is certified mailed before a Notice of Federal Tax Lien Filing.

WHAT IRS COLLECTION REMEDIES SHOULD I CONSIDER FIGHTING FOR? The three most common IRS collection remedies when the tax debt is not disputed and cannot be full paid due to hardships, are discussed below. Expect an IRS fight for all three. All collection remedies should be pursued through collection due process procedure discussed above, if possible.
1. Offer In Compromise [OIC]. While the favorite of taxpayers, this is IRS’ most hated and most resisted remedy because if accepted, the tax debt is reduced to some negotiated amount. An IRS offer amount is a formula, basically net asset equity plus net monthly income for the future twelve months. If this formula equals or exceeds your tax debt, you do not qualify to file an OIC. Expect IRS to abusively and repeatedly attempt rejection, but if you have a skilled tax lawyer prosecuting your OIC, and if you accept the required IRS fight up the chain of IRS management, this is the best remedy to pursue.
2. Installment Agreement. Less resisted by IRS, this is a full payment negotiated monthly payment amount for the remainder of the ten year collection statute expiration date.
3. Currently Not Collectible [CNC]. If you can prove your hardships presently prohibit you from paying your federal tax debt, IRS has discretion to grant you the temporary remedy of CNC. While not a solution, this remedy does provide temporary relief from enforced collection action.

Other less common collection remedies include innocent spouse relief, penalty abatement, and bankruptcy. Call for a free telephone consult to discuss any of the above discussed remedies.


Get free advice from an experienced tax litigation/controversies lawyer and certified public accountant about how to resolve your tax debt when you cannot afford to full pay. You got nothing to lose and a lot to gain! Call the telephone number at the bottom right of this page for a no obligation free telephone consultation with only me, David Dodge. Because I often am on the phone, please leave a message including your return telephone number so I can quickly return your call.

Authored by tax lawyer David C. Dodge, JD, CPA, MBA, whom routinely represents individuals and businesses in tax collection defense and collection remedy prosecution, including federal and California courts tax matters litigation. Tax collection practice is complex with many traps for inept and inexperienced representatives. For the highest probability of a successful tax collection remedy, hire only a tax lawyer with lots of tax collection case experience.
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