Challenging the decisions of the IRS requires timely filing of appeals at each level. Neglecting to do so can break the chain of appeals, leading to the forfeiture of your right to challenge the IRS action through to Tax Court.

Filing appeals offers distinct advantages. Appeals officers have greater flexibility to settle cases compared to revenue officers. Moreover, enforced collection activities, such as levies and wage garnishments, are put on hold during the appeal process, providing an opportunity to resolve the case and address multiple issues simultaneously.

Before levies are imposed on a tax debt, you will receive two letters. The first, known as CP504, is a demand for payment or a threat of asset seizure, and it does not offer appeal rights. Within 30 days, you must contact the IRS to arrange full payment, an installment agreement, or explore other collection alternatives, such as Offer in Compromise, Penalty Abatement, or Innocent Spouse Relief.

The second letter, Letter 1058, Final Notice of Intent to Levy, informs you of the IRS’s intent to seize assets and outlines your appeal rights. It includes a Collection Due Process hearing request form (CDP) that must be completed and submitted to the IRS within 30 days.

By completing the CDP form, you formally notify the IRS of your appeal. Provide your personal details, tax periods being appealed, and include the necessary information either in handwriting or electronically. Remember to include a copy of the final notice letter to ensure the appeals office receives all the required documentation.

The information needed to complete the CDP form can be found in the letter you are appealing (Final Notice of Intent to Levy). This letter typically lists the tax periods subject to the final notice, levy, and subsequent appeal. Make sure to indicate whether the letter pertains to a levy or a lien, and verify that the listed periods match those in the final notice letter. Don’t forget to sign the appeal and file it within the designated timeframe.

To prepare for the hearing, compile a list of the issues you wish to discuss with the appeals officer, including installment agreements, offers in compromise, penalty abatement, innocent spouse relief, and any other relevant matters. Gather all completed forms and supporting documents necessary for a thorough discussion of your case’s background facts. Start assembling this information promptly to allow sufficient time before the scheduled hearing or settlement conference.

If you are dissatisfied with the hearing’s outcome, you have the option to appeal to the Tax Court, followed by the US Court of Appeals, and ultimately, the US Supreme Court. While this process can be expensive and time-consuming, having these options provides you with negotiating power known as the threat of litigation. However, it’s important to note that during the appeals process, the statute of limitations is tolled, meaning it stops ticking or expiring.

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