Understanding Tax Levies and Your Options Moving Forward
A tax levy is the legal seizure of property to satisfy back taxes owed. If the IRS places a levy on your assets, you must work with them to resolve your tax debt or endure the levy. It’s a stressful process to undergo, but understanding what a levy is and how to resolve one can make it easier. It may not feel like it, but you have options, and it’s important to learn what they are as soon as the levy is in place.
Tax Levy Placement
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The IRS isn’t typically required to go to court to place a tax levy. By issuing a levy, the IRS can garnish your wages, take money from your personal bank account, and seize vehicles, real estate, or any other personal property. The agency can legally sell your property and keep the money it receives to satisfy your tax debt.
The Levy Process
A tax levy rarely comes as a surprise because the IRS must go through a series of steps prior to implementing one. Before issuing a levy, the IRS assesses your tax return and determines the amount you owe. Next, the IRS sends a bill for taxes due. If you don’t pay it, the IRS sends a Final Notice of Intent to Levy and a Notice of Your Right to Hearing. If these notices are ignored and the taxes remain unpaid, the levy can start 30 days after the IRS provides notice.
The IRS usually places a levy as a last resort, preferring to resolve the matter in other ways. Once the levy’s filed, it takes fast action by the taxpayer to stop it. Several different arrangements exist that can stop a levy, so if you’re facing one, don’t panic.
The quickest and most common way to end a levy is to enter into a payment plan. If a payment plan isn’t an option, consider submitting an offer in compromise, an agreement that allows you to pay less than the total amount owed. However, an offer in compromise is only available to those who qualify and are struggling financially. Your last option is to prove that the levy is creating a significant financial hardship. If you can, the IRS may agree to stop the levy temporarily.
Legal representation isn’t required when facing a levy, but it is helpful. If you owe a small amount and are able to set up a payment plan, it’s possible to handle the process by yourself. However, if you owe a significant amount, need to prove financial hardship, or submit an offer of compromise, a tax professional can offer invaluable advice, assistance, and guidance.
Undergoing the tax levy process can be stressful and exhausting, but you can recover from it. If you can, work out a payment plan. If not, don’t give up. You have options regardless of your situation. Learn all you can, retain professional help, and stay positive. Thousands of people have rebounded from a tax levy, and you can too.