Powerful tools are at the disposal of the IRS to collect back taxes. These include liens, levy and garnishment. Mounting a challenge had included a relatively short amount of time to bring wrongful levy claims.
The Tax Cuts and Jobs Act extended the amount of time from nine months to two years for challenging an IRS sale of levied property. This only applies, if a levy/seizure of the property occurred after December 22, 2017.
When the IRS still has your property
Seizure of property should never come as a surprise. The IRS must follow a process that involves many letters. First, the Service must let you know how much you owe in back taxes, interest and penalties. You have the right to appeal of the amount due or request a correction if there is an error.
The next step is generally to file a lien against the property. Moving or not getting your mail could mean you did not receive a notice.
If the IRS seizes your home or car, you can file a wrongful levy claim at any time as long as the Service still possesses the property.
What relief is available?
It often takes an experienced levy release attorney to bring a claim that convinces the IRS it has wrongfully levied your property. In these situations, you might have:
- Your property returned to you
- An amount equal to proceeds from the sale of the property mailed to you
It’s probably always preferable to get the property itself back, so act quickly to get legal assistance.
Thinking of handling this yourself
Consider the case of a taxpayer who responded to an IRS penalty notice with a demand for a more detailed response and a legal affidavit. These claims did not have legal merit, so the IRS never responded and later levied the man’s Social Security benefits.
Once the penalty amount had been recouped, the man brought a wrongful levy lawsuit against the IRS. A court did not need many words to deny it citing his failure to state a claim. He had basically missed his opportunity to challenge the penalty with a poorly drafted response to the penalty letter.
There are defenses to IRS penalties and levies, but they are narrow and often very fact specific. No amount of Google searching can replace the individualized counsel of a tax attorney who can apply the law to your situation and ensure you do not miss an opportunity to challenge a penalty or levy.