What Is A Collection Appeal?
A Collection Appeal allows the taxpayer to challenge the IRS’s actions for the collection of past taxes, including the placement of liens on the taxpayer’s properties. In many cases, this challenge will stop or reverse any collection processes and relieves the taxpayer of any collection actions.
Unfortunately, the IRS will begin collection proceedings on any outstanding balances whenever you fall behind on your tax obligations. Furthermore, the IRS has the ability to place liens and levies on your property and assets. Moreover, the IRS will usually begin their collections proceedings by sending you collection notices.
But the IRS is not perfect, despite being a government entity. They can be wrong in assessing penalties and interest on tax debt. Likewise, they can even be wrong in declaring that you have not met your tax obligations. Any wrongful actions done by the IRS can be reversed.
Types of Collection Appeals
There are two types of collection appeals recognized by the IRS: Collection Due Process (CDP) and the Collection Appeal Program (CAP). Similarly, both options apply to specific circumstances which sometimes may overlap. Collection Due Process allows you to appeal a Notice of Federal Tax Lien, both before or after a levy is placed on property, depending on the type of levy enforced.
According to the IRS, Collection Due Process is used when you have received one of the following notices:
- Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320
- Final Notice—Notice of Intent to Levy and Notice of Your Right to a Hearing
- Notice of Jeopardy Levy and Right of Appeal
- Notice of Levy on Your State Tax Refund—Notice of Your Right to a Hearing
The Collection Appeal Program is available in the following circumstances:
- The rejection or termination of an Installment Agreement
- Before or after the IRS has placed a lien, levy or any seizure action on your property
The Collection Appeal Program excludes the following situations:
- Trust Fund Recovery Penalty
- Offer in Compromise
- Jeopardy levies
- Actions taken by a Court
- Issues not within the scope of the IRS
- Collections decisions which would not allow a lien to be released
A Collection Appeal enables the taxpayer to challenge the IRS’s actions for the collection of past taxes, including the placement of liens, levies or seizure on the taxpayer’s properties. In many cases, this challenge will stop or reverse any collection processes and relieves the tax payer of any collection actions. Remember: a collection appeal may allow the taxpayer to at least stop if not reverse the collection process if the collection is found to be a mistake or to cause financial hardship.
When Should I File For A Collection Appeal?
To be eligible for Collection Due Process, you must file for an appeal of the IRS’ ruling and actions within 30 days of the receipt of the first notice of a right to a hearing. This stops any collection actions by the IRS until a final decision is made. You are still able to file after the 30-day window; however, this will not stop the IRS from taking collection actions against you.
The Collection Appeal Program is more lenient in filing for an appeal. Although it is best to take immediate action, this appeal allows you to file before or after any action is taken by the IRS. If you file before the IRS takes any collection action, the CAP will usually protect you from any action being taken in the first place unless the IRS feels that the collection of the tax debt is at risk.
If you believe that the IRS may place a collection action against your properties, it is best to consult a tax professional and explore all of your options as soon as possible A knowledgeable tax professional can determine what course of action will produce the best outcome for you. Give us a call today and we can help you decide on the best course of action for your tax situation.