When a taxpayer receives a Form CP 297C, this means that the IRS intends to levy on the taxpayer’s assets, typically where that taxpayer is a federal contractor subject to a Federal Contractor (FEDCON) Federal Payment Levy Program (FPLP). While taxpayer’s may understand a levy enough to know that it’s not a good thing, a deeper understanding of the FPLP system and how it works may prove beneficial for the taxpayer facing such a situation.

The FPLP is a tool for the systematic collection of delinquent taxes. Using this enforcement tool, the Internal Revenue Service (IRS) levies against federal payments made to the taxpayer, which are disbursed by the Treasury’s Financial Management Service (FMS). Such disbursements include social security, veteran’s benefits, tax refunds and many other federal payments. In other words, under this program the IRS will levy against payments going from the federal government to taxpayers that have not met their federal tax obligations and have failed to make alternative arrangements with the IRS to meet those obligations. Internal Revenue Service, CP-90/CP-297 Frequently Asked Questions (FAQ’s), available at https://www.irs.gov/individuals/understanding-your-cp297-notice).

In the case of federal contractors, federal payments will include more than simply social security or similar fringe benefits, but may include payments for contract work and the like. Thus, a FEDCON FPLP will occur where a federal contractor fails to meet its tax obligations, in which case a Notice of Federal Tax Lien will be sent to the taxpayer. However, in this case the IRS does not entitle the taxpayer to a post-deprivation hearing. While typically where the taxpayer files a request for a Collection Due Process (CDP) hearing within 30 days of the date of the CDP’s mailing by the IRS, the IRS may not file a levy until the taxpayer has had a hearing in which the levy can be contested. However, where the taxpayer receives a Form CP 297C, which are also known as post-levy CDP notices. In such cases, the taxpayer must have the levy reversed at the CDP hearing rather than prevent the levy from being instituted.

Upon receipt of a Form CP 297C, the taxpayer should immediately contact the IRS to discuss the options available. Consultation with an experienced tax attorney is also advisable, given that the federal tax lien has already been instituted, and the tax debtor’s financial situation has already been put at risk. An attorney with an understanding of the federal tax laws can address the situation adequately, and do what is necessary to have the lien lifted. Contact or call RJS LAW at (619) 595-1655 to schedule your consultation today.

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Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.