How To Appeal an IRS Tax Levy

How To Appeal an IRS Tax Levy

If the IRS is threatening to levy your assets, you have the right to appeal. You also have appeal rights once the levy is underway, but they are more limited. Before the levy, you should receive a Notice of Intent to Levy in the mail that explains your right to appeal the levy within 30 days.

To request an appeal, you must ask for a Collection Due Process (CDP) hearing in writing and send it to the IRS before the 30-day deadline. If you miss the deadline, you can still appeal with an equivalent hearing, but that option doesn’t stop the levy.

You can also use the Collection Appeals Program (CAP) to appeal an IRS tax levy. The CAP procedure is more flexible but also has some drawbacks when compared to the CDP hearing.

Key takeaways

• The Final Notice of Intent to Levy gives you 30 days to appeal with a collection due process (CDP) hearing.
• CDP hearing lets you protest the levy and talk about payment options. 
• If you miss the 30-day deadline, you can request an equivalent hearing.
• You can also appeal levies through the Collection Appeals Program.
• Reach out to a tax attorney for guidance with appeals. 

Should You Appeal the Levy?

Yes, you should absolutely appeal to stop the IRS from taking your assets. The appeals process also gives you a chance to take a breath and work with the IRS to set up payment arrangements. Here are some of the many reasons you should consider appealing a tax levy, such as:

• You want to stop the levy.
• The levy will cause financial hardship.
• The levy isn’t valid because the collection statute’s expiration date has passed. 
• The levy violates the automatic stay in bankruptcy.
• You want to set up payments or apply for an offer in compromise.
• The tax debt is due to your spouse, and you want to talk about innocent spouse relief.
• You want to appeal the tax due and haven’t had a chance to do so yet.

Requesting an appeal also gives you more time to figure out your best tax resolution option. The IRS is generally prohibited by law from levying your property during the CDP hearing process if your appeal request is timely. 

CDP Hearing Vs. CAP Vs. Equivalent Hearing

There are a few different ways to appeal. You may have the right to use either the CDP hearing, the CAP procedures, or an equivalent hearing to appeal the levy.

The CDP hearing can be used when you receive a Notice of Intent to Levy that informs you of your CDP rights. If you miss the deadline to request a CDP hearing, you can request an equivalent hearing. You can also use the CAP procedures when the revenue officer tells you that they’re planning to levy your assets.

During both the CDP and the equivalent hearing, you can talk about payment options or relief programs for your tax debt. The CAP, in contrast, is exclusively focused on the collection action and why it shouldn’t move forward.

You should use the CDP hearing if you want to preserve your right to go to Tax Court. You cannot appeal the decision from the CAP procedure or an equivalent hearing in Tax Court.

If you haven’t had the chance to do so yet, you may also be able to dispute the tax liability at a CDP or equivalent hearing. For example, if you previously received a Notice of Deficiency, you may not be able to dispute the tax because you already had the opportunity to do so. You can’t dispute the amount of your tax liability using the CAP procedure.

There are many factors to consider when choosing between the CDP hearing, equivalent hearing, and the CAP procedure. Talk to a tax professional if you need help making this decision.

How to Request a CDP or Equivalent Hearing

Before you request your CDP hearing, you can try calling the number on your levy notice and negotiating a resolution to your tax problems. Keep in mind that you still need to request your official appeal within 30 days of the IRS notice.

Request your CDP hearing by completing and submitting Form 12153, Request for a Collection Due Process or Equivalent Hearing. You can also submit your own written request that contains the information required on Form 12153. Written protests should include your contact details, a statement that you want to appeal the levy, the reasons you disagree, any statutes that support your position, and your signature.

You must postmark your request within 30 days after the date of the IRS Notice of Intent to Levy. If your request is late, you can request an equivalent hearing by checking box 7 on the form. Again, however, there are two important differences between CDP hearings and equivalent hearings you should be aware of:

• You can appeal the decision of a CDP hearing by petitioning the Tax Court, but you can’t go to Tax Court for an equivalent hearing.
• The IRS can levy your assets or wages during the equivalent hearing process. The IRS generally doesn’t levy assets during the CDP hearing process unless the collection of the tax is in jeopardy.

The equivalent hearing needs to be requested within one year of the date of the levy notice.

Send your CDP request to the address listed on your Notice of Intent to Levy. You can also send it by fax if you call the number on the notice and ask for the fax number first.

When to Use the Collection Appeals Program

Use the CAP procedure if you don’t otherwise qualify for the CDP hearing. Unlike a CDP hearing, you can request the CAP procedure before the Notice of Intent to Levy is sent or after the IRS has levied the property. You may be required to appeal the levy within two years from the date the levy occurs.

If you request a CAP procedure before you receive the Notice of Intent to Levy, keep in mind that issues that are decided using the CAP may not be appealed at a later CDP hearing.

The CAP procedure may also result in a quicker decision than the CDP hearing. However, you will not be able to appeal the determination made using the CAP procedure by going to Tax Court.

Third parties can also use the CAP procedure if the IRS wrongfully levied their property. If your property was levied because of another person’s tax liability that you are not responsible for, you might have to use the CAP procedure to appeal this action.

How to Request an Appeal of a Levy Using CAP

There are two ways to request the CAP procedure to appeal a levy. One method you can use is when your only collection contact has been a notice or phone call, and the other method is used when a Revenue Officer has contacted you.

If your only contact has been an IRS notice or phone call, you should first call the phone number on your notice or given to you during a prior call. Try to negotiate a solution to your issues that will allow you to avoid the IRS levy.

If you can’t come to an agreement, ask to appeal the decision by speaking to a manager. The manager should contact you within 24 hours. If you don’t agree with the manager, your case will be forwarded to the IRS Appeals Office. You won’t have to submit a request in writing.

The other method of requesting an appeal is used when you’ve spoken to a Revenue Officer. Request a conference with their Collection manager. If they can’t resolve your issue, let them know you will be submitting Form 9423, Collection Appeal Request. Complete and send this form to the Collection office which you’ve been in contact with.

What to Expect After Requesting an Appeal of a Levy

If your request is timely, the IRS generally won’t move forward with the levy during the appeals process. You still have the option of discussing your case with the Collection office after you’ve sent your request for an appeal. If you can work out a deal with the Collection office, you can withdraw your appeals request at any time. Otherwise, IRS Appeals will contact you to schedule your appeals conference.

Your appeals conference may take place over the phone, using correspondence, or in-person. In some cases, you may need to provide additional financial information. For example, you may need to submit a Collection Information Statement if you are requesting certain types of installment agreements.

When your conference is complete, the appeals office will issue a determination letter. If you requested a timely CDP hearing, you have the right to appeal this decision in Tax Court. If you request a CAP procedure or an equivalent hearing, you can’t go to Tax Court if you disagree with the determination letter.

What If You Don’t Appeal?

If you don’t appeal, the IRS will move forward with the levy. If you have received a Final Notice of Intent to Levy, you will see your wages garnished, bank account funds frozen, or even a physical asset seizure as soon as the 30 days pass. 

Also, if you don’t appeal an in-progress levy, the process will continue to play out until the tax bill is paid in full. 

Who Can Represent You During an Appeal of a Tax Levy

You have the option of representing yourself during the appeals process. If you want assistance, the following individuals can represent you:

• Licensed Tax Attorneys
• Certified Public Accountants
• Enrolled Agents
• Members of your immediate family
• For a business, a regular full-time employee, general partner, or bonafide officer

If you’re considering appealing a tax levy, you need professional answers you can count on, but you may not want to pay a lot of money just to explore this option. This is why we offer a 100% free consultation with one of our honest, licensed professionals who will evaluate your situation and provide you with the answers you need. Chat with us live right now or call us if you prefer. We are not salespeople, we’re true tax professionals.

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