The Internal Revenue Service (IRS) can place liens on assets and levy them to collect unpaid taxes. An IRS tax lien records the government’s authority to seize assets to pay tax liabilities. An IRS levy actually seizes assets.
If the IRS places a lien on one or more assets it must send the taxpayer a notice of the lien within five days. To appeal the placement of the lien administratively the taxpayer must request a collection due process hearing with the Office of Appeals within 30 days after the date of the lien notice. Among issues taxpayers raise in such hearings are (1) the levy is subject to the automatic stay for bankruptcy proceedings in progress, (2) there was a procedural error in an assessment, (3) the statutory term of limitations for collection lapsed before the levy notice, (4) the taxpayer had no opportunity to contest the assessment, and (5) there is a spousal defense.
A taxpayer who cannot resolve the IRS levy at the Office of Appeals has 90 days from when the office issues a notice of deficiency to challenge the deficiency in the Tax Court. At this point the taxpayer needs an attorney not only knowledgeable in tax law but also experienced in tax litigation.
Congress has vested jurisdiction over tax cases in several courts: the US Tax Court, US district courts, US bankruptcy courts, and the US Court of Claims. The rules vary among them and so the selection of venue can be important.
The US Tax Court hears only tax cases and there are no juries, only bench trials by judges. The taxpayer need not deposit the deficiency amount before disputing it in Tax Court or in a bankruptcy case. A taxpayer may also pursue a claim for refund in Tax Court.
To dispute the deficiency in a district court or in the Court of Claims the taxpayer must pay the liability up front and in effect make the case a claim for a refund. Jury trials are available in the district courts, which have general civil and criminal jurisdiction derived originally from common law.
An experienced tax attorney can help evaluate the best venue to pursue a refund of taxes or contest the assessment of tax liability. An experienced tax defense litigator can help prevent improper conduct by government counsel and present the best arguments for relief from the deficiency or for a fair refund.
Utah Tax Attorney Jim Gilland has represented hundreds of taxpayers and helped them to resolve many different kinds of tax debt issues including IRS liens and levies. Serving all of Utah, Gilland Law Firm P.C. has office locations in Salt Lake City, Saint George, Layton, Clearfield. Gilland Law has helped clients across the state including in Provo, Logan and Ogden.
