[0:00] Welcome to Resilience and Resolve with Lance Drury.
[0:05] Welcome to Resilience and Resolve with Attorney Lance Drury.
[0:08] Lance has spent more than 30 years helping individuals
[0:10] and small business owners resolve serious IRS tax problems.
[0:14] I'm Evan Mackenzie.
[0:15] Today, we're talking about an important taxpayer right
[0:17] that many people don't realize they have.
[0:19] The ability to challenge certain IRS collection actions
[0:22] through what is called collection due process hearing.
[0:26] Lance, my man, welcome back.
[0:27] Hi, you're doing evidence always great to be here
[0:29] and get to see you all the time.
[0:31] It's as a pleasure, Lance.
[0:32] You know, it's been a little bit,
[0:33] but I'm happy to be back with you.
[0:34] So when someone receives that notice that the IRS intends
[0:38] to take collection action,
[0:40] what exactly is collection due process hearing?
[0:42] Well, collection due process hearing
[0:44] gives you the right to appeal a final notice of intent to levy.
[0:49] And what happens then is levy action is suspended
[0:53] until you've had the right to that hearing.
[0:55] Now, it's interesting that we're talking about this today.
[0:59] Because this is evolving.
[1:01] There's two things now going on concerning collection due process
[1:05] hearings.
[1:06] They are taking so long because the IRS is so backlogged
[1:12] that we are not filing collection due process hearings.
[1:16] We're waiting for the 30 days to pass.
[1:19] And then we're filing the equivalency hearing because,
[1:23] especially if there's less than two years to run on the clock
[1:27] for collections because if you file an equivalency hearing,
[1:30] the clock doesn't stop and it could be nine months
[1:33] are longer before you have that collection due process hearing.
[1:38] And that's due to the backlog in the IRS.
[1:41] And here's the other thing that's going on that's interesting.
[1:44] My attorneys tell me this.
[1:46] We've had meetings.
[1:47] We're going to have another one Monday.
[1:48] Is that instead of pursuing the collection due process hearing,
[1:54] they are cold calling the attorney on the case,
[1:58] trying to see if they can work it out because it is taking forever
[2:04] for those collection due process hearings to be held.
[2:07] You know, I've said it before, Evan, but I'm going to say it again.
[2:11] You know, there's not enough staff.
[2:14] The service is extremely slow at the IRS now.
[2:18] Nobody wants the IRS to be funded, but then guess what?
[2:23] If they're not properly funded and you have a problem,
[2:26] then you're going to complain because there's no service
[2:28] because a simple problem is taking six months to a year
[2:32] and we have no control over that.
[2:34] So if you've got a problem with how slow the IRS is operating,
[2:39] you need to get a hold of your congressperson
[2:42] and you need to tell them to fund the IRS more
[2:45] because this is going to be the new reality
[2:48] and I don't see that it's going to stop anytime soon.
[2:51] You know, Atlanta, what point in the IRS collection process
[2:54] is a taxpayer have the right to request this type of hearing?
[2:57] Well, normally it's after an LT 11 letter or a CP 90
[3:01] which are the final notices of intent to levy
[3:04] or if you have a revenue officer,
[3:06] they will send you a final notice of intent to levy.
[3:09] There's other notices prior to that time
[3:12] but you cannot file an appeal at that time
[3:15] because it doesn't give you your appeal rights.
[3:17] They're just trying to scare the taxpayer into paying the debt.
[3:20] So there's no, there's a whole sequence of letters
[3:23] the IRS has to send before they can levy you
[3:26] but it's when you get the LT 11, the CP 90
[3:29] or a final notice of intent to levy from a revenue officer
[3:33] that you have the right to file a collection view process hearing.
[3:36] So what kind of IRS actions can be challenged
[3:40] through that collection view process hearing lens?
[3:42] Well, there's a variety of things.
[3:44] You know, basically you're trying to work out an agreement there
[3:47] so you can bring up financial hardship.
[3:50] You can tell the IRS, I don't have the ability to pay any of this back
[3:54] but then you got to prove it to the satisfaction of the IRS.
[3:57] You're going to have to fill out financial statements.
[4:00] You're going to have to have accompanying documents
[4:02] which prove up your actual expenses.
[4:06] And you know, you can also challenge whether or not the liability
[4:10] should have been there in the first place
[4:12] that it was a mistake.
[4:13] You can go after penalty abatement.
[4:15] There's all kinds.
[4:16] You can set up installment agreements.
[4:18] You can even try to file an offer and compromise
[4:21] through a collection view process hearing
[4:23] and a collection view process hearing
[4:26] unlike an equivalency hearing.
[4:28] If you don't get any satisfaction there,
[4:30] you ask for a determination letter.
[4:32] You have the right to go to US tax court to appeal that determination
[4:36] and have another tribunal hear your grievances against the IRS.
[4:41] Once a hearing is requested, though,
[4:43] Lance, how does that affect the IRS's ability to move forward
[4:47] with that collection?
[4:48] Well, they can't.
[4:49] The collection action is suspended until such time
[4:55] as the hearing is held.
[4:57] And you choose not to go to US tax court.
[5:00] Then it goes back into the regular collections or it goes back
[5:03] to a revenue officer.
[5:05] But during that whole time,
[5:07] that you're waiting for a collection view process hearing,
[5:11] the IRS cannot take any collection action against you.
[5:15] So, Lance, you know, you work with clients who use this process
[5:18] to slow things down and maybe reevaluate their options.
[5:21] Do you have a situation where requesting a hearing
[5:23] change the direction of the case?
[5:25] Well, it does give you a lot of time to pursue different alternatives
[5:29] for settlement.
[5:31] It gives you time to get your ducks in a row with your client
[5:34] to get financial statements to see what's viable.
[5:37] And the beauty of all that is,
[5:39] as we've said, they can't take collection action
[5:41] during you against you during all that time.
[5:44] Because, Evan, I hate to tell you this,
[5:47] but the clients just don't give us a financial statement
[5:50] and we're done because those financial statements are confusing.
[5:53] They're complicated for the average individual.
[5:56] Nobody fills them out right the first time.
[5:59] We have to go through them three, four top five times.
[6:02] We've got to go through bank statements,
[6:04] credit card statements, debit card statements for certain categories
[6:08] of expenses.
[6:09] And we have to do that for two reasons.
[6:12] We've got to make sure the numbers on those financial statements
[6:16] are accurate because, you know,
[6:18] you're submitting those under penalties of perjury.
[6:21] The taxpayer doesn't want to perjure himself.
[6:23] And secondly, you know what?
[6:25] You give us bad numbers.
[6:27] We're going to give you a bad advice.
[6:29] So we've got to make sure the numbers are accurate
[6:31] for those two reasons.
[6:33] And we do more that.
[6:35] We do more compiling and analyzing the financial information
[6:39] than anything else that we do.
[6:42] And it takes a lot of time.
[6:43] It's a lot of time for us.
[6:44] And it's a lot of time for the taxpayer.
[6:46] But I tell the taxpayers.
[6:48] In the initial consult.
[6:50] If you don't do what I ask you to do,
[6:52] we can't help you out.
[6:53] You know, and if you want to get a deal with the IRS,
[6:56] you got to make sure the last six years.
[6:58] Tax returns are prepared and filed.
[7:00] And you've got to fill out financial statements.
[7:03] So you just want to pay the whole debt off.
[7:05] If you're going to do that, then you don't have to worry
[7:07] about the financial statements.
[7:09] But most of my clients, they want to cut a deal.
[7:13] They don't want to pay the whole thing back.
[7:16] So 85 to 90% of our clients never pay back the full amount.
[7:20] So Lance, what issues are typically discussed
[7:22] or maybe reviewed during a collection due process hearing?
[7:26] Well, normally the discussion revolves around the taxpayers' ability
[7:30] to pay the tax that is owed back.
[7:33] And then, you know, they can come up and they can say,
[7:36] okay, I need more documentation for this.
[7:39] Or I need this or I need some pay stubs from the taxpayer.
[7:43] So there can be various issues that come up or they can say,
[7:48] well, the taxpayer has eight homes.
[7:51] He didn't list all those.
[7:52] You know, he's got rental properties.
[7:54] Why didn't he list them?
[7:55] Because they have access to all that information.
[7:58] So you don't want to fudge a most financial statements.
[8:01] Just like I said earlier, you're engaging in perjury
[8:05] if you don't feel those out accurately.
[8:07] And you don't want to do that.
[8:09] You don't want to try to defy the taxing authorities.
[8:13] You know, you can get deals with Uncle Sam,
[8:15] but we're going to do it the right way.
[8:17] We're going to do it the ethical way.
[8:19] We're going to do it playing the rules of the game.
[8:21] We're not going to do anything shady.
[8:23] And we're not going to hide any information for the IRS.
[8:26] That's relevant.
[8:27] How does this process create opportunities
[8:30] to explore resolution options like those payment plans
[8:33] or those settlements?
[8:34] Well, that's what the collection do process hearings all about Evan.
[8:38] It's for you to get a deal because guess what?
[8:42] Once you get a deal, the IRS is not going to love you.
[8:45] But if you don't have an agreement,
[8:47] the IRS is free to love you if they've gone through the sequence
[8:50] of letters that they're required to do.
[8:52] So it gives you an opportunity to get this resolved.
[8:56] But you also have to be a hundred percent compliant moving forward.
[9:01] I had a guy years ago.
[9:03] He had to harm me three times because he was paying on the agreement.
[9:07] But he wasn't having enough withheld from his paycheck.
[9:10] So it took him three times to harm me before I could convincing me
[9:13] had to get get more withheld from his paycheck.
[9:16] So he didn't have to harm me again.
[9:18] And so, you know, you've got to be a hundred percent compliant moving forward,
[9:23] which means you have to file your taxes on time.
[9:26] You have to pay on time.
[9:28] Or guess what, Evan?
[9:29] The deal goes down the drain.
[9:31] You're back to square one.
[9:32] You've wasted all your money and hiring me to get you a resolution
[9:36] because you're not compliant moving forward.
[9:39] What mistakes do people make when they overlook or misunderstand
[9:43] their right to request this type of hearing though, Lance?
[9:46] Well, they miss the deadline.
[9:47] And then they get loving.
[9:48] Yeah.
[9:49] You know, they get their paycheck garnished.
[9:51] It could be up to 90% of their paycheck.
[9:54] They can have their bank account wiped out.
[9:56] They can have 15% of their Social Security taken.
[9:59] But those Social Security deposits are direct debits into your bank account.
[10:05] And once it's in the bank account, they can take the whole thing.
[10:09] So, you know, trying to do this on your own, trying to navigate the IRS maze on your own is not very smart.
[10:17] You need professional help.
[10:19] You need people who do this every single day.
[10:22] That's all we do, Evan, when I was a small town lawyer,
[10:26] 15 hours a year and continuing legal education.
[10:29] I have a day-long webinar next week.
[10:32] All of the attorneys in my office do 50 to 100 hours or more every year.
[10:38] Just keeping up on this.
[10:40] The IRS is a bureaucracy.
[10:42] They're constantly changing.
[10:44] Procedures change.
[10:45] That's why we do monthly meetings with all the attorneys.
[10:48] And exchange ideas and tell each other what procedures are now going on or taking effect.
[10:54] And so we find that very helpful in helping our clients get the best possible deal from the IRS.
[11:01] So, Lance, for someone listening who just received a notice about IRS collection activity,
[11:06] what should they understand about the importance of responding within the required time frame?
[11:11] Well, what they need to understand is if they don't take action.
[11:14] And they don't want to do this on their own because they're liable to screw it up.
[11:18] They're going to get levied.
[11:20] And the IRS can take all of your assets, your income.
[11:23] So you do not want that to happen.
[11:25] So you've got to be responsive when you get those nasty notices.
[11:29] Call us, Evan, and we'll take care of you.
[11:31] Yes, tough, Lance.
[11:32] Thank you for your time, sir.
[11:33] Thank you, Evan.
[11:34] Always a pleasure.
[11:35] Thank you for listening to Resilience and Resolve with Lance.
[11:38] Drury, understanding your rights during the IRS collection process
[11:41] can make a meaningful difference in how tax problems are handled.
[11:44] If you're facing IRS collection actions that went guidance before things escalate further,
[11:48] visit lancejurylaw.com.
[11:50] Don't forget to like, leave a review, and subscribe to the show.
[11:52] So you don't miss the next episode and we'll see you all next time.
[11:55] Thanks for watching.
[11:56] Be sure to hit that like and subscribe button
[11:59] and leave us a review in the comments.
[0:05] Welcome to Resilience and Resolve with Attorney Lance Drury.
[0:08] Lance has spent more than 30 years helping individuals
[0:10] and small business owners resolve serious IRS tax problems.
[0:14] I'm Evan Mackenzie.
[0:15] Today, we're talking about an important taxpayer right
[0:17] that many people don't realize they have.
[0:19] The ability to challenge certain IRS collection actions
[0:22] through what is called collection due process hearing.
[0:26] Lance, my man, welcome back.
[0:27] Hi, you're doing evidence always great to be here
[0:29] and get to see you all the time.
[0:31] It's as a pleasure, Lance.
[0:32] You know, it's been a little bit,
[0:33] but I'm happy to be back with you.
[0:34] So when someone receives that notice that the IRS intends
[0:38] to take collection action,
[0:40] what exactly is collection due process hearing?
[0:42] Well, collection due process hearing
[0:44] gives you the right to appeal a final notice of intent to levy.
[0:49] And what happens then is levy action is suspended
[0:53] until you've had the right to that hearing.
[0:55] Now, it's interesting that we're talking about this today.
[0:59] Because this is evolving.
[1:01] There's two things now going on concerning collection due process
[1:05] hearings.
[1:06] They are taking so long because the IRS is so backlogged
[1:12] that we are not filing collection due process hearings.
[1:16] We're waiting for the 30 days to pass.
[1:19] And then we're filing the equivalency hearing because,
[1:23] especially if there's less than two years to run on the clock
[1:27] for collections because if you file an equivalency hearing,
[1:30] the clock doesn't stop and it could be nine months
[1:33] are longer before you have that collection due process hearing.
[1:38] And that's due to the backlog in the IRS.
[1:41] And here's the other thing that's going on that's interesting.
[1:44] My attorneys tell me this.
[1:46] We've had meetings.
[1:47] We're going to have another one Monday.
[1:48] Is that instead of pursuing the collection due process hearing,
[1:54] they are cold calling the attorney on the case,
[1:58] trying to see if they can work it out because it is taking forever
[2:04] for those collection due process hearings to be held.
[2:07] You know, I've said it before, Evan, but I'm going to say it again.
[2:11] You know, there's not enough staff.
[2:14] The service is extremely slow at the IRS now.
[2:18] Nobody wants the IRS to be funded, but then guess what?
[2:23] If they're not properly funded and you have a problem,
[2:26] then you're going to complain because there's no service
[2:28] because a simple problem is taking six months to a year
[2:32] and we have no control over that.
[2:34] So if you've got a problem with how slow the IRS is operating,
[2:39] you need to get a hold of your congressperson
[2:42] and you need to tell them to fund the IRS more
[2:45] because this is going to be the new reality
[2:48] and I don't see that it's going to stop anytime soon.
[2:51] You know, Atlanta, what point in the IRS collection process
[2:54] is a taxpayer have the right to request this type of hearing?
[2:57] Well, normally it's after an LT 11 letter or a CP 90
[3:01] which are the final notices of intent to levy
[3:04] or if you have a revenue officer,
[3:06] they will send you a final notice of intent to levy.
[3:09] There's other notices prior to that time
[3:12] but you cannot file an appeal at that time
[3:15] because it doesn't give you your appeal rights.
[3:17] They're just trying to scare the taxpayer into paying the debt.
[3:20] So there's no, there's a whole sequence of letters
[3:23] the IRS has to send before they can levy you
[3:26] but it's when you get the LT 11, the CP 90
[3:29] or a final notice of intent to levy from a revenue officer
[3:33] that you have the right to file a collection view process hearing.
[3:36] So what kind of IRS actions can be challenged
[3:40] through that collection view process hearing lens?
[3:42] Well, there's a variety of things.
[3:44] You know, basically you're trying to work out an agreement there
[3:47] so you can bring up financial hardship.
[3:50] You can tell the IRS, I don't have the ability to pay any of this back
[3:54] but then you got to prove it to the satisfaction of the IRS.
[3:57] You're going to have to fill out financial statements.
[4:00] You're going to have to have accompanying documents
[4:02] which prove up your actual expenses.
[4:06] And you know, you can also challenge whether or not the liability
[4:10] should have been there in the first place
[4:12] that it was a mistake.
[4:13] You can go after penalty abatement.
[4:15] There's all kinds.
[4:16] You can set up installment agreements.
[4:18] You can even try to file an offer and compromise
[4:21] through a collection view process hearing
[4:23] and a collection view process hearing
[4:26] unlike an equivalency hearing.
[4:28] If you don't get any satisfaction there,
[4:30] you ask for a determination letter.
[4:32] You have the right to go to US tax court to appeal that determination
[4:36] and have another tribunal hear your grievances against the IRS.
[4:41] Once a hearing is requested, though,
[4:43] Lance, how does that affect the IRS's ability to move forward
[4:47] with that collection?
[4:48] Well, they can't.
[4:49] The collection action is suspended until such time
[4:55] as the hearing is held.
[4:57] And you choose not to go to US tax court.
[5:00] Then it goes back into the regular collections or it goes back
[5:03] to a revenue officer.
[5:05] But during that whole time,
[5:07] that you're waiting for a collection view process hearing,
[5:11] the IRS cannot take any collection action against you.
[5:15] So, Lance, you know, you work with clients who use this process
[5:18] to slow things down and maybe reevaluate their options.
[5:21] Do you have a situation where requesting a hearing
[5:23] change the direction of the case?
[5:25] Well, it does give you a lot of time to pursue different alternatives
[5:29] for settlement.
[5:31] It gives you time to get your ducks in a row with your client
[5:34] to get financial statements to see what's viable.
[5:37] And the beauty of all that is,
[5:39] as we've said, they can't take collection action
[5:41] during you against you during all that time.
[5:44] Because, Evan, I hate to tell you this,
[5:47] but the clients just don't give us a financial statement
[5:50] and we're done because those financial statements are confusing.
[5:53] They're complicated for the average individual.
[5:56] Nobody fills them out right the first time.
[5:59] We have to go through them three, four top five times.
[6:02] We've got to go through bank statements,
[6:04] credit card statements, debit card statements for certain categories
[6:08] of expenses.
[6:09] And we have to do that for two reasons.
[6:12] We've got to make sure the numbers on those financial statements
[6:16] are accurate because, you know,
[6:18] you're submitting those under penalties of perjury.
[6:21] The taxpayer doesn't want to perjure himself.
[6:23] And secondly, you know what?
[6:25] You give us bad numbers.
[6:27] We're going to give you a bad advice.
[6:29] So we've got to make sure the numbers are accurate
[6:31] for those two reasons.
[6:33] And we do more that.
[6:35] We do more compiling and analyzing the financial information
[6:39] than anything else that we do.
[6:42] And it takes a lot of time.
[6:43] It's a lot of time for us.
[6:44] And it's a lot of time for the taxpayer.
[6:46] But I tell the taxpayers.
[6:48] In the initial consult.
[6:50] If you don't do what I ask you to do,
[6:52] we can't help you out.
[6:53] You know, and if you want to get a deal with the IRS,
[6:56] you got to make sure the last six years.
[6:58] Tax returns are prepared and filed.
[7:00] And you've got to fill out financial statements.
[7:03] So you just want to pay the whole debt off.
[7:05] If you're going to do that, then you don't have to worry
[7:07] about the financial statements.
[7:09] But most of my clients, they want to cut a deal.
[7:13] They don't want to pay the whole thing back.
[7:16] So 85 to 90% of our clients never pay back the full amount.
[7:20] So Lance, what issues are typically discussed
[7:22] or maybe reviewed during a collection due process hearing?
[7:26] Well, normally the discussion revolves around the taxpayers' ability
[7:30] to pay the tax that is owed back.
[7:33] And then, you know, they can come up and they can say,
[7:36] okay, I need more documentation for this.
[7:39] Or I need this or I need some pay stubs from the taxpayer.
[7:43] So there can be various issues that come up or they can say,
[7:48] well, the taxpayer has eight homes.
[7:51] He didn't list all those.
[7:52] You know, he's got rental properties.
[7:54] Why didn't he list them?
[7:55] Because they have access to all that information.
[7:58] So you don't want to fudge a most financial statements.
[8:01] Just like I said earlier, you're engaging in perjury
[8:05] if you don't feel those out accurately.
[8:07] And you don't want to do that.
[8:09] You don't want to try to defy the taxing authorities.
[8:13] You know, you can get deals with Uncle Sam,
[8:15] but we're going to do it the right way.
[8:17] We're going to do it the ethical way.
[8:19] We're going to do it playing the rules of the game.
[8:21] We're not going to do anything shady.
[8:23] And we're not going to hide any information for the IRS.
[8:26] That's relevant.
[8:27] How does this process create opportunities
[8:30] to explore resolution options like those payment plans
[8:33] or those settlements?
[8:34] Well, that's what the collection do process hearings all about Evan.
[8:38] It's for you to get a deal because guess what?
[8:42] Once you get a deal, the IRS is not going to love you.
[8:45] But if you don't have an agreement,
[8:47] the IRS is free to love you if they've gone through the sequence
[8:50] of letters that they're required to do.
[8:52] So it gives you an opportunity to get this resolved.
[8:56] But you also have to be a hundred percent compliant moving forward.
[9:01] I had a guy years ago.
[9:03] He had to harm me three times because he was paying on the agreement.
[9:07] But he wasn't having enough withheld from his paycheck.
[9:10] So it took him three times to harm me before I could convincing me
[9:13] had to get get more withheld from his paycheck.
[9:16] So he didn't have to harm me again.
[9:18] And so, you know, you've got to be a hundred percent compliant moving forward,
[9:23] which means you have to file your taxes on time.
[9:26] You have to pay on time.
[9:28] Or guess what, Evan?
[9:29] The deal goes down the drain.
[9:31] You're back to square one.
[9:32] You've wasted all your money and hiring me to get you a resolution
[9:36] because you're not compliant moving forward.
[9:39] What mistakes do people make when they overlook or misunderstand
[9:43] their right to request this type of hearing though, Lance?
[9:46] Well, they miss the deadline.
[9:47] And then they get loving.
[9:48] Yeah.
[9:49] You know, they get their paycheck garnished.
[9:51] It could be up to 90% of their paycheck.
[9:54] They can have their bank account wiped out.
[9:56] They can have 15% of their Social Security taken.
[9:59] But those Social Security deposits are direct debits into your bank account.
[10:05] And once it's in the bank account, they can take the whole thing.
[10:09] So, you know, trying to do this on your own, trying to navigate the IRS maze on your own is not very smart.
[10:17] You need professional help.
[10:19] You need people who do this every single day.
[10:22] That's all we do, Evan, when I was a small town lawyer,
[10:26] 15 hours a year and continuing legal education.
[10:29] I have a day-long webinar next week.
[10:32] All of the attorneys in my office do 50 to 100 hours or more every year.
[10:38] Just keeping up on this.
[10:40] The IRS is a bureaucracy.
[10:42] They're constantly changing.
[10:44] Procedures change.
[10:45] That's why we do monthly meetings with all the attorneys.
[10:48] And exchange ideas and tell each other what procedures are now going on or taking effect.
[10:54] And so we find that very helpful in helping our clients get the best possible deal from the IRS.
[11:01] So, Lance, for someone listening who just received a notice about IRS collection activity,
[11:06] what should they understand about the importance of responding within the required time frame?
[11:11] Well, what they need to understand is if they don't take action.
[11:14] And they don't want to do this on their own because they're liable to screw it up.
[11:18] They're going to get levied.
[11:20] And the IRS can take all of your assets, your income.
[11:23] So you do not want that to happen.
[11:25] So you've got to be responsive when you get those nasty notices.
[11:29] Call us, Evan, and we'll take care of you.
[11:31] Yes, tough, Lance.
[11:32] Thank you for your time, sir.
[11:33] Thank you, Evan.
[11:34] Always a pleasure.
[11:35] Thank you for listening to Resilience and Resolve with Lance.
[11:38] Drury, understanding your rights during the IRS collection process
[11:41] can make a meaningful difference in how tax problems are handled.
[11:44] If you're facing IRS collection actions that went guidance before things escalate further,
[11:48] visit lancejurylaw.com.
[11:50] Don't forget to like, leave a review, and subscribe to the show.
[11:52] So you don't miss the next episode and we'll see you all next time.
[11:55] Thanks for watching.
[11:56] Be sure to hit that like and subscribe button
[11:59] and leave us a review in the comments.
