What is a Tax Levy?
A levy constitutes a lawful confiscation of your assets or property to settle an outstanding debt. While conventional levies necessitate a collection agency to secure a court order for enforcement, the IRS holds authority to levy assets for collecting overdue tax debts.
No asset is exempt from potential levy, including real estate, vehicles, watercraft, bank deposits, wages, retirement savings, rental earnings, the cash value of life insurance policies, and various other holdings. The IRS can enact a freeze on bank accounts, seize property, or claim ownership of assets to satisfy unpaid taxes, with exceptions for certain exempt possessions like clothing, educational materials, and basic furnishings.
At what point does the IRS authorize a levy?
To authorize a levy, the IRS must fulfill three requirements:
- You must have received at least one Notice and Demand for Payment (commonly known as a tax bill).
- The taxpayer has failed or refused to pay the tax bill.
- The IRS must issue 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 notify you of its intent to levy through various means, including in-person delivery, leaving the notice at your home or workplace, or sending it to your last known address via certified or registered mail.
Please be aware: The IRS will never communicate its intent to levy via phone call, email, or text message. If you receive any threats of an IRS levy through these channels, it’s likely a scam, and you should report it to the FTC immediately.
The IRS will implement a tax levy on your assets if you fail to pay your taxes after receiving the Notice and Demand for Payment. They will provide you with a Final Notice of Intent to Levy and Notice of your Right to a Hearing at least 30 days before initiating the levy.
A levy ceases when you have fully settled your federal tax debt, the statute of limitations has expired, or you have successfully petitioned for the levy’s removal. If the tax levy causes financial hardship, you may request its removal and explore alternative tax relief options.
Can I Remove A Tax Levy?
Although submitting IRS Form 9465 isn’t particularly difficult, the IRS commonly denies requests for Offers in Compromise.
It’s advisable to apply for an Offer in Compromise after building a strong case demonstrating financial hardship and an inability to settle your tax debt.
There’s no specific minimum tax liability required to qualify for an Offer in Compromise. Eligibility for resolution varies based on each taxpayer’s individual financial circumstances and liability.
Can I Qualify On My Own?
If the IRS has initiated a levy against you, you possess the right to appeal and request the release of the levy. However, the IRS reserves the right to deny your appeal, and the process may involve complex legal discussions, which is why we often advise seeking the assistance of a tax attorney.
The IRS is obligated to lift a levy under the following circumstances:
- You have paid the outstanding amount in full.
- The period for collection elapsed before the IRS imposed the levy.
- Releasing the levy would enable you to fulfill your tax obligations.
- You have enrolled in a Fresh Start Initiative program, and the terms of the program prohibit the continuation of the levy.
- The levy imposes an economic hardship on you.
- Releasing the levy will not impede the IRS’s ability to recover the owed amount.
If you believe that you meet one or more of these criteria or contend that the IRS levied your assets in error, you have the right to appeal your case and seek the release of the levy.
Is Professional Help Necessary to Lift a Tax Levy?
Taxpayers aren’t legally mandated to enlist professional assistance to lift a tax levy. However, given that tax levies typically occur in cases of severe delinquency with the IRS, it’s highly recommended to seek counsel from a tax attorney when attempting to release or appeal a levy.
The decision to release a levy lies within the IRS’s discretion, often necessitating a meticulously constructed and presented case for resolution. While the IRS must adhere to various guidelines when considering levy release, it ultimately falls on the taxpayer to effectively present their case.
TaxRise tax attorneys are adept at collaborating with the IRS to secure favorable terms for levy release on behalf of clients. They navigate negotiations skillfully, ensuring compliance without compromising on client interests. Our team’s track record includes successful removal of tax liens, cessation of wage garnishments, and halting bank levies through strategic advocacy and robust arguments.
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