Okay, in Part I we discussed no less than eight proven strategies to stop or neutralize collection by the government. Now in Part II let’s discuss what you can do if some of those strategies are not successful.
You see, what the IRS won’t tell you, is that just about every decision the IRS makes – from big to small – can be appealed. And then it can be appealed again. Understandably, the IRS would rather not advertise the second and third chances available to taxpayers. And yet it’s vital you know your rights because candidly many of our clients’ greatest successes happen on appeal.
The Right of Appeal
Collection Due Process Appeal (CDP). The CDP is the most powerful method to defend against enforced collection. Collection due process rights include participation in a hearing to explore collection alternatives such as an offer in compromise or payment agreement. Even the tax liability itself can be challenged in a CDP. The appeal is a fresh look within a division often more receptive to resolving the tax problem than a stubborn revenue officer. You are allowed 30 days from the date of an IRS final notice to file a CDP.
Equivalent Hearing. If a levy or lien started and the 30 day deadline to file a Collection Due Process hearing was blown, the alternative is to request an Equivalent Hearing. An Equivalent Hearing is similar to a CDP, although in the event the taxpayer is not successful, it’s the end of the line, and unlike a CDP, an appeal to U.S. Tax Court is not permitted.
A broad range of issues can be raised at a CDP or an Equivalent Hearing. Innocent spouse defenses can be asserted. The appropriateness of IRS collection can be challenged and tax resolution agreements may be reached, such as installment agreements, hardship agreements, or agreements to file an offer in compromise.
TIP Appealing an IRS collection notice puts the brakes on liens, levies, and seizures. Audit findings, installment agreements, offers in compromise, and other issues can also be appealed. If the CDP appeal is unsuccessful, the United States Tax Court will decide the matter.
Taxpayer Assistance Order. If a levy or tax lien creates undue hardship and a Taxpayer Assistance Order is issued, collection will come to a screeching halt and alternative collection will be considered. A Taxpayer Assistance Order may be just the right cure for a revenue officer who fails to act in accordance with the language and spirit of the Internal Revenue Manual.
TIP The IRS cannot seize bank accounts or assets of a corporate entity in order to collect a personal tax liability unless [A] it is first established that the citizen possesses an ownership interest in favor of the assets of the corporate entity; and [B] a charging order is obtained by the IRS. However, the IRS can intercept income paid from the corporate entity to the responsible individual. This raises an interesting and much more involved discussion of how to legally use corporate entities to shield assets and income from creditors, including the IRS. Feel free to contact us on this subject.
United States Tax Court. This court is the “great equalizer” for citizens and businesses facing IRS problems. Without our tax court, the IRS would be invulnerable to checks and balances on its power. Here are some examples of where tax court plays a vital role in protecting hard-working citizens from IRS abuse.
- You are not successful at a Collection Due Process hearing. The U.S. Tax Court has jurisdiction to hear disputes involving citizen opposition to IRS levies and liens, as well as IRS denial of innocent spouse relief, offer in compromise, penalty abatement, and other tax relief.
- You receive a “Notice of Deficiency” claiming you owe tax. A petition may be filed with the U.S. Tax Court within 90 days of the notice, and the tax liability need not be paid until the case is resolved. These are called deficiency cases.
- You are denied innocent spouse relief. You have 90 days from the date of the final determination in which to file a petition in U.S. Tax Court seeking a review. While the 90 days are pending, and while the Tax Court case is pending, the IRS cannot take collection.
U.S. District Court. With respect to real or personal property on which the United States claims a lien, the United States can be sued to quiet title.
Caution! Get a lawyer licensed in the United States Tax Court, Federal Court, and Bankruptcy Court. A CPA or enrolled agent is not licensed to appear in these courts, and tax resolution companies never go near these courts either.
Neutralizing IRS Revenue Officers
When the tax problem has become serious, it’s not unusual for an IRS revenue officer to make an unannounced home or business visit. If this happens to you, remember your rights:
- You do not have to let the IRS revenue officer into your home or business. Don’t be intimidated, and call a tough tax lawyer who will protect your legal rights.
- You do not have to speak with a revenue officer. You can have your tax lawyer do the speaking for you—he or she will know what to say and what not to say.
- You do not have to sign any document they put in front of you. Seek a tax professional before signing any document or agreeing to any terms.
- You do not have to accept their initial offer. The IRS is not looking after your best interests. Their first offer is quite often not their best offer.
Remember, these guys play the game all the time. You don't. So be wise.
You Have Power!
The same laws the IRS uses as a sword can and should also be used as a shield against IRS collection and abusive tactics. You really do have power the IRS would prefer you didn’t know about!
If you would like an aggressive, experienced, clever tax lawyer on your side, call me for free at 800-659-0525 or 414 771 9200.