#irslevy

Innocent Spouse Relief

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a legal claim against property to secure payment of the tax debt, while a levy actually takes the property to satisfy the tax debt.

A levy allows the IRS to garnish(take) your WAGES or EMPTY OUT YOUR BANK ACCOUNT.

These are the 2 most common levies done by the IRS.

Generally, a wage levy is continuous and will remain in effect until it is stopped by the IRS by the IRS issuing a levy release.

A release can be a partial release or a complete release.

A Bank levy is usually a one time levy. This means that it only gives the IRS what you have in your bank account on the day the levy is processed. Funds deposited into your account after the levy will not be taken unless the IRS was to issue an additional levy.

Where does Internal Revenue Service (IRS) authority to levy originate?

The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331. Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied, unless the IRC exempts the property from levy.

What actions must the Internal Revenue Service take before a levy can be issued?

The IRS will usually levy only after these four requirements are met:

The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);

You neglected or refused to pay the tax; and

The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.

The IRS sent you advance notification of Third Party Contact notifying you that IRS may contact third parties regarding the determination or collection of your tax liability.

When will the IRS issue a levy?

If you do not pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action, the IRS may levy any property or right to property you own or have an interest in. For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).

HOW CAN YOU STOP A LEVY

GENERALLY, you will need to be in compliance by filing at least the last 6 years of tax returns, if you are not up to date with your filing.

You will than need to do one of the following

Set up a PAYMENT PLAN

Set up a PARTIAL PAY PAYMENT PLAN

Establish FINANCIAL HARDSHIP

File an Offer in Compromise

The IRS is required to release a levy if it determines that:

You paid the amount you owe,

The period for collection ended prior to the levy being issued,

Releasing the levy will help you pay your taxes,

You enter into an Installment Agreement and the terms of the agreement don’t allow for the levy to continue,

The levy creates an economic hardship, meaning the IRS has determined the levy prevents you from meeting basic, reasonable living expenses, or

The value of the property is more than the amount owed and releasing the levy will not hinder our ability to collect the amount owed.

Please note: The release of a levy does not mean you don’t have to pay the balance due. You must still make arrangements with the IRS to resolve your tax debt or a levy may be reissued.

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