If you money to the IRS, you have taxpayer rights.
Your rights are in the the Internal Revenue Code, which has laws that limit the power of the IRS collection division to collect, levy and destroy.
An IRS collection agent cannot always do what he wants, when he wants.
These laws protect you from the collection enforcement powers of the IRS.
If you are facing an IRS Revenue Officer or an Automated Collection Service representative, IRS collection laws that are on your side can be golden.
For when you need it, here are the most important collection laws and rights in the Internal Revenue Code:
IRS must give you notice before levy and the right to appeal, Internal Revenue Code 6330 and 6331(d):
The IRS must send you a letter before they can take your property, and give you 30 day notice beforehand. This letter is called a Final Notice of Intent to Levy. After you receive a Final Notice, tax laws give you 30 days to file an appeal to dispute the IRS levy, stop it from happening, have a hearing with an IRS appeals officer to reach an alternative solution to levying, and, ultimately if all else fails, petition the US Tax Court for additional review. This is called a collection due process appeal – and all IRS enforcement is on hold while you exercise your rights to appeal.
IRS cannot levy or seize your property unless it results in a recovery of money to them, Internal Revenue Code 6331(f) and 6331(j)(2)(c):
This is known as the no equity rule. In other words, the IRS can only seize your property if it results in payment to them. For example, if you have a F150 truck that is worth $5,000 and has a $5,000 loan on it, an IRS seizure will only get your bank paid on the loan. There will be nothing left for the IRS as there is no equity in it for them. Because of that, they legally cannot seize it. Same is true for your house. The no equity law eliminates the vast majority of IRS seizures.
The IRS has 10 years to collect your unpaid tax debt, Internal Revenue Code 6502:
The good news is that Internal Revenue Code 6502 gives the IRS 10 years to collect tax debts. After 10 years expires, the IRS must, by law, put a credit on your account for the amount that cannot be collected, and move your account balance to zero. The time to collect begins when the IRS first puts a balance due on its books, and ends 10 years later. The end is known as the IRS collection statute expiration date. By law, owing the IRS is not forever.
It is unlikely that the IRS is going to take your personal belongings, household goods, furniture, and clothing, Internal Revenue Code 6334(a):
The Internal Revenue Code 6334 prevents the IRS from taking your everyday personal belongings. In other words, you have the right to keep your essentials – the IRS cannot put you out on the street with no clothes, furniture, or household goods. Like the no equity rule, this is another protection allowing you to keep your property and protect it from the IRS.
The IRS is required by law to consider settling your debt, Internal Revenue Code 7502:
You have heard it on the ubiquitous television and radio ads – settle your tax debts for pennies on the dollar. The truth behind the ads is in Internal Revenue Code 7502, Compromise. Yes, by law, the IRS is authorized to settle your tax debt for less than what you owe, known as an offer in compromise. But be careful – not everyone qualifies for an offer in compromise. However, the IRS has very rigid guidelines on examining an offer in compromise. The IRS will look at your household income, living expenses and asset values, and determine if they can collect the amount owed from you. In most cases, to accept a compromise, the IRS has to be convinced that they will never collect the full amount owed from you. If so, then they can agree to settle for a lower amount, representing what can be paid and recovered.