IRS TAX LEVY

An IRS Tax Levy can have a significant impact on our lives both emotionally and financially. The good news is that there is help out there to assist you in working through this difficult time. Below are some tidbits and what can be done if an IRS tax levy has been imposed on your or your assets.

What is an IRS Tax Levy?

The first question that must be asked is what is an IRS tax levy?  An IRS tax levy is a legal seizure of your assets to satisfy an IRS tax debt. An IRS Tax Levy can be attached to any property, including real estate and vehicles, but is most frequently applied to individual bank accounts, securities, wages and even a business’ accounts receivables.  Tax levies are different and are far more damaging than tax lien. A tax lien is a claim used as security for the tax debt, while a tax levy willfully takes the property to satisfy the tax debt.

How does an IRS Tax Levy Work?

A taxpayer will generally receive a Notice of Demand from the IRS requesing a response.  If the taxpayer does not respond the next step would be for the IRS to file a tax lien and submit a Notice of Intent to levy the taxpayer’s property.  It is the responsibility of the taxpayer to pay the debt in full or make payment arrangements or the IRS Tax Levy will go into effect.  Once the levy has commenced the IRS will empty out the taxpayers bank account and/or contact businesses that owe the taxpayer money and order them to send the money owed to the IRS. IRS tax levies are one of the most aggressive forms of Collection administered by the IRS and will create extremely difficult hardship for any IRS tax levy recipients.

What Can be Done?

There are several options that a taxpayer has when they are looking to get an IRS Tax levy released or removed. 

Option #1:  Show undue hardship to get a release of levy

Undue hardship basically is proving that the Levy has caused hardship not only to yourself but others as well. A substantial amount of evidence will need to be provided in order to convice the IRS that a hardship is being sustained.  A release may also be granted if a taxpayer can prove that there is undue hardship on their employees

Option #2:  Come to terms with the IRS in the form of a Resolution

Once a payment plan or some other type of formal resolution is in place the IRS will then release the levy conditionally.  It will be the responsibility of the taxpayer to remain current on the payments, to file all tax returns, and to qualify for the arrangement proposed to pay back the tax liability.  If everything is done in accordance to the proposed resolution the IRS tax levy will be released.

Option #3:  Collaborate a Release of IRS Tax Levy

An agreement may be reached with a local IRS Revenue collections officer to release the IRS Levy.  The officer will request specific documentation and will establish a plan to back the outstanding tax liability through negotiations.  Keep in mind that most local IRS collection officers will not have the authority to release the IRS levy.

Option #4:  Formal Appeals and Taxpayer Advocate Requests to get IRS levy released

Two types of appeals are available that will prevent or delay an IRS levy but that sometimes can result in an IRS levy release, the (1) Collection Appeal Request and the (2) Collection Due Process Request.  It is recommended that a taxpayer hire a tax professional to submit either one of these request for they can be lenghty and complicated.   A taxpayer can also file a Taxpayer Advocates Assistance Request which will put them in touch with a liaison to the IRS.  The assigned liaison does not have the authority to release as well.

In any case it is important that a person who has received an IRS Tax levy get help with an experienced Tax Attorney.  Although difficult times lie ahead for the taxpayer, a tax attorney can assist tremendously with tax problems and can help ease the burden on the taxpayer and their family.


Related Links
Jobs in Taxes
Information about Tax Liens