IRS Law Blog

The IRS collection division is awakening from its Covid-19 slumber.

At the beginning of the pandemic, the IRS was respectful of hardships.

IRS Revenue Officers stopped actively working their case files. Revenue Officers were closing files and using their time for training rather than collecting.

Revenue Officers, who are the government’s most powerful collection tool, were neutralized by Covid.

Covid also caused the IRS to shut down its Automated Collection Service (ACS) from mailing levies, filing tax liens, and sending out enforcement letters. ACS uses computer-generated programs and algorithms to levy your livelihood. That stopped due to the pandemic.

During 2020 and the first half of 2021, IRS seizures of property were an exception, not the rule.

Now, the IRS is back in business.

Starting with summer, 2021, the IRS is resuming their every day collection casework. This includes active enforcement by both Revenue Officers and Automated Collection Service.

IRS levies, liens, and aggressive collection letters have started back up.

The IRS has taken its first shot, sending out their LT11, Final Notice of Intent to Levy and Your Right to a Collection Due Process Hearing letters.

If you have received an IRS LT11, Final Notice of Intent to Levy, it means the IRS is currently targeting your wages, accounts, or property for a levy.

Here are five tips to take action and protect yourself from being stung by the LT11 and an IRS levy:

First, you have rights to stop the IRS in their tracks by filing a collection due process appeal in response to the LT11.

You do not have to sit still and become an IRS target.

The IRS cannot surprise you with a levy – that’s why they send the LT11. They have to let you know first – and we respond with a collection due process appeal.

A collection due process appeal is your legal right to IRS stop from levying and be heard.

Your collection due process appeal is filed using IRS Form 12153, Request for a Collection Due Process Appeal or Equivalent Hearing (CDP). Here are tips on how to complete the Form 12153 and file your appeal.

Second, understand the rights you get from responding to the LT11 with a collection due process appeal.

Your rights include:

• Stopping all IRS collection agents in their tracks and prevent the IRS from levying your property.
• Moving your file away from IRS collection agents and to their independent office of appeals.
• Getting an impartial hearing with an IRS Settlement Officer, who is unaffiliated with the IRS collection division.
• Resolving your taxes without the bias and power of an IRS collection agent’s ability to hurt you.

These are the strongest rights you have to neutralize the IRS and even the playing field.

The LT11 Final Notice of Intent to Levy is the IRS’s power at work; the collection due process appeal is yours.

Third, let’s review what to expect from the IRS after we file the collection due process appeal.

After we file the appeal, our file will sit quietly for 5-9 months. That is how long it typically takes the IRS to process it. Eventually, our case will be assigned to an IRS Settlement Officer in the IRS office of appeals. Then, we will receive a letter from the Settlement Officer proposing a hearing date to resolve the LT11 and your taxes without the IRS levying.

Expect our hearing date to be 2-3 weeks after the date of the letter.

During this entire time, from the filing of the appeal to the completion of the hearing, IRS levy authority is on hold. They cannot act on their LT11, Final Notice of Intent to Levy. This gives you precious time of protecting yourself from the IRS. It also provides us time to prepare finances and records for the hearing to resolve your taxes and avoid the levy.

Fourth, know in advance what to expect at our hearing on our collection due process appeal.

The hearing is usually conducted by phone. You do not have to participate in the hearing or speak with the Settlement Officer. I handle that for you.

For the hearing, we will need to together determine which IRS program is the best fit for you for resolution of the taxes. IRS programs can include an offer in compromise to settle your debt, an installment agreement, currently not collectible status, and penalty abatement. If your tax liability is incorrect from the IRS filing estimated tax returns for you, that can also be corrected in the hearing.

We choose an IRS program of relief in place of the levy the IRS wanted to take against you. For example, if the IRS approves an installment agreement at the hearing, they cannot levy you while you are in the plan and make the payments. (By the way, installment agreements do not need to pay the IRS back in full; you can pay them $100/month on $100,000, if the IRS agrees that is what your finances permit.) That beats the IRS taking your paycheck.

Most IRS levy-relief programs us to provide your finances to calculate the amount you can pay instead of giving it all up by levy. IRS financial statements will need to be prepared for the hearing, known as Form 433A (for personal taxes) and Form 433B (for business taxes). The IRS Settlement Officer will also need us to prepare verification of your finances for the hearing, items like bank statements, paystubs, proof of living expenses, and documentation for home and auto loans.

Fifth, it is important to reiterate the benefits of negotiating with an IRS Settlement Officer.

Settlement Officers have no power to levy, so our appeals hearing is intended to be more even-handed. There should not be threats while we talk. IRS Settlements, being independent from collection agents, are trained to be unbiased in their decision-making.

And if you disagree with a Settlement Officer’s decision, it can be appealed to the U.S. Tax Court. This is a right you would not have in dealing with IRS collection agents.

For many, getting through Covid-19 has been hard enough. But the IRS is now back to business. You do not now need the IRS levying your wages, accounts, or property. If you have received an LT11, Final Notice of Intent to Levy with Rights to a Collection Due Process Appeal, assert your rights. Respond to the LT11 with the filing of a collection due process appeal and stop the IRS in their tracks. Your livelihood does not have to be on the line.