What is a Notice of Levy? IRS Tax Levy?
An IRS Notice of Levy is a letter sent to taxpayers who have not paid their back taxes and have an IRS lien placed against them. The IRS is notifying the delinquent taxpayer that they will begin collecting the debt using levy actions such as wage garnishment, property seizure, and bank account seizure. A notice of levy causes many problems for taxpayers. It means that the taxpayers’ accounts and assets may be frozen by the tax lien, which may prevent the possibilities of selling them or changing ownership of the items. The taxpayer only has 30 days in which to take care of the tax debt before the levy actions are taken. Failing to pay back the full amount of the debt after receiving an IRS notice of levy will mean that levy actions will start unless the necessary steps have been taken.
It’s important to note here that a levy is a legal seizure of your assets to use towards a taxpayer’s outstanding tax debt. They’re different from a lien, as a lien is a hold on assets, while a levy will actually take them away from the taxpayer.
What Actions Will the IRS First Take Before a Notice of Levy is Issued?
The IRS will do a series of actions before resorting to sending a notice of levy. First, the IRS will have assessed your account, decided that you have a certain amount of tax debt to pay, and then they will send you a notice that demands immediate payment. This is a tax bill. The IRS expects to be paid upon receipt. If the taxpayer neglects to pay the amount issued, then the IRS will send a final notice of intent to levy accompanied by a notice of your right to hearing. The IRS must also include an explanation for the issuing of the tax levy, the process in which the levy happens, and the alternatives the taxpayer has when dealing with enforcement. These documents are released thirty days prior to the levy being issued, allowing the taxpayer a month to respond promptly. These ‘before’ notices will be sent via certified mail and or delivered at the address the IRS has on file. In some cases, the IRS will hand deliver the notice to the taxpayer.
When Will a Tax Levy Be Issued?
Simply stated, when the IRS has witnessed enough noncompliance and they decide it’s time for enforcement. This means that the taxpayer has not paid their taxes nor have they taken the proper steps to make arrangements in doing so. The IRS will then take severe collection action and issue a tax levy against assets you own or that others do (for instance your wages are taken from your employer).
What Can a Levy Be Issued Against?
There are quite a few of item of value the IRS can levy once the notice has been delivered and there has been no correspondence within thirty days. In terms of what the government can legally take from a delinquent taxpayer, this will give you an idea:
Tax Garnishment – Garnish Wages
The IRS will order your employer garnish your wages and issue them towards your tax debt rather than to you personally. Depending on the severity of your tax levy, this tax garnishment is continuous. The tax levy will stay in place until your tax debt is paid in full or it is released and stopped.
Contractor or Vendor Payments
The IRS has all your information. When an IRS Revenue Officer is on the case, they can reach out to third parties who owe the levied taxpayer money and demand these payments are sent to the IRS instead.
OPM Retirement Benefits, SSA Benefits, Employee Travel Advances
The IRS also has the power to take these perks from you and use them towards the entirety of your tax debt owed.
IRS Tax Levy – Bank Accounts Levies
In the worst case scenario, the IRS can put a tax lien on your bank account and lock it from you. After twenty-one days, they can then demand that whatever money in your account is transferred directly to the IRS.
Depending on the situation, if the taxpayer is going to be receiving commission from a certain project or legal endeavor, then the IRS will take action and claim the commission to help satisfy tax debt.
Property – Rental Income
Any piece of property that the taxpayer owns which could help satisfy their tax debt. This starts with a home and can go all the way to toy vehicles that could be used to satisfy a tax debt. Any piece of property that the taxpayer owns which the IRS considers valuable, they can levy and use towards the outstanding amount owed. Should you have rental income, the IRS can order every tenant you have to pay them instead of you.
Anything of Value
Truthfully, when the IRS has decided to take action, it’s possible that they can levy anything the taxpayer owns and use it towards the tax debt. Even possessions or holdings that are not considered assets to the taxpayer could be levied and used to resolve the amount owed.
What to Do Once You Receive the Intent to Levy Notice?
The obvious way to avoid having your assets seized and penalties added to your account would be to pay off your tax debt. If you are here and reading our information, paying your tax debt probably isn’t feasible. Listed below are payment programs tailored towards taxpayers that are not in the financial situation to pay off their debts. The two main alternatives being an installment agreement and an offer in compromise.
This is basically a payment plan similar to the way one would pay off a loan. Depending on what is agreed between the taxpayer and the IRS, the taxpayer will then be put on a monthly installment plan and pay off their debt in increments. An IRS Installment Agreement will last anywhere from 3-6 years. Again, depending on what is agreed, it is possible that through this payment plan the taxpayer will end up paying a larger amount in interest.
Offer in Compromise – Tax Settlement
An Offer in Compromise is a tax settlement between the IRS and the taxpayer for an amount equal to less than what is owed. Due to the IRS not wanting to implement a forgiveness policy for all those who cannot pay their taxes, eligibility has requirements. The taxpayer needs to meet very specific criterion and must prove to the IRS that there is no possibility that they could pay the tax owed. The IRS, usually coordinating with a tax professional representing the delinquent taxpayer, will come to an agreement on how much is owed and will settle with one lump sum payment.
IRS Final Notice of Intent to Levy
The IRS will levy your assets is a tax garnishment is something a taxpayer wants to avoid at all costs, it’s important to consult a tax professional. They will assess your situation and help you not only plan a course of action, but detail exactly what sort of aid you’re eligible for. If the IRS is going to levy a taxpayer’s assets, then something has gone seriously wrong. It’s important to find the type of help that will make sure they can at least mitigate the situation and avoid further penalties.
At the very least, correspondence is huge. Go ahead and open your mail. “Being forewarned is being forearmed”. By just ignoring the IRS, the taxpayer is not only being delinquent, but they’re also giving the IRS means to take action. It’s important to reach out to them and even if you do not know how to explain that you are trying to assess the situation and find alternatives that could settle the debt.
The IRS Tax Attorneys at Flat Fee Tax Service are capable in some circumstances of preventing an IRS levy from taking place after a taxpayer has received an IRS notice of levy. In some cases, there is not enough time or circumstances prevent this type of action from taking place. In other cases, our tax professionals can work with a client and the IRS agent to enter into a successful tax relief option that prevents, stops and releases the levy.
How Can Flat Fee Tax Service Help Me?
Because of how financially devastating an IRS Notice of Levy can be to a taxpayer, immediate action is required to ensure that enough time is available to take the necessary steps to have the tax levy stopped and released.
Contacting the tax professionals at Flat Fee Tax Service, Inc. as quickly as possible after receiving the tax levy notice could be the difference between an IRS garnishment on your wages, or getting your tax debt settled. In some cases, it may already be too late but we hope not.
STOP AN IRS TAX LEVY – IRS GARNISHMENT IN ONE DAY.
Call now for more information about an IRS levy and speak with one of our tax professionals today: 1-866-747-7435.