Just the word “audit” is enough to send chills down the spine of even the most earnest taxpayer. For many American taxpayers, an audit procedure means stressful visits to the IRS office or worse, dealing with revenue agents.
But who can blame you? Nobody wants to see their hard-earned money go up in smokes because of the taxman. When hit with a tax audit, most people feel that it’s just the case of “it is what it is.”
In reality, most people just don’t feel like challenging the IRS. However, you’ll be surprised at how much power you have. That’s right, you can actually file an IRS appeal to protest and hopefully resolve any disagreements about your taxes.
How do you know when it’s time to file a tax appeal?
4 Signs That You Should File an IRS appeal
1. Tax Lien
When the IRS files a tax lien for a certain tax type, they will send you a “Notice of Federal Tax Lien and Your Right to a Collection Due Process Hearing.” within five business days. This notice will inform you that a lien has been filed and you can request a “Collection Due Process” or CDP.
For a tax lien, you can file for an IRS appeal. However, there are certain criteria that must be met such as:
- Taxes are paid in full before the lien was filed
- The agency made an error during the lien filing process
- You are in the process of filing for bankruptcy
- The agency has mistakenly processed and filed a lien to your name
- An expired statute of limitations on the debt prior to the filing of the lien
2. Installment Agreements
If you requested an Installment Agreement and it’s rejected, it is within your rights to appeal. You may also file an IRS appeal if you are under an Installment Agreement but was terminated by the agency.
Typically, you have 76 days to file an appeal but try to file within 30 days for good measure.
For appealing an Installment Agreement, it’s best if you work with an enrolled agent to represent you. Ideally, you want a professional with enough experience and a good track record.
A tax levy is certainly one of the harshest collection methods by the IRS. A levy is the legal seizure of a person’s assets as payment to taxes owed. The IRS may levy your wages, accounts receivables, pensions, bank accounts, insurance policies, and more.
To dispute the levy notice, you can file an IRS appeal. To file the appeal, you need to fill out and submit IRS Form 12153.
If it works in your favor, you may be able to work out a solution. However, it’s a good step to request for an appeals hearing. Keep in mind that the IRS is unable to levy your properties or wages while there’s an ongoing appeal.
4. Offer in Compromise
An Offer in Compromise or OIC enables taxpayers to settle the tax debt for less than the full amount owed. However, the rejection rate for OICs is quite high.
Fortunately, you can appeal an IRS rejection of OIC but it will be a strike on your record. Keep in mind that an OIC that’s rejected is different from the one that’s returned. You can appeal a reject but not when the OIC is returned.
You have 30 days within the issuance of the rejection letter to file an appeal. After 30 days, your request for appeal will be denied.
Never Hesitate to Appeal
While you have numerous options for an appeal, most of them are time sensitive so it’s essential to act fast. For any type of IRS appeals, it’s highly recommended that you work with a tax resolution professional for higher chances of success.