IRS Law Blog

Some of the biggest fears my clients have when dealing with the IRS are:

• “When will the IRS take enforcement action against me through levy or wage garnishment?”
• “Will I be notified before they take this action?”
• “Is there any way I can stop enforcement before it happens?”

The answer to these questions can be explained by looking at the IRS’s LT11 (Or 1058) Final Notice of Intent to Levy.

Will the IRS Notify me Before Levy?

In most cases, yes, the IRS is required by law to give you written notice by mail before they can take enforcement action.

Specifically, the IRS must send you written notice that they intend to take enforcement action and offer you the opportunity to dispute the proposed levy through an administrative appeal. This specific language appears in IRS Letters LT11 and Letter 1058. The letter provides us with 30 days to request a Collection Due Process appeal (CDP). When an appeal is pending, and until its resolution, the IRS is prevented from taking levy or garnishment action.

After the CDP is filed, it typically takes the IRS six to nine months to process the appeal and assign it to an Independent Appeals officer, known as a Settlement Officer.

Additionally, the LT11 is issued by IRS Automated Collection System (ACS). ACS enforcement is typically limited to wage and bank levies. ACS does not have the ability to take your car or house, only a live agent, such as a Revenue Officer can do that. However, the LT11 should not be ignored as ACS can (and frequently does) take wage garnishments and bank levies.

How Is the Final Notice Sent?

The Final Notice of Intent to Levy, is usually sent by certified mail to your last known address. What sets the Final Notice apart from other IRS Letters (such as the CP504) is that the Letter specifically states your rights to challenge the levy and request a Collection Due Process Appeal. Other letters such as the CP504 do not offer the ability to request a Collection Due Process hearing. This is critical as the Final Notice of Intent to Levy requires a 30 day response, while other letters, although important, do not require immediate action.

If you are uncertain whether a Final Notice of Intent to Levy has been issued in your case, we can secure IRS account records to verify if the IRS has issued one.

Okay, I received the LT11 Notice and Appealed, What Happens Now?

If we chose to file a CDP we will complete IRS Form 12153 and submit to the IRS. The IRS will typically take six to nine months to process our appeal and assign it to its Independent Office of Appeals. When the case is finally assigned we should receive an IRS Letter 4837 setting a hearing date, time, and who our Settlement Officer will be.

Typically, the hearings are conducted by phone. My clients never attend the hearings, we handle them on their behalf. At the hearing we will discuss the collection alternatives such as:

• IRS Installment Agreement.
• Current Non-collectible Status.
• Offer in Compromise.

One valuable part of having a CDP appeal is that your tax file is now with a live human directly trained on the Internal Revenue Manual to assist with resolving your tax case. This is often far better than dealing with the IRS call centers and long wait times to speak with a representative.

What if I Miss the 30 Day Deadline?

While missing any deadline is not ideal, the IRS administratively gives grace to taxpayers who do not timely file their Collection Due Process Appeals. Filing the CDP outside of the 30 day window and within one year of the Final Notice of Intent to Levy being issued gives us the ability to request a CDP Equivalent Hearing.

While the IRS can still take enforcement action after filing an Equivalent Hearing, it is policy not to. Additionally, filing outside the 30 day window does not toll the IRS collection statute, as a regular CDP would.

What to Do if you Disagree with What Happened in your CDP.

If you are unable to reach a resolution with the Settlement Officer we can appeal the decision to United States Tax Court. Tax Court will usually adjudicate cases from appeals based on an “abuse of discretion” standard. Abuse of discretion means the Court will see if the Appeals Officer committed any plain errors or failed to follow administrative procedures.

This standard can sometimes be a high barrier to reach, so it is important to fully understand the facts of your case before petitioning the Court.

How We Can Help

We regularly represent taxpayers before the IRS Independent Office of Appeals and United States Tax Court.

If you are uncertain whether a Final Notice of Intent to Levy has been issued in your case, or are struggling to resolve in Appeals, we can review your account transcripts, assess your current enforcement exposure, and develop a plan to protect your rights and resolve your tax liabilities.