Guide to Appealing an IRS Tax Lien
Your ability to get credit or sell your property may be compromised when the IRS files a Notice of Federal Tax Lien (NFTL). The IRS must notify you by mail within five days of the official filing of the NFTL.
You have the right to appeal the filing of the federal tax lien, but you’ll need to understand several issues first, such as:
- How long you have to request an appeal of the NFTL.
- How to request the appeal.
- Reasons you should consider appealing the filing of the tax lien.
- Which appeals procedure to use.
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What the IRS Lien Notice Says
You may receive an IRS lien notice on Letter 3172. This letter is telling you that the IRS is filing a tax lien in the public records, such as the county recorder’s office where your real property is located.
The lien is filed to notify other potential creditors of the IRS lien interest. Any creditor who files a lien after the IRS lien would have a lower priority, which could impact your ability to obtain credit.
The notice will also tell you about your appeal rights. You can request an appeal of the filing of the tax lien by requesting an appeals hearing within 30 days.
Reasons to Consider a Tax Lien Appeal
You may want to consider requesting a tax lien appeal for any of the following reasons:
- You’ve already paid your taxes owed in full.
- You entered into an installment agreement that specified that the IRS would not file a tax lien.
- The IRS didn’t follow its own procedures. If you didn’t receive the right notices or the IRS filed the lien prematurely, the IRS may be required to withdraw the lien.
- You were in bankruptcy, and the filing of the lien violated the automatic stay.
- You want to dispute the tax liability, and the IRS didn’t give the opportunity to do so.
- The Collections Statute Expiration Date has passed for your taxes owed. In this case, you would no longer be responsible for repaying the liability.
- You want to request a lien discharge or lien subordination.
- You are requesting innocent spouse relief for the taxes owed.
- You want to propose a collection alternative, such as an installment agreement or Offer in Compromise.
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Collection Due Process Hearing vs. Collection Appeals Procedure
You may be able to appeal the tax lien using either the Collection Due Process (CDP) hearing or the Collection Appeals Program (CAP). There are a few differences you should be aware of before you make your choice.
The main benefits of the CDP hearing are that you can dispute the amount of the tax liability (if you haven’t already had the chance to do so) and that you can go to Tax Court if you disagree with the appeals decision. You can’t go to Tax Court if you use the CAP procedure.
The CAP procedure typically results in a faster decision. It’s also available for a broader range of collection actions. If you want to appeal the denial of a request for a lien discharge, withdrawal, or subordination, you can use the CAP procedure. Alter egos or nominees can also use the CAP procedure because they don’t have CDP rights.
Your IRS lien notice should include an enclosed Form 12153, Request for a Collection Due Process or Equivalent Hearing. You can also submit a written request that has the same information contained on Form 12153.
Send in your CDP request and a copy of your lien notice to the address listed on the notice. You’ll need to provide your reason for requesting the hearing, information about your taxes owed, and your contact information. Make sure you send in your request before the deadline listed on your lien notice.
You can also indicate whether you want a lien discharge, withdrawal, or subordination. A lien withdrawal completely removes the Notice of Federal Tax Lien from all of your property, while a discharge or subordination only applies to a specific asset.
If you make the request after the deadline, but within one year of the date on the notice, you can still receive an equivalent hearing. However, you need to check box 7 on Form 12153 if you want to receive an equivalent hearing.
The equivalent hearing is similar to the CDP hearing, but you will not have the right to go to Tax Court if you disagree with the final outcome.
You can use the CAP procedure before or after the NFTL is filed. You can also use this procedure if you ask for a lien withdrawal, discharge, or subordination, and the IRS denies your request.
The way you request the CAP procedure varies depending on whether a revenue officer has already contacted you.
Requesting an Appeal When You’ve Only Received a Letter or Phone Call
Call the number on your IRS notice. Tell the IRS employee which action you disagree with, your reasons for disagreeing, and your proposed solution to the problem.
If the employee doesn’t agree with you, ask to appeal the decision and speak to their manager. If you can’t speak to the manager at that time, they should return your call within 24 hours.
If the manager doesn’t agree with you, the case will be forwarded to the IRS Appeals Office. You won’t need to submit a written appeal request.
Requesting an Appeal When You’ve Been Contacted by a Revenue Officer
Your first step is to request a conference with the Collection Manager. If you can’t agree, you’ll need to submit a written appeals request.
Send Form 9423, Collection Appeals Request, to the collection office you’ve been in contact with. Tell the Revenue Officer or Manager that you want to appeal within two business days of your conference with the Collection Manager. Your Form 9423 needs to be postmarked within three business days if this conference if you want to avoid the resumption of collection actions.
If the Collection Manager doesn’t contact you for a conference within two business days of your request, call them again or submit Form 9423. You can note on Block 15 that the manager didn’t contact you, along with the date of your request.
What to Expect After Your Appeal
If you request a CDP hearing, a determination letter will be issued once the Appeals Office makes a decision. You can request a judicial review of this decision within the timeframe stated in this letter.
Judicial review is not available for decisions made at equivalent hearings or using the CAP procedure. However, you may be able to try to resolve your issues using other tax resolution strategies.
Alternatives to Appealing the IRS Tax Lien
If you don’t appeal the filing of the IRS tax lien, you can still try to get around the lien at a later date. You can request a lien withdrawal, discharge, or subordination whenever you meet the conditions set forth by the IRS.
You can also focus on paying back or settling your taxes owed. If you enter into a Direct Debit Installment Agreement, pay your balance under $25,000, and meet certain other requirements, you can then ask the IRS to withdraw the tax lien.
Should You Get Representation to Appeal a Tax Lien?
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A tax professional can help you submit your appeal request and negotiate with the IRS. If you aren’t sure which tax resolution option to use, a tax professional can also help you with that decision.
If you are submitting an Offer in Compromise, installment agreement, or a request for innocent spouse relief, you may want professional assistance with the application process. Any of the following people can represent you at a CDP, CAP, or other appeals proceeding:
- Immediate family member
- Tax Attorney
- Certified Public Accountant
- Enrolled Agent
- For business tax cases—a full-time employee, general partner, or bona fide officer.
- Low-Income Taxpayer Clinic (if you are eligible)
A tax professional will have experience with IRS procedures and may be able to resolve your issues more quickly. If you need professional assistance, talk to a tax professional before the deadline listed on your IRS lien notice.