IRS Collections Defense
- Attorneys in Freeman’s tax controversy and litigation practice have been named to U.S. News and World Report’s Best Lawyers in America list, recognized by Chambers & Partners as among the leading tax and litigation attorneys in the United States, including for fraud representations, and recognized as the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas.
- Our tax litigation attorneys include former IRS trial attorneys, former clerks to the Chief Judge of the United States Tax Court, tax law professors, dual-credentialed CPAs, and attorneys with advanced LL.M. tax degrees from the most prestigious tax programs in the nation. One-third of our attorneys are law professors at tier one law schools, teaching tax law.
- Freeman’s tax attorneys have extensive experience in fighting IRS collection efforts. We methodically and efficiently approach each IRS collection matter with the client’s interests in mind.
IRS Collections Overview
Freeman’s IRS collections practice regularly represents clients against the IRS in its collection efforts. We bring a range of experience, tools, and talent to address federal taxes, penalties, liens, levies, and other collection efforts. We are efficient, thorough, and relentless in our advocacy for taxpayers.
We combine creativity and problem-solving skills with experience and substantive tax knowledge. Our attorneys are client-focused tax defenders. They bring a strong mix of piercing intelligence, unwavering integrity, and battle experience.
Best Lawyers® and U.S. News & World Report have recognized Freeman as a “Tier 1” Tax Law firm and our tax attorneys have garnered national recognition for their tax defense work, such as:
- The “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas
- U.S. News – Best Lawyers® Best Lawyers in America
- The Best Lawyers in America®, Chambers USA
In IRS collection defense, who represents a taxpayer means how that taxpayer is represented. We bring unique industry insights from day one and work to protect and defend taxpayers, using all assets at our disposal.
Federal Tax Liens
Tax liens are one of the primary tools that the IRS uses to collect outstanding taxes. A Notice of Federal Tax Lien is a document that is publicly filed with state and local jurisdictions in order to put other creditors on notice of the IRS’s lien interest. As a result, the NFTL itself does not actually create the lien—it merely informs others of a lien that already exists by statute. Under Section 6321 of the Internal Revenue Code, federal tax liens arise automatically when a taxpayer fails or refuses to pay tax after notice and demand.
Section 6321 further states that a federal tax lien attaches to all of a taxpayer’s property or rights to property. And, according to the Supreme Court, state law controls the determination of the existence of any legal interest that a taxpayer has in property. See Aquilino v. United States, 363 U.S. 509 (1960). However, whether the state-created interest constitutes property or rights to property to which the federal tax lien attaches is a matter of federal law. See United States v. Bess, 357 U.S. 51 (1958).
We understand the impact that a federal tax liens can have for taxpayers. Accordingly, we work diligently to obtain various types of lien relief, including: a discharge of property from the effect of a tax lien, a certificate of non-attachment, a certificate of erroneous lien, subordination of a tax lien, or withdrawal of a Notice of Federal Tax Lien.
Federal Tax Levies
The IRS’s ability to seize a taxpayer’s property is one of its most potent weapons to encourage tax compliance. But, as the Treasury Inspector General for Tax Administration (“TIGTA”) has previously found, the IRS does not always follow levy procedures:
TIGTA identified instances in which the IRS did not comply with a particular Internal Revenue Code section, an internal procedure, or there was no guidance present, resulting in violations of taxpayers’ rights and taxpayer burden. Errors identified were related to Collection Due Process rights, nonjudicial sale notices, and property valuations.
TIGTA Report, Review of Compliance With Legal Guidelines When Conducting Seizures of Taxpayers’ Property.
The collection of unpaid tax by the Internal Revenue Service (IRS) generally begins with collection notices, after which the case will usually be assigned either to the IRS’s Automated Collection System, Field Collection, or Collection Queue. Taxpayers should be aware of various IRS notices/letters and their significance: Notice CP501, Notice CP503, Notice CP504, Notice CP504B, Letter 3172, Notice CP90, Notice LT11, and Letter 1058.
The threat of an IRS levy is unsettling to most, if not all, taxpayers. We work relentlessly to assert taxpayers’ rights and avoid levy actions by asserting taxpayers’ collection due process rights and assessing collection alternatives.
IRS Collection Alternatives
According to IRS Notice LT11, Letter 1058, and Section 6331 of the Internal Revenue Code, levy actions can be stopped. A taxpayer can pursue certain collection alternatives, such as installment agreements and offers in compromise. While such installment agreements and offers are pending, the IRS may not pursue levy actions against a taxpayer.
According to Section 6159 of the Internal Revenue Code, the IRS is authorized to enter into written agreements with any taxpayer under which such taxpayer is allowed to make payment on any tax in installment payments if the IRS determines that such agreement will facilitate full or partial collection of such liability. Depending on a taxpayer’s situation, the taxpayer may be required to enter into a direct debit installment agreement with the IRS.
Alternatively, a taxpayer may pursue an offer in compromise. Section 7122 of the Code provides broad authority to the IRS to compromise any case arising under the internal revenue laws, as long as the case has not been referred to the Department of Justice for prosecution or defense. For many taxpayers, the IRS’s Offer in Compromise program is a path toward a fresh start. To qualify, a taxpayer must submit an offer package (including all required documentation and forms) that meets certain IRS criteria. There are three categories for offer in compromise relief: (1) doubt as to liability; (2) doubt as to collectability; and (3) promotion of effective tax administration.
We evaluate a taxpayer’s best collection alternatives from the start of our client engagements. The attorneys at Freeman Law constantly analyze a taxpayer’s personal, financial, and tax circumstances and pursue the taxpayer’s most viable options accordingly.
Collection Due Process Hearings
Since 1998, the Internal Revenue Code has provided significant procedural rights to taxpayers with respect to proposed levies. Specifically, under I.R.C. § 6330, the IRS is precluded from levying until it has “notified such person in writing of their right to a . . . [Collection Due Process] hearing.” Once the CDP notice is issued, a taxpayer has 30 days to timely respond, and if the taxpayer does so, the levy action is stayed until the taxpayer has completed the CDP process. Significantly, this stay of levy action can last from the time the CDP notice is issued until the United States Tax Court’s decision becomes final, if the taxpayer contests the IRS’ CDP hearing determinations.
Accordingly, taxpayers are entitled to a CDP hearing but must exercise their respective rights in a timely manner. That is, CDP hearings are crucial. As the IRS has previously stated, a “CDP hearing is an opportunity to discuss alternatives to enforced collection and permits you to dispute the amount you owe if you have not had a prior opportunity to do so.”
Representation is key with these administrative procedures. According to the former National Taxpayer Advocate, taxpayers face an uphill battle in CDP hearings:
While the Internal Revenue Code contains significant rights, protections, and expectations of taxpayers, these provisions are scattered throughout the Code and the IRM. They are not easily accessible to taxpayers, nor are they written in language that is readily understandable by many taxpayers.
Our attorneys have deep-bench experience with respect to CDP hearings. We work tirelessly to dispute taxes, propose viable collection alternatives, and protect taxpayers from IRS collection efforts.
According to its mission statement, IRS Criminal Investigation “serves the American public by investigating potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.” While IRS collection efforts may start out as civil matters, they could result in a criminal referral to IRS Criminal Investigation depending on the circumstances.
Our attorneys at Freeman Law defend taxpayers with criminal exposure in mind. We work around the clock, utilizing our tax and legal acumen and experience, to keep civil tax matters just that—civil.
Our firm and attorneys maintain a reputation for integrity and vigorous representations defending taxpayers and tax professionals. Freeman attorneys have experience defending against a range of government agencies, with a particular focus on the IRS.
Well-versed in high-stakes tax and criminal tax defense, our attorneys are trial-ready and battle tested; we’re ready when you are.
- Wrongful Seizure. Recovered hundreds of thousands of dollars as lead counsel in suit against United States/IRS and Department of Justice for wrongful collection activities and seizure of assets.
- Criminal Tax Referral. Represented client in criminal tax referral involving allegations of income tax evasion; “killed case,” obtaining declination to prosecute client from United States Attorneys Office.
- Collection Alternatives. Represented client in IRS offer in compromise involving offer to compromise tax debt of more than $15 million for less than $100,000.
- Collection Alternatives. Represented client in obtaining IRS offer in compromise, settling tax debt of more than $1 million dollars for less than $150,000.
- Collection Alternatives. Counseled clients on successful IRS collection alternatives, such as offers in compromise, resulting in significant reductions and/or eliminations of federal tax debts.
- Trust Fund Recovery Penalty. Represented client against IRS assessment of Trust Fund Recovery Penalty. Obtained complete removal of Trust Fund Recovery Penalty.
- Collection Due Process. Represented clients in Collection Due Process (CDP) hearing matters, including representation before the IRS Independent Office of Appeals.