Presenting a live 90-minute webinar with interactive Q&A IRS Enforced Collection Actions: Challenges and Responses to Federal Tax Liens and Levies Mitigating the Effects of Tax Liens, Navigating the Levy and Asset Seizure Process TUESDAY, FEBRUARY 14, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Venar R. Ayar , Esq., Founder and Tax Attorney, Ayar Law , Southfield, MI Erica Good Pless, J.D., LL.M., The Pless Law Firm , St. Petersburg, Fla. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 . NOTE: If you are seeking CPE credit, you must listen via your computer — phone listening is no longer permitted.
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Continuing Education Credits FOR LIVE EVENT ONLY In order for us to process your continuing education credit, you must confirm your participation in this webinar by completing and submitting the Attendance Affirmation/Evaluation after the webinar. A link to the Attendance Affirmation/Evaluation will be in the thank you email that you will receive immediately following the program. For CPE credits, attendees must participate until the end of the Q&A session and respond to five prompts during the program plus a single verification code. In addition, you must confirm your participation by completing and submitting an Attendance Affirmation/Evaluation after the webinar and include the final verification code on the Affirmation of Attendance portion of the form. For additional information about continuing education, call us at 1-800-926-7926 ext. 35.
IRS Enforced Collection Actions February 14, 2017 FEDERAL TAX LIENS ERICA GOOD PLESS ERICA@THEPLESSLAWFIRM.COM
Tax Lien vs. Tax Levy • What is a Federal Tax Lien? • When a tax liability goes unpaid after demand a legal claim arises by law against the taxpayer for the amount of taxes, interest, and penalties owed by the taxpayer. (Internal Revenue Code § 6321) Secret lien, statutory lien – Automatically comes into existence at the • time of assessment • Notice of Federal Tax Lien (NFTL) – IRS files a public notice to creditors that a taxpayer owes taxes. The lien attaches to all of the taxpayer’s current and future property and rights to property, whether real or personal, to the extent of the taxpayer's interest in the property. • The Service is not required to file a NFTL in order for the tax lien to attach but IRC 6323(a) requires it to be filed in order to have priority • The government’s method of securing its interest in a taxpayer’s property • No property is exempt (one rare exception) • Not a seizure of property 5
Tax Lien vs. Tax Levy • What is a Federal Tax Levy? • Legal seizure of property or rights to property to satisfy a tax liability. (Internal Revenue Code §§ 6330 and 6331) • Bank levy, wage garnishment • Property seizure – IRS takes physical custody of a taxpayer’s property in order to sell it 6
Notice of Federal Tax Lien Timeline • Tax liability is assessed against taxpayer • Taxpayer doesn’t pay liability (approx. 30 days) • IRS issues demand for payment – CP 501 notice (upper right hand corner of IRS letter) • If you don’t pay the amount due or call us to make payment arrangements, we can file a Notice of Federal Tax Lien on your property at any time, if we haven’t already done so. • If the lien is in place, you may find it difficult to sell or borrow against your property. The tax lien would also appear on your credit report – which may harm your credit rating – and your creditors would also be publicly notified that the IRS has priority to seize your property. • Taxpayer doesn’t pay liability • IRS may file a Notice of Federal Tax Lien (approx. 30 days) 7
Avoiding a Notice of Federal Tax Lien • Unlike a tax levy, IRS is not required to issue a Notice of Intent to file a federal tax lien • Demand for payment is the only formal notice a taxpayer will receive prior to a lien being filed • What can you do to stop a lien from being filed? • Pay liability in full • Request an extension to pay (120 days max) • Pay the balance below $50,000 and agree to a direct debit installment agreement that will full pay the balance within 60 months (IRS has discretion whether to file a lien in this case) • Submit a hardship request with the Taxpayer Advocate Service • IRS Form 911 8
Collection Appeals Program (CAP) • Collection Appeals Program (CAP) • A taxpayer may use CAP to appeal the proposed filing of a Notice of Federal Tax Lien (NFTL), the actual filing of an NFTL at the first and each subsequent filing of the NFTL, denial of Application for Withdrawal. • Revenue Officer tells taxpayer he/she is going to file a tax lien. • Under CAP rules, the taxpayer must first contact the Revenue Officer’s manager. If unable to resolve dispute with the manager then submit IRS Form 9423 for Appeals consideration within 3 business days of the conference with the manager. • Appeals generally will review the case within 5 business days. • Phone conference • Not very useful other than to delay lien filing a few days 9
Notice of Federal Tax Lien • Taxpayer receives Notice of Federal Tax Lien - IRS Form 668 (Y)(c) • IRC § 6320(a) requires IRS to notify a taxpayer in writing within 5 business days after the filing of the notice of tax lien • Mailed to taxpayer’s last known address by certified mail • IRC § 6320(b) allows taxpayers to file a Collection Due Process Hearing within 30 days of the Notice • IRS Form 12153 • IRS Office of Appeals • Telephone conference with Appeals Officer • Appeals will issue a Notice of Determination on whether the tax lien should be withdrawn, released, discharged or subordinated • If you disagree with the determination you have 30 days from date of Determination to file a Tax Court petition 10
Notice of Federal Tax Lien • Taxpayer receives Notice of Federal Tax Lien • 30 days have passed to file for the Collection Due Process Hearing • What can you do? • File Equivalent Hearing • IRS Form 12153 – Must check the box on line 7 • IRS Office of Appeals • Telephone conference with Appeals Officer • Appeals will issue a Notice of Determination on whether the tax lien should be withdrawn, released, discharged or subordinated • If you disagree with the determination you cannot go to Tax Court 11
Challenges to Notice of Federal Tax Lien Challenges to Notice of Federal Tax Lien Certificate of Release of Federal Tax Lien Withdrawal of Filed Notice of Federal Tax Lien Certificate of Discharge Subordination Non-attachment 12
Certificate of Release of Notice of Federal Tax Lien • Certificate of Release of Federal Tax Lien - IRS Form 668(Z) • Certificate of Release extinguishes the statutory tax lien. • IRS must issue a formal Certificate of Release within 30 days in the following cases: • Taxes, interest, penalties and fees are paid in full • Taxpayer satisfies payment terms through an Offer in Compromise • Liability becomes legally unenforceable because the statute of limitations for collection has expired • Generally 10 years from date of assessment (exceptions apply) Internal Revenue Code § 6325(a) • IRS accepts a bond guaranteeing payment of the debt 13
Certificate of Release of Notice of Federal Tax Lien • The lien is self-releasing if: • Date for refiling has passed and • The IRS has not refiled the Notice of Federal Tax Lien • Review column (e) on the federal tax lien, “Last Day for Refiling” to determine if the lien is self released • May be different self-releasing dates for different periods • The Notice of Lien will not be considered fully released until all the liabilities shown have been satisfied or self-released. • Important Release Information: For each assessment listed below, unless notice of the lien is refiled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release as defined in IRC 6325(a) 14
Requesting a Certificate of Release If the Federal tax lien has not been released by the 30 days, you can request a Certificate of Release of Federal Tax Lien. The request must be in writing and should be mailed to the Advisory Group servicing your area. Use Publication 4235, Collection Advisory Group Addresses, to determine the address to mail your request. 15
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