CTRS CTRS Tax Liens and Levies — Advanced Strategies 2

Question 1

What is the IRS's 'Lien Withdrawal' and how does it differ from a lien release?

Accepted Answer

A withdrawal removes the public Notice of Federal Tax Lien from the record as if it was never filed, while a release only acknowledges the lien is satisfied

Answer

A lien withdrawal under IRC §6323(j) removes the Notice of Federal Tax Lien from public record as if it was never filed, which is more favorable than a release for credit purposes because it eliminates the public record entirely.

Question 2

Under Fresh Start, what criteria must be met for the IRS to consider withdrawing a Notice of Federal Tax Lien?

Accepted Answer

The balance owed is $25,000 or less, the taxpayer enters a direct debit installment agreement, makes 3 consecutive payments, and is in full compliance

Answer

Under Fresh Start expanded procedures, the IRS will consider lien withdrawal when the balance is $25,000 or less, the taxpayer enters a direct debit IA, makes 3 consecutive timely payments, and is in full filing compliance.

Question 3

What is an 'Equivalent Hearing' and how does it differ from a Collection Due Process hearing?

Accepted Answer

An Equivalent Hearing is available when the CDP deadline is missed (filed within 1 year instead of 30 days), but does not confer Tax Court rights

Answer

An Equivalent Hearing provides a review by the IRS Office of Appeals but, unlike a CDP hearing, does not suspend collection and the resulting determination cannot be appealed to Tax Court.

Question 4

What is the IRS's policy on levying a taxpayer's primary residence?

Accepted Answer

The IRS requires supervisory approval and must obtain a federal district court judgment before levying a principal residence

Answer

Under IRC §6334(e) and §6343, levying a principal residence requires written approval from an IRS Area Director and, in some cases, a federal court order, reflecting Congress's intent to protect primary homes.

Question 5

What is 'levy source priority' and why does it matter in tax resolution?

Accepted Answer

The IRS generally levies the easiest and most liquid assets first (bank accounts, wages) before pursuing harder-to-reach assets like real estate

Answer

While the IRS has broad discretion, it typically targets the most liquid and accessible assets first, meaning bank accounts and wages are usually levied before real estate or business assets.

(CTRS) Certified Tax Resolution Specialist Practice Test

(CTRS) Certified Tax Resolution Specialist Practice Test

CTRS CTRS Tax Liens and Levies — Advanced Strategies 2