Collection Rights
Written in plain language for general understanding. This is educational content, not legal advice. Based on federal statutes and official sources.
What is this right?
When you owe taxes, the IRS has powerful collection tools — but your rights limit how and when they can use them. The IRS cannot seize your property without giving you notice and an opportunity to be heard. Certain property is exempt from seizure, and the IRS must follow specific procedures before garnishing wages, levying bank accounts, or placing liens.
The IRS also has a 10-year statute of limitations on collecting tax debt. After 10 years from the date of assessment, the debt expires.
When does it apply?
This right applies when:
- The IRS sends you a Notice of Intent to Levy (typically Letter 1058 or LT11)
- The IRS files a federal tax lien against your property (Notice of Federal Tax Lien)
- The IRS garnishes your wages or levies your bank account
- The IRS contacts your employer, bank, or other third parties about your tax debt
Common misconceptions:
- "The IRS can take everything I own" — No. Federal law exempts certain property: unemployment benefits, workers' comp, minimum exempt amount of wages, school books, undelivered mail, and necessary clothing.
- "Once the IRS levies my bank account, the money is gone" — Not necessarily. You have 21 days from the levy notice before the bank releases the funds to the IRS. You can request a Collection Due Process hearing during this time.
- "The IRS can come to my house and take my stuff without warning" — Not for the first seizure. They must send a Final Notice of Intent to Levy at least 30 days before the first levy action.
What should you do?
Step 1: If you receive a Notice of Intent to Levy, act immediately. You have 30 days to request a Collection Due Process (CDP) hearing — this stops the levy while your case is reviewed.
Step 2: Request a CDP hearing using Form 12153 within 30 days of the lien or levy notice. During the hearing, you can propose alternatives like a payment plan or Offer in Compromise.
Step 3: If your wages are being garnished, contact the IRS at the number on the levy notice. You can request a modification if the levy creates an economic hardship.
Step 4: If the 10-year Collection Statute Expiration Date (CSED) is approaching, consult a tax professional. In some cases, the best strategy is to wait out the statute.
Step 5: Contact the Taxpayer Advocate Service at 1-877-777-4778 if collection is causing a significant hardship (inability to pay for housing, food, or medical care).
What should you NOT do?
Don't miss the 30-day CDP deadline. After 30 days, you lose your right to a CDP hearing and can only request an "equivalent hearing" with fewer protections.
Don't hide assets. Transferring property to avoid IRS collection is a federal crime (IRC § 7206). The IRS can also reverse fraudulent transfers.
Don't sign a waiver extending the collection statute without professional advice. The IRS may ask you to extend the 10-year CSED — you generally have no obligation to agree.
Don't assume bankruptcy clears all tax debt. Some tax debts can be discharged in bankruptcy, but only if they meet specific age and filing requirements. Get professional advice.
How Pennsylvania differs from federal law
Pennsylvania has important collection protections, especially for wages:
- No wage garnishment for most debts: Pennsylvania is one of the most protective states for wages. State law prohibits wage garnishment for most consumer debts, including state tax debts in many cases. Exceptions: federal tax levies, child support, and student loans.
- Homestead exemption: Pennsylvania does not have a traditional homestead exemption from creditors, BUT state tax collection on real property has procedural requirements that provide some protection.
- Lien protections: The PA Department of Revenue can file liens against property, but must follow specific notice and procedural requirements. Taxpayers have 10 days after notice to pay or appeal.
- Setoff of state payments: PA can intercept state tax refunds, lottery winnings, and other state payments to offset tax debts.
Additional Steps in Pennsylvania
Contact the PA Department of Revenue at (717) 787-8201 to discuss payment options. If you cannot pay, request a payment plan. Consult a tax attorney or contact your local legal aid for help navigating state collection.
Relevant Law: 72 P.S. § 10003.1 et seq. (Tax Collection), 42 Pa.C.S. § 8127 (wage garnishment restrictions)
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