Tax Levies Can Result From A Missing IRS Notice

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In some situations, no news is not always good news. As the Treasury Inspector General of Tax Administration (TIGTA) reported, sometimes no news just means that computer systems aren’t always performing properly. The TIGTA report, dated June 18, 2015, focuses on the notification procedure used by the Internal Revenue Service to alert taxpayers of assessed levies and the opportunity to request a Collections Due Process hearing. The findings show inconsistencies when notifying taxpayers of additional assessments, resulting in cases where some taxpayers did not receive important information regarding their Collection Due Process rights.

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Given the IRS’s ability to take (or, levy) a taxpayer’s assets when taxes go unpaid, Collection Due Process rights, and the notices that direct taxpayers to request a hearing prior to a levy action, are significant. A hearing request has the ability to place a “hold” on the taxpayer’s account, thereby temporarily freezing the IRS’s ability to take levy action. Hearing requests also provide the taxpayer with an avenue through which he or she is able to work closer with the IRS to determine a solution to a delinquent tax bill in place of the proposed levy. The importance of receiving a hearing notice, therefore, cannot be understated and illustrates the gravity of the TIGTA report.

The report found that taxpayers who were issued levies without additional assessments predominantly received their notices without problems. In these situations hearing notices were received within the 30 calendar day time frame prior to the IRS issuing a levy, as required. However, for those taxpayers with additional assessments, only a fraction of notices were received.

A sample of cases were selected out of the Automated Collection System that included additional tax assessments, representing taxpayers who were issued systemic and manual levies. Approximately 40% of taxpayers who were issued systemic levies (or, 12 of the 30 taxpayers sampled) did not receive a new notice of intent to levy and notice of Collection Due Process rights once additional assessments were made on a tax period listed on the original levy notice. Approximately 20% of taxpayers (or, 6 out of 30 taxpayers sampled) who were issued manual levies similarly did not receive a new notice when additional assessments were made on tax periods listed in the levy.

IRS management and computer programmers have begun to tweak computer systems in order to address the findings in the TIGTA report. Unfortunately, it will not be until TIGTA performs a subsequent review, to take place next year, that the changes and potential fixes implemented by the IRS will be tested.

If you are concerned about the possibility of a levy, or want to make sure that you are not missing critical information regarding your Collection Due Process rights, contact a Hayfield Tax Lawyer at Frost & Associates today for a free consultation.

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