Lien & Levy Relief and Resolution Memo
| Party | Identifier (example) | Balance source | Collection status |
|---|---|---|---|
| Cascade Coast Cannabis LLC | EIN 88-0000010 | Assessed §280E income-tax deficiency | NFTL filed; Final Notice issued |
| [Example: A. Rivera] | SSN redacted | §6672 trust-fund recovery penalty | Balance assessed; collection pending |
Engagement routing. Tier: Active collection — representation · Posture: Posture-neutral · Active IRS matter: Yes — §6321 lien (NFTL filed) + §6331 Final Notice of Intent to Levy · Services indicated: §471-11 / §280E COGS Review (reduce the underlying balance) · §6050I Cash Compliance
Prepared for the named taxpayer under a representation engagement (Form 2848). This example is illustrative and does not constitute tax or legal advice to any reader; no client relationship is created by viewing it, and it describes no real balance or IRS collection action. Collection relief is driven by the taxpayer's verified financial condition; nothing here is a promised outcome. The Collection Due Process deadline is treated as a hard clock.
Stop the levy, then resolve the balance
A federal tax lien has arisen under §6321 and a Notice of Federal Tax Lien is filed under §6323; the IRS has issued the Final Notice of Intent to Levy under §6331, opening a 30-day Collection Due Process window under §6330. The immediate move is to timely request a CDP hearing — which suspends levy — then propose a resolution on a verified Form 433 financial picture: an installment agreement (§6159), an offer in compromise (§7122), or currently-not-collectible hardship status.
File the Form 12153 CDP request inside the 30-day window to stop the levy and preserve Tax Court review; then let the cash-flow snapshot pick the path. Because much of the underlying balance traces to an overstated §280E position, the durable relief is often reducing the liability at its root (COGS Review), not just restructuring it.
The balance and where collection stands
Facts below are fabricated for illustration; a real matter is built from the account transcripts, notices, and a verified financial statement.
Taxpayer summary
A single-location California operator carrying an assessed federal income-tax balance from a §280E adjustment, with a related trust-fund recovery penalty against an individual. Cash-intensive operations and limited banking make levy exposure on receivables and accounts a live concern.
Notice history
Balance-due notices, then the Notice of Federal Tax Lien (§6323), and now the Letter 1058 / LT11 Final Notice of Intent to Levy — the notice that starts the CDP clock (Exhibit A logs the full chronology and deadlines).
Account balance summary
Balance by period and type (tax, penalty, interest), tied to the IRS account transcript. Part of the balance is the disputed §280E deficiency; part is the TFRP. Correctly separating them drives which relief tools apply to which party.
Collection status
Lien filed; Final Notice issued; no levy yet. The 30-day CDP window under §6330 is running — the single most important date in the file.
Financial hardship facts
Thin margins, seasonal cash flow, and secured obligations limit ability to pay. The monthly cash-flow snapshot (Exhibit D) and asset summary (Exhibit C) are the evidence for hardship-based relief.
Supporting documents
Account transcripts, the NFTL, the Final Notice, bank and loan statements, and a completed Form 433-A / 433-B Collection Information Statement — the financial disclosure every resolution path is built on.
Exposure, options, and the path
Levy / lien exposure (§6321 lien, §6331 levy)
The §6321 lien attached to all property on assessment plus notice and demand; the §6323 NFTL perfects the IRS's priority against other creditors and clouds title and financing. The §6331 levy power reaches bank accounts, receivables, and other property once the Final Notice period runs — but a timely §6330 CDP request suspends levy while the matter is heard. Lien relief (withdrawal, discharge, or subordination under §6323(j) / §6325) is addressed separately from stopping the levy.
Available relief options
- CDP hearing (§6330) — Form 12153 within 30 days; suspends levy, preserves Tax Court review, and is the forum to propose alternatives.
- Installment agreement (§6159) — full-pay or partial-pay (PPIA) based on ability to pay.
- Offer in compromise (§7122) — doubt as to collectibility (Form 656 + 433-A(OIC)/433-B(OIC)), where reasonable collection potential is below the balance.
- Currently not collectible — hardship status where the financials show no ability to pay after necessary expenses.
- Levy release (§6343) — including release for economic hardship if a levy has issued.
- Lien subordination / discharge (§6325) — to enable financing or a sale that ultimately pays down the balance.
Collection procedure is posture-neutral — lien, levy, and CDP work the same for any taxpayer, cannabis or not. What is cannabis-specific is the friction: cash-intensive operations and limited banking make levies on accounts and receivables especially disruptive.
The durable relief is at the root. Where the assessed balance rests on an overstated §280E position, reducing the liability through a COGS Review (or, for open years, a defensible correction) does more than restructuring ever can. A move to Schedule III lowers future balances but does not erase an already-assessed one — so the assessed balance is worked through collection tools, not assumed away.
Recommended resolution path
Immediate: file the CDP request to stop the levy and preserve review. Then, on the verified 433 picture: pursue a partial-pay installment agreement or currently-not-collectible status given the hardship facts, evaluate an OIC if reasonable collection potential is genuinely below the balance, and seek lien subordination where it unlocks financing that pays the balance down. Run the COGS Review in parallel to shrink the underlying §280E liability.
Collection issue register
Each item lists the controlling authority and posture. Conclusions are illustrative and not asserted; a real matter turns on verified financials. Bands are order-of-magnitude illustrations.
| Issue | Controlling authority | Illustrative exposure | Posture |
|---|---|---|---|
| Final Notice of Intent to Levy — CDP window | IRC §6331; §6330; Form 12153 | Levy imminent if missed | Act now |
| Filed Notice of Federal Tax Lien | IRC §6321; §6323 | Clouds title / financing | Subordinate |
| Ability to pay (resolution path) | IRC §6159; §7122; Form 433 | Drives IA vs OIC vs CNC | Analyze |
| Underlying §280E balance overstated | IRC §280E; §1.471-11 (COGS Review) | Root-cause reduction | Reduce |
| Levy on receivables / bank accounts | IRC §6331; §6343 release | Cash-flow disruption | Release |
| Related personal TFRP balance | IRC §6672; §6321 / §6331 | Separate collection track | Coordinate |
Resolution path, deadlines, and follow-ups
Owners and targets are placeholders; the 30-day CDP window is the hard clock.
| Step | Why | Owner | Deadline |
|---|---|---|---|
| File Form 12153 CDP request (§6330) | Suspend levy; preserve Tax Court review | J. Williams, EA | [within 30 days of Letter 1058] |
| Complete Form 433-A / 433-B | Financial basis for every resolution path | EA + client | [+14 days] |
| Select path: PPIA (§6159) / OIC (§7122) / CNC | Match ability to pay | J. Williams, EA | [+30 days] |
| Request lien subordination / discharge (§6325) | Unlock financing to pay down balance | J. Williams, EA | [as needed] |
| Run §471-11 / §280E COGS Review | Reduce the underlying assessed liability | J. Williams, EA | [parallel] |
| Coordinate the related TFRP collection | Single strategy across entity + individual | J. Williams, EA | [ongoing] |
Supporting shells
Exhibit A — IRS notice chronology
| Date | Notice | Significance | Deadline |
|---|---|---|---|
| [date] | Balance-due (CP14 / CP501) | Assessment + notice and demand | — |
| [date] | NFTL filed (§6323) | Lien perfected; §6320 CDP right | [+30 days for lien CDP] |
| [date] | Letter 1058 / LT11 (§6331) | Final Notice of Intent to Levy | [+30 days CDP] |
Exhibit B — Payment history
| Date | Payment / credit | Applied to | Running balance |
|---|---|---|---|
| [date] | $— | [period] tax | $— |
| [date] | $— | [period] penalty | $— |
Exhibit C — Asset summary
| Asset | Value (illustrative) | Encumbrance | Levy exposure |
|---|---|---|---|
| Operating bank account | $— | — | High |
| Accounts receivable | $— | — | High |
| Equipment | $— | Secured loan | Medium |
Exhibit D — Monthly cash-flow snapshot
| Line | Monthly amount (illustrative) |
|---|---|
| Net business income | $— |
| Necessary operating expenses | $— |
| Allowable living / owner draw | $— |
| Net available to IRS | $— (drives IA / OIC / CNC) |
Exhibit E — Resolution options matrix
| Option | Authority | Fits when | Fit |
|---|---|---|---|
| Partial-pay installment agreement | §6159 | Some monthly ability to pay | Likely |
| Currently not collectible | Hardship (Form 433) | No ability after necessary expenses | Possible |
| Offer in compromise | §7122 | Collection potential below balance | Evaluate |
| Full-pay / short-term | §6159 | Liquidity available | Unlikely |
Findings, actions, and what's open
- Lien filed (§6321 / §6323); Final Notice of Intent to Levy issued (§6331).
- The 30-day §6330 CDP window is the controlling deadline.
- Resolution path is driven by the verified Form 433 picture.
- Much of the balance traces to an overstated §280E position.
- File Form 12153 CDP request to suspend levy.
- Complete Form 433-A / 433-B.
- Select PPIA / OIC / CNC on the financials.
- Run the COGS Review to reduce the balance at root.
- 30-day CDP window (Letter 1058) — hard clock.
- Lien CDP window (§6320) after NFTL filing.
- Resolution submission dates once path is set.
- Account transcripts + copies of all notices.
- Bank / loan statements and receivables aging.
- Completed Collection Information Statement.
Facing an IRS lien or levy?
A licensed Enrolled Agent files your Collection Due Process request to stop the levy, builds the Form 433 picture, and matches you to the right resolution — installment agreement, offer in compromise, or hardship status — while working to reduce the underlying §280E balance at its root. Start with a consult.
Book a collections consult →Single-location California operators · EA-signed, exam-ready