Guide to Appealing an IRS Tax Levy
If you want to stop an IRS bank levy or wage garnishment, your last chance is generally to file an appeal of 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 your request is late, you may still get a hearing, but you can also lose some important rights.
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.
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When to Consider Appealing a Tax Levy
There are many reasons you should consider appealing a tax levy, such as:
- An installment agreement is an alternative collection option you want to propose.
- You are going to submit an Offer in Compromise to settle your taxes owed for less than you owe.
- The amount of your tax liability is in question. However, the IRS may prevent you from disputing the tax if you have already had the opportunity and failed to do so.
- You will experience financial hardship if the levy occurs.
- You want to request innocent spouse relief.
- The levy violates the automatic stay in bankruptcy.
- You aren’t responsible for the tax because the collections statute of limitations has expired.
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.
When to Use the Collection Due Process Hearing to Appeal a Levy
You may have the right to use either the CDP hearing or the CAP procedure 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.
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 in Tax Court.
You may also be able to dispute the tax liability at the CDP hearing. 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 and the CAP procedure. Talk to a tax professional if you need help making this decision.
How to Request a CDP Hearing to Appeal a Levy
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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.
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. 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 to Appeal a Levy
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 that 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 taxes owed 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 that 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.
Who Can Represent You During an Appeal of a Levy
You have the option of representing yourself during the appeals process. If you want assistance, the following individuals can represent you:
- Certified Public Accountants
- Enrolled Agents
- Members of your immediate family
- For a business, a regular full-time employee, general partner, or bonafide officer
Contact a tax professional if you need representation or assistance appealing an IRS levy.
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