When people come to us, they often feel lost and discouraged. They’ve lived for so long in a constant state of stress and anxiety over their tax problems that they don’t even remember life without the constant threat of the IRS hanging over their head. They want nothing more than to make the problem go away, but don’t even know where to start. But we do. At AFFC Law Firm, we are problem solvers. We come to work every day eager to take on the tax troubles that plague our clients, and transform their stress into relief.
We represent individuals and businesses before the IRS and SCDOR for audit and examination, collections, settlement negotiations and tax resolution, and tax litigation in Tax Court.
As part of our client-first approach to tax resolution, we use a state-of-the-art tax resolution process that eliminates the need for our clients to spend hours pouring over mounds of paperwork. Our process ensures that any work that needs to be done on the clients’ end is simple and intuitive. Don’t worry, we take care of all the complicated stuff.
Contact us today, to schedule a consultation with an experienced tax attorney who has represented individuals and businesses in audit and examinations.
The IRS is in the business of collecting money for the Federal Government. Under ideal circumstances, they will be able to collect that money on a voluntary basis—taxpayers pay the taxes they owe in full and on time.
Of course, life doesn’t always operate under ideal circumstances, and the IRS often finds itself in the position of needing to compel taxpayers to meet their tax obligations. Liens and levies are the tools they use for that compulsion.
The process associated with collecting tax from when a tax return is filed until the tax is collected can be summarized, as follows:
1. Return filed
2. Audit notice
3. 30-Day letter (administrative)
4. 90-Day letter (statutory)
6. Appeals Conference
7. Decision Document determining the deficiency. § 6211
8. Assessment. §§ 6201-03
If the tax is not paid after assessment, the sequence of events beginning with assessment and ending with collection of the tax is as follows:
1. Notice and Demand for Payment within 60 days of assessment. § 6303
2. Statutory Lien. § 6321
3. Series of requests for payment. § 6502
4. Authority to collect the tax. § 6301
5. Possibly a Notice of Lien (Due Process Notice/30-day letter). § 6320
6. Notice of Intent to levy (30-day letter). § 6330
7. Levy. § 6331
As a prerequisite to collection, the IRS must assess the tax and send the taxpayer a notice and demand for payment. § 6303. The IRS must notify the taxpayer of the assessment within 60 days from the date of assessment, and the IRS has 10 years from the assessment date to collect the tax. IRC § 6502(a)(1).
The issuance of a lien is a transitional moment. Issuing a lien means that the IRS has gone from waiting for the taxpayer to comply, to engaging their imposing collections engine. By issuing a lien, the IRS is asserting a legal right to a taxpayer’s property as a security against debt the taxpayer owes to the IRS. Essentially, the IRS is stating their claim on the taxpayer’s assets. That claim, if left unchecked, will eventually end with the IRS seizing the taxpayer’s assets—bank accounts, valuables, real assets with equity—in an attempt to fulfill the outstanding tax debt. The purpose of issuing a lien is to inform other creditors that the IRS now has legal right to the taxpayer’s property.
A levy transfers ownership of an asset to the government. In other words, a levy is a seizure of assets. If a taxpayer ignores months’ worth of requests and notices urging them to address their outstanding tax balance, the IRS will levy the taxpayer’s assets in an attempt to pay down the tax bill.
A levy is the last step in the collections process. When the IRS issues a Final Notice of Intent to Levy (CP 90) to the taxpayer, they are no longer making threats. Unless you take immediate action, the IRS will begin seizing the taxpayer’s assets as soon as 30 days after the notice was issued. The IRS prefers seizing liquid assets such as bank accounts, wages (through garnishment), and social security benefits. However, they will also seize and liquidate assets such as retirement accounts and cash value life insurance policies. The IRS will even seize and liquidate vehicles and real estate if the assets hold sufficient equity to justify the cost of the liquidation process.