The IRS Levy

An IRS levy is a serious consequence to many common IRS issues such as late payment of taxes. To be able to pay a taxpayer's unpaid penalty or debt, the IRS may empty bank accounts, seize property, or garnish wages with a levy. Your house, your car, retirement accounts, and even rental income may all be levied by the IRS. Upon receipt of a Levy Notice, you have to act fast to stop these financially crippling and drastic methods.

Before a Levy Notice is served, a Demand for Payment will be received. To get assistance in avoiding a levy, ask a tax lawyer and show documentation why the penalties and taxes asked from you weren't paid.

The IRS Levy Notice gives you 30 days to request a Collection Due Process hearing with the local IRS Office of Appeals. You need to prepare for the hearing if advised to do so by your tax attorney. If your taxes were paid and the IRS made a mistake by levying you, you must provide proof in the hearing. When citizens ignore the IRS Levy Notice, they become victims of unfair levies of property and wages.

The IRS is stopped from pursuing a levy by several situations. Making the IRS Office of Appeals aware of these cases is your responsibility. The IRS can't subject you to a levy if you have filed for bankruptcy. You also shouldn't be levied if you've paid the unpaid debt before or quickly following you got the Levy Notice. The statute of limitations is one loophole to stop a levy that many people do not know of. The IRS is stopped from collecting taxes assessed over ten years ago by the statute of limitations. If the tax collection period expired before the IRS served your Levy Notice, you're exempt from the levy and from settling the taxes and penalties.

The Collection Due Process hearing is also a chance to work out an installment plan for paying outstanding taxes. You'll have to work out a payment option with the Office of Appeals if you are not able to pay the entire amount of what you owe the IRS. While not the perfect choice, the installment option will be less of a financial burden than having your wages garnished or your bank account levied.

An IRS levy will go on unless it's officially released, your debt is settled, or you meet the statute of limitations and the IRS can no longer collect those taxes. If your bank account was erroneously levied as an outcome of an IRS error, the IRS will reimburse your bank fees. You should file for refund within 30 days or you will not qualify.

Your IRS issues will only worsen if you ignore a Levy Notice. To protect your assets, it is better to get quick help.