Tax Controversy Roadmap — Part 5
What the IRS does to collect an unpaid balance — and where, in the stream of notices, the hearing rights actually are.
Once a tax is assessed, the IRS has ten years to collect it — the Collection Statute Expiration Date, or CSED (IRC §6502). Every notice, lien, and levy that follows is a move against that clock.
The clock matters because some events pause it — a pending offer, a CDP hearing, bankruptcy, time abroad. A collection strategy is, in part, a strategy about that ten-year horizon: what to resolve now, and what the statute may resolve on its own.
Collection opens with a bill. The first is CP14 — the formal notice and demand for payment required by §6303. If it goes unpaid, reminders follow: CP501, then CP503. Then comes CP504, which announces an intent to levy and reads like a final warning.
The notice that opens the door to a hearing is the Final Notice of Intent to Levy and Notice of Your Right to a Hearing — issued as Letter 1058, LT11, or CP90. It starts a 30-day Collection Due Process clock under §6330. A request filed on Form 12153 within those 30 days generally stops levy action, sends the matter to Appeals, and preserves the right to Tax Court review.
People use the words interchangeably; the law does not.
A lien arises automatically on assessment under §6321 — a claim against everything the taxpayer owns. It becomes public, and gains priority over other creditors, only when the IRS files a Notice of Federal Tax Lien (announced by Letter 3172). That filing carries its own 30-day CDP right under §6320. A lien secures the debt; it does not take anything.
A levy actually seizes — wages, bank accounts, receivables (§6331). Some property is protected: §6334 shields certain items, exempts a residence where the tax owed is $5,000 or less, and requires a court proceeding under §6334(e)(1) before the IRS can seize a principal residence. A levy that creates economic hardship can be released under §6343.
A timely CDP request is the taxpayer's leverage. It routes the matter to the Independent Office of Appeals (Part 4), where collection alternatives and the underlying liability (in some cases) can be raised, and it preserves Tax Court review of the resulting determination. Miss the 30 days and a lesser "equivalent hearing" may still be available — but with no path to the Tax Court.
The point of engaging collection early is to choose the exit rather than be assigned one. Almost every balance has a resolution — full payment, an installment agreement, an offer, or a hardship suspension — and the right one depends on the numbers and the CSED. Those are the subject of the next post.
Collection is where a tax problem becomes a cash-flow problem — liens that cloud title, levies that hit payroll and accounts. The leverage is in the calendar: the CDP window, the CSED, the timing of an alternative. Donovan Legal represents taxpayers across the entire arc, exam through collection and litigation, under one signature.
One firm. One signature. Full-arc defense.