So, what happened at the IRS Collection Due Process (CDP) Hearing?  The hearing resulted in the sculptor agreeing to the terms of an installment agreement for full payment of his assessed liability. As part of the installment agreement, however, the appeals officer insisted upon the filing of a notice of lien. The officer believed that notice of lien was necessary under the Internal Revenue Code to protect the government’s interest. The sculptor argued that the notice of lien would hurt his business and would prevent him from satisfying the installment agreement. He claimed that the lien would cause his customers to cease paying for projects up front because they might never receive projects based on the sculptor’s tax difficulties. As such, the sculptor rejected the appeals officer’s proposal.

Thereafter, the appeals officer issued a notice of determination sustaining the notice of levy and authorizing collection by levy of the assessed liability. The sculptor objected and filed a petition with the Tax Court alleging that conditioning the installment agreement upon filing a notice of lien was improper.

Tax Court Agreed That Requiring Notice of Lien Was Improper

The Tax Court held that the appeals officer erroneously concluded a filing of a notice of lien in the circumstances of this case was required. The court stated that the officer “did not balance the need for the efficient collection of taxes with petitioner’s legitimate concern that the collection action (i.e., the notice of lien) be no more intrusive than necessary….” The court then remanded the case for a supplemental CDP hearing to perform balancing factors as required by the Internal Revenue Code before determining any appropriate collection action.

Contact a California Tax Attorney

If you have outstanding tax liability and the IRS is trying to levy your property, an experienced California tax lien attorney can help you negotiate with the IRS to minimize your liability and to protect your property. Janathan L. Allen, APC’s California tax attorneys have extensive experience helping taxpayers and businesses manage and address outstanding tax liabilities. Contact one of our tax attorneys today to find out how we can help you prevent the IRS from levying your property.


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