Everything On IRS Levies

An IRS levy is a serious punishment to many common IRS problems like late payment of taxes. To be able to satisfy a taxpayer's unpaid penalty or debt, the IRS may empty bank accounts, seize property, or garnish wages with a levy. Your house, your car, retirement accounts, and even rental income may all be levied by the IRS. To avoid these drastic and financially crippling scenarios, you need to act immediately upon receipt of a Levy Notice.

The first step to preventing a levy is to get the help of a tax attorney. You must reveal any settlement notices received from the IRS when you consult with the lawyer. Before being issued the Levy Notice, the IRS often issues a Demand for Payment statement to the taxpayer. Why this Demand for Payment wasn't settled will need to be justified. There are several valid causes for this, including IRS processing errors, financial hardship, or bankruptcy, but you should present documentation that effectively shows why the taxes or penalties have gone unpaid.

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 advised to do so by your tax lawyer. If the levy is the outcome of an IRS error, you'll still have to attend the hearing to justify the case and present evidence that your taxes were settled and the IRS has, in fact, committed a mistake. This is an unfortunately common problem, but many citizens fall prey to unfair wage and property levies when they ignore the IRS Levy Notice.

There are several situations which will prevent the IRS from enforcing a levy. Making the IRS Office of Appeals aware of these situations is your obligation. If you've filed for bankruptcy, the IRS can't subject you to a levy. Similarly, if you've paid the unpaid amount prior to or immediately following the Levy Notice, you should not be levied. One loophole to stop an IRS levy that most people are unaware of is the statute of limitations. The IRS is stopped from collecting taxes assessed over 10 years ago by the statute of limitations. You're exempt from paying penalties and taxes and the levy if the collection period of the tax expired before your IRS Levy Notice was mailed.

You can work out an installment option with the Office of Appeals at the Collection Due Process hearing. Rather than getting your bank account levied or your wages garnished by the IRS, this is indeed a better choice.

An IRS levy will continue until it's officially released, your debt is settled, or you meet the statute of limitations and the IRS can no longer collect those taxes. If your bank account was erroneously levied as a result of an IRS error, the IRS will reimburse your bank fees. To qualify, you should file for refund within 30 days.

Ignoring a Levy Notice will only increase your IRS problems. It's better to seek help right away to protect your assets.