What is a collection due process appeal?

On Behalf of | Feb 5, 2023 | Back Taxes or Tax Debt

You may have outstanding tax debt with the Internal Revenue Service (IRS). If you’re struggling to resolve it, then the IRS may pursue collective activities. The IRS will formally notify you about what collective activity they intend to take if you have unpaid tax debt. There are two kinds of letters you may receive:

  • IRS Letter 3172: Notice of Federal Tax Lien Filing and Your Right to a Hearing
  • IRS Letter 1058: Notice of Intent to Levy and Notice of Your Right to a Hearing

However, if you believe the amount you owe the IRS is wrong and you shouldn’t be suffering from a lien, levy or wage garnishment, then you may consider filing a collection due process appeal. When filing a collection due process appeal, you should first understand what each letter means. Here’s what you should know:

IRS Letter 3172

A Notice of Federal Tax Lien (NTFL) is used to protect government interests in real estate, personal property and financial assets by notifying state and local county recording offices about your outstanding debt. A lien may be placed on your vehicle, for example. Selling your vehicle may be difficult as the IRS could take money from the sale to pay off your debt.

IRS Letter 1058

A bank levy allows the IRS to take property or financials forcefully to pay off said debt. They may liquidate your home, vehicle or valuable assets to do so. Likewise, you may also suffer from wage garnishment because of your unpaid debt.

Right to a hearing

These kinds of letters can seem intimidating, but you should be aware that each letter has a right to a collection due process hearing. You can request a collection due process hearing within 30 days of receiving your letter. During this hearing, you may dispute the amount of debt owed and discuss other methods of collection. It’s often important to understand your legal options when appearing for a collections due process appeal.