Tax Levy Strategies

July 11, 2019

Learning about tax terminology and basic tax concepts is important. That’s why we devote so much effort toward this task. But it’s equally important to know how to respond when the IRS attempts to enforce your back tax debt. Tax knowledge is supremely important, but this is partly because knowledge enables you to act properly when the time arises. The two are connected. You need knowledge to act properly, but that knowledge means almost nothing if you don’t take action at some point. Today, we’re going to look at an IRS tax levy. We’ll discuss how knowing what to do about it can pay big dividends.

When the IRS reaches out to you to collect tax debt, it’s imperative that you know how to respond. If you don’t know what to do, and simply continue to avoid the issue, it can have extremely negative consequences. The IRS may end up forcibly seizing your property to satisfy your tax debt. What’s more, you may seriously damage your credit report. That, in turn, makes it very difficult to build the type of lifestyle you desire in the future. 

What is a Tax Levy?

In this post, we’ll discuss some of the concrete steps you need to take when you receive notice that the IRS will soon move forward with a tax levy, or property seizure. Before the IRS steps in and begins taking your property, the IRS will give you notice of its intent to seize (or “levy”). If you act properly, you will minimize the negative impact of your back tax debt and begin the process of rebuilding your financial situation. Let’s look at the things which are “must do” when the IRS reaches out. 

Respond Promptly to IRS Notices 

The first thing to do when the IRS issues a tax levy notice is to respond in a timely fashion. The other way to say this is that you must not ignore or avoid the notice. Before the IRS actually moves in and seizes your assets, it will give you ample advance notice. The IRS will first send you a notice of your deficiency. Then, the IRS will send you a final notice of intent to levy. And then, the IRS will wait 30 days before moving forward.

Regardless of how you plan to resolve your tax debt, it’s imperative that you respond promptly to halt the tax levy process. Whether you choose to pay in full, enter an installment plan, declare bankruptcy or dispute your balance, the key thing is that you need to reply. If you simply avoid the notices, you will be sadly disappointed if you hope that the IRS will not follow through with its collection efforts.  

Remove the Lien from Credit Report 

As part of a 2018 initiative, the major credit reporting agencies currently do not post tax liens on your credit report unless certain criteria are met. If your personal information is shown on public record with the tax lien, then the credit bureaus may still post the lien to your report. But otherwise the bureaus have agreed to keep liens off of reports. Formerly, tax liens could stay on your report for many years. You should go the extra mile and be sure that evidence of a tax lien isn’t currently tainting your credit report. Tax liens can have a very negative impact on your credit, affecting your ability to develop the type of financial condition you desire. After you respond to the notice, you should make sure that the IRS hasn’t damaged your report. 

Rebuild Your Financial Health 

The other thing you need to do is begin the process of rebuilding your financial health. After you respond to the notice, and remove any trace of the lien from your credit report, you should gradually start to improve your financial condition. For many people, this may entail consulting with a qualified financial counselor. A financial counselor can give you concrete tips on how to perfect your credit, develop better spending and saving habits, investments, and so forth.

No matter how you spin it, a tax levy inevitably involves financial mistakes. This doesn’t mean that those who get one are necessarily financially irresponsible. But it does mean that those with tax debt need to work on their financial planning skills. Developing better financial skills will help to ensure that tax problems do not recur in the future. As they say, an ounce of prevention beats a pound of cure. This is absolutely true when applied to the issue of tax debt. 

Call MC&C for Tax Levy Assistance! 

Again, we can’t emphasize enough that the worst thing you can do is ignore a notice from the IRS. The problem won’t simply go away. At Mackay, Caswell & Callahan, P.C., we understand that talking to the IRS can certainly be difficult. This is part of where we can contribute value. At MC&C, we help our clients resolve their tax debt with the IRS and begin the process of moving forward. We can help you interface with the IRS, acting as an intermediary, and facilitate your tax debt resolution. If you have an IRS tax levy, contact one of our top New York City tax attorneys today. We’ll get started on your case right away. 

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