What is a Tax Levy?
By definition, a levy is a legal seizure of your assets or property to repay or satisfy an unpaid liability. While traditional levies require a collection agency to obtain a court order to move forward with a levy, the IRS has the power to authorize levies to collect delinquent tax balance itself.
Any property or asset can have a levy, including your house, car, boat, bank account, wages, retirement accounts, bank accounts, rental income, the cash loan value of a life insurance policy, or any other asset. The IRS can freeze a bank account, seize property, and otherwise take ownership of any assets to fulfill an unpaid tax bill, other than a list of exempt assets.
When Will the IRS Issue a Levy?
There are three requirements that must be met for the IRS to issue a levy.
- The IRS sent you at least one (1) Notice and Demand for Payment (aka a tax bill)
- The taxpayer has neglected/refused to pay the tax bill
- The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right To A Hearing at least thirty (30) days before initiating the levy.
The IRS can inform you of its intent to levy in several different ways including serving you the notice in person, leaving the notice at your home or your work, or by sending it to your last known address through certified or registered mail.
Please Note: the IRS will not send you an intent to levy via phone call, email, or SMS message. If you receive a threat that the IRS is threatening to levy you through any of these mediums, it is most likely a scam and we recommend reporting it to the FTC immediately.
The IRS will enact a tax levy on your property after you have neglected or refused to pay any taxes owed upon receipt of the Notice and Demand for Payment. They will inform you of the intention with a Final Notice of Intent to Levy and Notice of your Right to a Hearing a minimum of 30 days before its start.
A levy ends when you have fully repaid your federal tax balance, the statute of limitations has ended, or you have the levy removed. If the tax levy creates a financial hardship for you, then you can apply to have it removed, as well as apply for other tax relief solutions.
How to Remove a Tax Levy?
If the IRS has placed an active levy on you, you have the right to appeal to have the levy released. The IRS can deny your appeal and there can be some tedious legal negotiations, so it is often recommended to hire a tax attorney.
The IRS is required to release a levy if it is proven that:
- You paid the amount owed in full
- The period for collection ended before the levy being issued
- Releasing the levy would allow the taxpayer to pay their tax liability
- The taxpayer entered into a Fresh Start Initiativeprogram and the terms of the agreement do not allow the levy to continue
- The levy creates an economic hardship for the taxpayer
- Releasing the levy will not hinder the IRS’s ability to collect the amount owed
If you feel that you already meet one or more of these requirements or believe that the IRS issued a levy in error, your case may be appealed, and the levy released.
Does A Professional Need to Remove a Tax Levy?
A taxpayer does not need to legally hire a representative to have a tax levy released. However, because tax levies are often only applied to a case that has been severely delinquent with the IRS, it is strongly advised to consult a tax attorney when attempting to release or appeal a levy.
The IRS’s ability to release a levy is up to its own discretion and levy negotiations often require an expertly built and presented case. While there are many guidelines that the IRS must comply with when considering releasing a tax levy, it is the responsibility of the taxpayer to be able to properly and accurately present their case.
For more information regarding releasing your current tax levy, call 833-419-RISE (7473).
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