All About IRS Levies
An IRS levy is a serious consequence to most common IRS issues like late payment of taxes. A levy entitles the IRS to garnish wages, seize property, and empty bank accounts in order to settle a taxpayer’s debt or unpaid penalty. Your house, your car, retirement accounts, and even rental income can all be levied by the IRS. To prevent these drastic and financially crippling methods, you must act immediately upon receipt of a Levy Notice.
Enlist the help of a tax lawyer as a first step to avoid a levy. When you meet with the lawyer, you’ll have to reveal your IRS issues and any settlement details or notices received from the IRS. Prior to being served the Levy Notice, the IRS usually issues a Demand for Payment statement to the taxpayer. You will need to explain why this Demand for Payment was not settled. Why the penalties or taxes are unpaid must be justified with proof.
A Collection Due Process hearing can be requested at the IRS Office of Appeals in your area within thirty days after you receive the IRS Levy Notice. You should get ready for the hearing if counseled to do so by your tax lawyer. If the levy is the result of an IRS error, you will still have to go to the hearing to justify the case and show proof that your taxes were settled and the IRS has, indeed, committed a mistake. When citizens ignore the IRS Levy Notice, they become victims of unjust levies of property and wages.
Quick payment following the Levy Notice and filing for bankruptcy are a few reasons why a levy can’t be pursued by the IRS. The IRS also can’t collect taxes assessed more than 10 years ago due to the statute of limitations. You don’t have to pay your taxes if the IRS levy was mailed after the period for tax collection has already expired.
The Collection Due Process hearing is also an opportunity to work out an installment option for paying unpaid taxes. You will have to work out a payment option with the Office of Appeals if you’re not able to pay the full amount of what you owe the IRS. Compared to a levy of your bank account or garnishment of your wages, an installment plan is definitely less of a burden financially.
An IRS levy will go on until it’s officially released, your debt is paid off, or you meet the statute of limitations and the IRS can no longer collect those taxes. The IRS will reimburse your bank fees if your bank account was erroneously levied because of an IRS error. To qualify, you must file for reimbursement within 30 days.
Ignoring a Levy Notice will just increase your IRS issues. It’s better to get assistance as soon as possible to protect your assets.
Filed under Blog by on Oct 19th, 2009. 