WHAT THE IRS MUST DO BEFORE IT SEIZES PROPERTY

To safeguard wrongful seizures of property by levy, revenue officers are required to do the following before property is seized:

(1) Verify the taxpayer's liability;

(2) Find out if collection expenses exceed the property's fair market value (if no continue);

(3) Find out if the taxpayer has sufficient equity in the property (if yes consider seizure); and

(4) Before seizing the assets of a going business, consider other collection alternatives.

If the IRS fails to comply, it may be liable for wrongful seizure or the seizure may be reversed.

Those nasty revenue officers cannot levy as much of your property. For all property levies after July 22, 1998, $6,250 of personal assets, and $3,125 of trade or business assets are exempt from a levy. The old exemption amount was $2,500 of personal assets and $1,250 of trade or business assets.

HOW TO STOP THE IRS FROM LEVYING YOUR PROPERTY

Thank God, or better yet, thank Congress, for passing The IRS Restructuring and Reform Act of 1998 that President Clinton signed into law on July 22, 1998. For any enforced collection activity begun after January 18, 1999, taxpayers can stop the IRS from levying property by requesting a hearing before an independent IRS appeals officer. This is what lawyers call DUE PROCESS. I can tell you from years of experience -- IRS appeals officers are much more reasonable than the IRS revenue officers that do the collecting.

Prior to January 18, 1999, taxpayers were powerless to stop the IRS from levying wages and/or property 30 days after mailing a Notice of Intent to Levy.

Here is how it works.

At least 30 days before the IRS levies a taxpayer's property, the IRS must notify the taxpayer in writing of their right to a hearing. The written notice must be mailed

by certified or registered mail, delivered in person, or left at the taxpayer's business or home.

If the taxpayer does not elect to have a hearing, then the IRS can levy property. If taxpayers have a valid reason why the IRS should not levy their property, a hearing should be elected. Enforced collection activity must stop during the entire period of appeal. It is likely that months will elapse before a hearing is held.

If the IRS appeals officer rules against the taxpayer at the hearing, the taxpayer can continue the appeal in the United States Tax Court, or in Federal District Court, whichever has jurisdiction. If Court review is sought, more months will go by, maybe even years, before the matter is decided.

If the IRS validly determines that collection of tax is in "jeopardy" (i.e. the taxpayer plans to destroy or fraudulently transfer property to stop lawful collection), then this new law does not apply. Also the time the IRS may collect the tax and the time to start a criminal investigation are tolled during appeal.

So in effect, this new law can operate as an injunction against a levy when a hearing is elected.