There are few things in life more alarming and devastating than having your hard-earned money and property taken, especially when it could easily be avoided.
That’s exactly what happens when the IRS issues a Notice of Intent to Levy. Many hardworking taxpayers wind up facing overdraft alerts on their bank accounts and losing property due to back taxes and uncertainty on how to get back into good standing with IRS, and it feels a lot like waking up in Whoville and finding the Grinch has stolen your Christmas joy.
In the time of holiday hustle and bustle when finances are already tight and gift lists are lengthy, it’s easy to find yourself in a tight financial situation and ignore notices from the IRS regarding overdue tax payments. Don’t risk losing it all to a tax levy.
You have options to overcome issues that lead to an IRS tax levy, and we’re taking a look at the easy process of compliance to protect your bank account and future from being stolen.
What is an IRS Tax Levy?
A tax levy is when they IRS takes property from taxpayers to pay overdue taxes. Tax levies can include penalties like wage garnishment or legal seizure of assets and bank accounts. There are exceptions to what can be taken by the IRS in a legal seizure, but the bottom line is that tax levies are never fun or favorable.
The good news, however, is that the financial hardship an IRS levy creates is rarely ever a surprise and, believe it or not, can be easily avoided with a few steps – even if you find yourself with an heft tax bill you think you can’t repay.
How Do Tax Levies Happen?
If you’ve filed one or more income tax returns without paying the full amount of tax due, you will most certainly hear from the IRS. The IRS sends delinquent taxpayers a few notices in the mail. A notice will start off as courteous reminder, then the communications get increasingly more threatening until you receive the Final Notice of Intent to Levy.
IRS typically sends this notice via certified mail in an effort to ensure you’re made aware of the impending doom headed your way if you fail to act. Some folks think ignorance is bliss, but that’s not the case with IRS.
If you are considering NOT accepting the certified mail notice, the eventual levy will proceed, regardless, and this is a scary place to be because it’s where you’ll begin to lose rights granted to you under the law. It is better to accept the notice immediately, as there are some very time sensitive actions required on your part that will offer you protection or place you further in peril.
So what should you do if you receive a Notice of Intent to Levy from the IRS?
What to Do First If You Receive IRS Notice of Intent to Levy
You have 30 days from the date of the notice to file a type of appeal called a Collection Due Process hearing. We will discuss that more later. The first thing that needs to happen is you need someone to contact IRS on your behalf to begin resolving your case.
Speaking with the IRS on such a critical issue of your finances and future is not for the faint of heart or even the everyday passionate person. This is NOT a DIY project for anyone unless they are intimately familiar with IRS collection procedure and can dedicate ample time focus to the case. This is when you need representation and your choice in your representation matters.
Let Your Certified Tax Resolution Specialist or Tax Attorney Speak with IRS
Hire a representation professional, such as a CPA, EA, or Attorney, and sign IRS form 2848 – Power of Attorney and Declaration of Representative, which authorizes your qualified representative to interact with the IRS on your behalf. By filing the power of attorney, IRS is prevented from contacting you directly unless they have permission from your representative
As experienced Certified Tax Resolution Specialists, our clients never speak to IRS. We have successfully represented hundreds of taxpayers through collection alternatives and would be glad to do the same for you. Schedule a Consultation to begin the process of resolving your unique situation.Schedule Consultation
Upon first contact, your representative will request the IRS issue a collection activity hold on your account, then we’ll perform a compliance check with the IRS collections agent. Depending upon the non-compliance issues discovered, IRS may issue a collection hold for 30 – 60 days, during which you are protected from the levy. During this time period, Tax Crisis Rescue or your trusted tax representative will work to correct any non-compliance issues other than the delinquent tax debt.
The objective here is to provide you with additional rights by re-establishing current compliance.
Combat Wage Garnishment with Compliance
Economic Hardship Status, Installment Agreement, Compromise, and Other Options for Outstanding Tax Debt
Paying off your delinquent tax debt is NOT a requirement to re-establish current account compliance…
but you may have to file some missing tax returns and arrange to pay the current year’s taxes as they become due. Think of it as taking a few little steps and making an attainable plan to resolve your issues. Once your current compliance with IRS is re-established, then it is time to work with the IRS on getting into a formal resolution plan for the delinquent tax debt.
There are several options other than the often-impossible lump-sum full payment, like:
- FINANCIAL HARDSHIP STATUS
A financial hardship status means that no payments are required until the IRS determines your specific financial hardship is no longer an issue.
- MONTHLY INSTALLMENT AGREEMENT
A monthly installment agreement allows you to pay back the amount owed via monthly payments over 84 months or fewer.
- A DEBT COMPROMISE
A debt compromise will settle the entire amount of debt owed for less than what is owed.
- FILING FOR BANKRUPTCY
Bankruptcy is a legal discharge of the tax debt owed.
These are a few of the formal resolution plan options to repay delinquent tax debt, and the best option for taxpayers varies by situation. It’s imperative to have an experienced tax defender in your corner to assess your unique situation to determine the best course of action.
Establishing a formal agreement with the IRS to repay tax debt protects you from all forced collection actions, including the levy proposed on your Final Notice of Intent to Levy. But what if you are not able to come to an agreement with IRS?
Without a Formal Agreement, You Still Risk IRS Levy
Time is not your friend in this situation because the collection activity hold will eventually expire, exposing you to the levy again. Remember the Collection Due Process hearing that needs to be filed for within 30 days? Let’s circle back to that now.
Your Right to a Hearing is a Form of Protection
If the 30-day deadline to file is approaching and you did not come to an agreement with IRS, then you need to file for the hearing. By filing for the hearing, your right to challenge IRS collections division at the appellate level is preserved (very important), along with your right to challenge the appeals decision in tax court. In addition, while the hearing is pending, IRS is prohibited from taking forced collection action so the levy is halted.
Now, without the threat of levy, you can continue to work on an agreement with the IRS collections division while waiting for the Collection Due Process hearing to be scheduled. If an agreement is reached before the hearing, you can withdraw the filing.
To be clear, the very worst thing you can do is ignore these notices and your debt with IRS because you relinquish rights and lose eligibility for favorable means of resolution. Speaking of favorable…
The IRS Appeals Process Can Prove Favorable
For taxpayers who owe and are unable to come to terms with the IRS collections division, there’s another opportunity for resolution during the Collection Due Process appeals hearing. Personally, Tax Crisis Rescue has experienced quite favorable results with IRS appeals. You see, while the IRS collection division’s mandate is to collect money for the U.S. Treasury, the IRS Appeals division’s mandate is to resolve the taxpayer’s issue.
With focus aligned and the appeals division having more broad discretion, both sides are more likely to come to an agreement. If all else fails (which very rarely happens), the taxpayer still has the right to challenge an appeals decision in tax court.
Ensure Levy Release and Resolve Your IRS Tax Issues Once and For All
We have been through this process hundreds of times over the years and know the procedure quite well. We’re here to guide you through to a resolution of your tax debt and safeguard your future from the Grinchy IRS. If you have tax debt mounding and notices collecting, please schedule an appointment to protect yourself from the impending levy and discuss how we can resolve your IRS issues once and for all!