What Is A Collection Appeal?
When you begin to fall behind on your tax obligations, the IRS will eventually begin to collect on any outstanding balances due to your failure to meet said obligations. The IRS has the ability to place liens and levies on your property and assets should you fail to meet your tax obligations. The IRS will usually begin their collections proceedings by sending you collections notices. IRS, despite it being a government entity, is not perfect. You may find that their actions are sometimes wrong and in some cases reversible.
Collection appeals allow you, the taxpayer, to challenge the IRS’s actions for collection and in many cases either put a pause on their ability to collect or reverse the collection process and relieve yourself of any collection actions taken against you.
There are two types of collection appeals recognized by the IRS. These are Collection Due Process (CDP) and the Collection Appeal Program (CAP). Both options apply to specific circumstances which sometimes may overlap.
Collection Due Process allows you to appeal a Notice of Federal Tax Lien, Either before or after a levy is placed, depending on the type of levy.
According to the IRS, Collection Due Process is an option given that you’ve received one of the following notices:
The Collection Appeal Program is available in the presence of the following circumstances:
The Collection Appeal Program excludes the following situations:
A collection appeal allows you time to collect your thoughts and paperwork so that you are able to better handle the situation. If the collection is found to be a mistake or to cause you financial hardship, a collection appeal may allow you to reverse the collection process. This will relieve you of the collection action.
When Should I File For A Collection Appeal?
In order to be eligible for Collection Due Process, you must file for the appeal within 30 days of the first notice of a right to a hearing for a particular notice. Doing so would stop any collections action from being taken by the IRS until a final decision is made. You are able to file after the 30 day window however if you do so, this would not stop the IRS from being able to begin collection action.
The Collection Appeal Program is more lenient when it comes to 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 unless the IRS feels that the collection is at risk.