Lien, Levy, and Garnishment Appeals

If the Internal Revenue Service has placed any liens or levies on a taxpayer's property or has garnished the wages of a taxpayer, there is an appeals process that can have those potentially devastating terms revoked. A lien is defined as a form of security interest over a piece of property to guarantee the payment of a debt or taxes owed to the IRS. The IRS can place a lien on a taxpayer's motor vehicle, their home, or another piece of property they own. This is where levy comes into play. A levy is the actually seizure of the property or wages of a taxpayer to settle a debt with the IRS. A garnishment is when the IRS will have the employer of a taxpayer remove a large portion of the taxpayer's paycheck to pay off the debt. Having one's wages garnished can be potentially devastating, since the remainder of the paycheck will be too little to live on each week. The percentage of money removed from the paycheck can be anywhere from 30 to 70 percent.

A lien, a levy, or a garnishment can be appealed with the IRS and with the help of a tax attorney. The taxpayer that has had a lien, levy, or garnishment placed on their property or wages can request a Collection Due Process hearing with the Office of Appeals.

If you may need legal assistance with a Property Lien Matter, Submit Your Case for a Free Review from a local Real Estate Lawyer.

Before the taxpayer can request the hearing the grounds for appealing must meet the following criteria:

  • The taxpayer has paid all of the taxes owed prior to receiving the notice of levy
  • The IRS assessed the tax and actually sent the notice while the taxpayer was in bankruptcy
  • The IRS committed a procedural error in their assessment
  • The Statute of Limitations expired before the IRS sent the notice of levy
  • The taxpayer was not given the proper opportunity to dispute the liability
  • The taxpayer requests the opportunity to discuss various collection options
  • The taxpayer wishes to make a spousal defense

A spousal defense is defined as the ability to prove that the taxpayer is innocent regarding the tax problems that the IRS is contacting them about. The taxpayer's spouse could have filed a tax return incorrectly or the taxpayer's ex-spouse could have done the same.

To qualify as an innocent spouse when filing an appeal for a lien, levy, or a wage garnishment one must meet one or more of the following criteria:

  • The taxpayer filed a joint return with an understatement of tax due because of the spouse
  • The taxpayer had no reason to know that the return was filed with an understatement when the spouse signed the return
  • The taxpayer would be treated unfairly by being held liable for the understated tax
  • The taxpayer and his or her spouse are not attempting to transfer property between each other as part of a fraudulent scheme
  • The taxpayer must request innocent spouse relief within two years after the IRS began their collection against the taxpayer for the unpaid taxes

Once the appeal hearing is complete, the IRS will send a letter of determination to the taxpayer that appealed the decision of a lien, levy, or garnishment. The letter of determination will inform the taxpayer of the decision made by the IRS regarding the appeal. Within 30 days of receiving the letter of determination, the taxpayer can bring a suit to contest the decision. The IRS will stop levying wages or property when the levy is released, if the taxpayer pays the debt, or if the time expires for legally collecting the debt of the tax.

If you may need legal assistance in dealing with the IRS, consult with a Certified Tax Attorney in your area today for a free case review.

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