When the IRS Deploys a Levy, It’s Time to Get Help
Whether you’ve personally dealt with the IRS previously, or you’ve managed to fly under their radar all of your tax-paying years, everybody knows that the IRS is notorious for being a bully. While the IRS has been known to pull some pretty ruthless maneuvers to get money from taxpayers, a tax levy is one of the most aggressive ways they have of dealing with collecting tax debts.
What is a Levy?
A levy is the legal seizure of your property by the IRS to repay an outstanding tax debt. That property can be anything; your wages, your savings, your car, your house, or any other asset.
A levy differs greatly from a lien in that once the IRS takes possession of your property it’s theirs for good. With a lien, you do have a chance to repay the debt in X amount of time and get your property back.
However, the IRS won’t just levy your property without a sufficient amount of warning. They’ll usually only levy after these three requirements have been met:
· They have assessed the taxes owed and sent you a Notice and Demand for Payment;
· You either neglected or refused to pay your taxes; and
· They sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (a levy notice) at least 30 days before the levy went into effect.
While an IRS levy is not something that should be taken lightly, there are times when they take your current financial standing into consideration and remove the levy. If the levy causes you immediate economic hardship, you may be eligible for this procedure. This does not mean that you are exempt from paying your debt. The IRS can work with you, based upon your current financial situation, to develop a payment plan that reflects an amount that you can reasonably afford to pay each month.
Levy on Your Bank Account
When it comes to paying taxes, it seems as if the payments will never end. But be rest assured, tax levies don’t go on forever. When a levy on your bank account is issued, it will end when one or all of the following three conditions are met:
· The levy is released
· You pay your tax debt in full
· The time expires for legally collecting the tax (10 years)
If your bank account is levied, your bank is required by law to hold funds you have on deposit up to the amount you owe for 21 days. This 21 day holding period is simply in place to give the IRS time to resolve any issues regarding your bank account. Once the holding period is up, the bank will send the money – plus any interest – to the IRS. The levy is not continuous but the IRS can and will send additional levy notices to your bank if they receive money on a previously filed levy…and they will do this until your debt is paid off.
Can I Stop an IRS Levy?
If you receive a Final Notice of Intent to Levy and you simply don’t want to deal with the hassle, there are steps you can take to avoid the levy all together. You can
· Pay your taxes in full right away before the 30 day grace period is up
· Enter into an installment agreement
· File for an offer in compromise
· Get declared uncollectible
If you choose to take any of these steps, we advise you to consult with a tax professional before proceeding. Visit us at http://www.irsallstar.com/our-services to see how we can help you make the best decision based upon your current financial circumstances.