Avoiding An IRS Levy

June 27, 2019

Most people are aware that failing to pay federal taxes will lead to some serious negative consequences. However, few people, aside from experts, know precisely what can happen to those who fall behind. For those who willfully evade taxes, most people know that doing so will carry potential criminal prosecution. But what about those who file their return, don’t willfully falsify it, and then simply don’t pay their full bill? Chances are, they may become acquainted with an IRS levy.

IRS Enforcement Actions

As it turns out, the IRS can do all sorts of things to compel payment from tax debtors. The IRS can garnish (or forcibly take) your wages, or freeze your bank account. It can seize your real estate, seize your other valuables, and so forth. When the IRS forcibly takes your property in one of these ways, it’s called a “levy.” An IRS levy is the most common way in which the IRS tries to compel payment.  

In this post, we will go over the IRS levy process. When the IRS issues a levy to take your property, the levy is typically issued according to an established procedure. This procedure may not always be utilized. In some cases, the IRS may simply seize a debtor’s property without going through these steps. But those cases are quite rare. The IRS wants to give the vast majority of debtors a legitimate opportunity to resolve their debt voluntarily. The levy procedure is meant to facilitate this goal. Let’s explore the IRS levy process in detail. 

Written Notice of Your Deficiency 

To begin the levy process, the first thing the IRS does is issue a written notice of your deficiency. This makes sense. The IRS wants you to know how much you owe and how long your account has been overdue. The notice will provide an exact amount and request immediate payment. To prevent the levy process from moving forward, you should immediately take steps to resolve the situation. This means either paying the tax in full, submitting a settlement offer, beginning an installment agreement or pursuing another option. 

Final Notice of Intent to Levy 

If you fail to respond to the notice of deficiency, the IRS will then issue something referred to as a final notice of intent to levy. Just as its title suggests, this notice is meant to serve as your “final warning” before the IRS moves forward and seizes your assets. The final notice will include several pieces of information. The notice will explain how you may appeal or dispute the levy. It will also outline in detail your options for resolving your tax debt (if you do not dispute your debt). The IRS must deliver the notice to you either in person or through the mail to your address.

After you receive final notice, you have 30 days to respond or else the IRS will seize assets. As mentioned earlier, the IRS can seize virtually any type of property you have to satisfy your debt. The IRS can seize your bank account, wages, cars, real estate, commissions, social security benefits, retirement benefits, and so forth.  

Removing the IRS Levy 

When you receive the first notice from the IRS, it’s imperative that you take the steps to remove the levy from taking effect. IRS levies are preventable. To prevent a levy, you need to resolve your debt with the IRS. In order to do that, you need to pursue one of the tax debt resolution options available to you. To figure out which option you should pursue, you should consider consulting with an experienced tax attorney. If you cannot pay your tax debt in full right away, then you should think about either submitting a settlement offer or entering into an installment agreement.

A settlement offer (or “offer-in-compromise”) is literally an offer for less than the full face amount of your tax debt. Submitting an offer of this sort can be complex, and so using a tax attorney is a good idea. An installment agreement is a contract whereby you agree to pay back your tax debt in full over a period of time. This can sometimes be desirable because it allows you to spread your payments out over time, and this can lessen the negative financial impact of your debt.  

Don’t Ignore an IRS Levy Notice

This is an overview of the IRS levy process. In the future, we will come back to this topic and mention some of the specific forms which can be involved. We may go over specific forms in detail, just as we’ve done recently with certain New York tax forms. To reiterate, it’s imperative that you do not avoid or ignore a levy notice sent from the IRS. If the IRS begins the levy process, this means that it is quite serious about collecting your debt from you. The IRS is not going to allow you to simply walk away from your obligation. Even if you do intend to satisfy your tax debt with a single lump sum payment, talking to an experienced tax attorney may still be a worthwhile investment.

Call MC&C Today for Assistance! 

A qualified tax attorney can help you understand the process in detail and explain what you can expect as you attempt to pay your balance and prevent a levy.  At Mackay, Caswell & Callahan, P.C., we deal with IRS levy notices on a regular basis and so we are well conversant in this area. It’s intimidating to receive these types of notices from the IRS. We are here to help. If you need counsel in this area, contact one of our top New York City tax attorneys and we will review your situation immediately. 

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