What kind of reasons can you give for an appeal? Do you have to have some special circumstances or can anyone file one?

You don't need special circumstances to request a Collection Due Process (CDP) hearing - it's your right after receiving a final notice. You can appeal based on procedural issues (like if you believe you don't actually owe the tax), propose alternative collection methods (like an installment agreement), or claim financial hardship. Even if you know you owe the tax, requesting a CDP hearing buys you time to get your finances in order while collections are paused. During the hearing, you can propose an installment agreement, an Offer in Compromise, or request Currently Not Collectible status. The important thing is that it stops the immediate threat of a levy while you work things out.

What happened after they took the money? Did they keep coming after you for more or was that the end of it?

Thanks for this insight! I'm actually W-2 at my main job but I've been picking up some independent security gigs on weekends (about 10-15 hours per week) where I'm paid as a contractor. Would that change things since I'm partially self-employed? And what kind of documentation would you recommend keeping?

That definitely changes things! For the independent contractor work, you can potentially deduct a portion of the karate lessons that corresponds to your self-employment income. So if your 1099 work is 25% of your total income, you might reasonably deduct 25% of your martial arts training. For documentation, keep receipts for all classes, a log of your training hours, and most importantly, documentation showing how these specific skills are used in your contract work. I also keep client contracts that mention security skills required, emails discussing security requirements, and a written explanation of how each training element directly contributes to my services. The more specific you can be about the connection between the training and your security services, the better.

Does the same principle apply to gym memberships for personal trainers? My wife is trying to deduct her CrossFit membership claiming it's "research" for her training business.

When I did an OIC a few years ago, my credit actually improved because the tax lien was removed after acceptance. The IRS files a Notice of Federal Tax Lien when your tax debt gets high enough, and that definitely hurts your score, but once your OIC is accepted and paid, they remove it.

The documentation was definitely the most time-consuming part! Here's what I had to submit: I filled out Form 656 (the actual Offer in Compromise) and Form 433-A (Collection Information Statement). For the 433-A, I had to provide three months of bank statements for all accounts, pay stubs, proof of all my expenses (rent receipts, utility bills, car payment, insurance, medical expenses, etc.), and verification of any assets I owned. The key was being super detailed about my expenses and making sure I had documentation for everything. I also included a hardship letter explaining why I couldn't pay the full amount - in my case, ongoing medical expenses and reduced income due to changing jobs. One thing that really helped was organizing everything by category and creating a cover sheet for each section. The IRS examiner who called me actually commented on how well-organized my submission was and said that made their job easier. Honestly, it's a lot of work, but for me, getting rid of $27k in tax debt for $500 was absolutely worth the effort!

Thank you for this advice! I do have student loans that will be going into repayment soon. How do I figure out exactly how much extra to withhold? Is there like a calculator or something I can use?

The IRS has a Tax Withholding Estimator tool on their website that's pretty helpful. You input your expected income, student loan interest, and other details, and it gives you a recommended amount for extra withholding. For a rough estimate, if you're early in your career making under $60k with typical student loan interest, having an extra $40-50 withheld from each biweekly paycheck often puts you in a good position. But the calculator will give you a more personalized number based on your specific situation.

This is exactly what I do too! I'd rather get a nice refund than stress about possibly owing. My friends think I'm crazy for "giving the government an interest-free loan" but I see it as forced savings lol. Last year I got back almost $2,200 and used it for a vacation.

Did you use a CPA or did you handle the amendment yourself? I've heard different things about whether professional preparation makes a difference in how returns get processed.

We used the same CPA who did our original return. He basically said the same things others have mentioned here - that reducing income isn't typically as concerning to the IRS as increasing deductions would be. He did recommend we include a clear explanation letter that he drafted, which specifically explained the exact nature of the accounting error (duplicate counting of specific transactions) and referenced our supporting documentation. I think having that professional guidance did help give us peace of mind, but from what I've learned, the risk was probably low either way.

Good point! I made this exact mistake a few years ago and got hit with a state penalty even though I fixed the federal return properly. The states don't automatically get notified when you amend your federal return.