IRS Tax Debt Collection Attempts - Is it a Levy or Property Seizure?
Posted by Dean Alexander on Thu, Nov 19, 2009
Generally speaking, an IRS tax levy such as a bank levy, garnishment, or an accounts receivable levy (taking the tax debt amount from other people who owe you.), all end up in the IRS by a check. So, a levy or garnishment is an IRS collection action in which they get a check in the amount they determine from either your bank or from your employer. The IRS uses Form 686, Intent to Levy Notice, to initiate the process.
IRS property seizure is something bulky the IRS will get in its collection efforts to satisfy a tax debt. They will get a clunker, a boat, a piece of land, or any other type of asset they can take, and eventually auction it off to collect for back taxes. Again, Form 686 is used. Example of serving this notice: IRS embarks on seizing property in an effort to collect on back taxes owed, such as a car which is parking in a commercial parking lot. The IRS will, once again, use Form 686 to deliver to the attendant. The IRS will give the attendant Form 686-A, Notice of Levy and demand the car be turned over. Amazing power? No court order is needed, no nothing.
IRS Authority to Levy, Issue Garnishment, or Attempt Property Seizure
Does the IRS have the authority to execute a levy, garnishment, or property seizure?
They sure do. The Internal Revenue Code (IRC) authorizes a levy as a means to collect delinquent taxes (IRC 6331). It is permitted for any property, or rights to property, that belong to you.
Required IRS Notices for Levy
IRS must deliver the following notices:
1. Notice and Demand for Payment for Tax Debt
2. Notice of Intent to Levy
3. Taxpayers Right to a Collection Due Process Hearing (CDP hearing)
Can You Appeal an IRS Intent to Levy?
Yes, there are two ways:
1. You may request a Collection Due Process (CDP) hearing by filing Form 12153 no later than 30 days from the time you receive the levy notice. The Office of Appeal will issue a determination as to whether the levy was issued correctly or not. If you don't like the decision of the appeal, you can go to United States Tax Court within 30 days after that.
2. You can also appeal a federal levy or garnishment under Collection Appeal Program (CAP) regardless of the taxpayer's ability to appeal under The Collection Due Process (Such as missing the initial 30 day deadline required for the CDP). CAP is independent from the collection function. It gives administrative relief to taxpayer. It is a chance for an administrative review. Quick cautionary note on this point: Unlike the CDP, a CAP cannot be challenged nor can the amount of the tax liability. You cannot proceed under CAP to Tax Court.