Have you received an IRS notice telling you of their intent to levy your property? The IRS has many different ways to collect from you if you owe them a tax debt. A tax levy is just one of those ways—but it is one of the most serious.
Because of the severity of a levy, the IRS will send 5 notices to an individual before seizing the money in the taxpayer’s bank account. After 4 notices, they can seize your state income tax refund without further warning. Once you receive the final notice of intent to levy, you have the right to appeal their decision, but it is better to address the problem before it gets to this point.
If you have received notice of intent to levy (or notice of a federal tax lien), it’s important that you do not ignore the IRS. The consequences of a lien or levy can be very serious—and may affect your livelihood. They can seize assets like your wages and bank accounts, and they can put a lien on your house (which can make it nearly impossible to sell). For businesses, they can seize or freeze all business accounts, making it very difficult to keep operating.
A lien or a levy is a very stressful challenge to face, and if you need help you can contact a tax attorney like S.H. Block. Check out the end of this article to schedule your free consultation to discuss your bank levy or wage garnishment options.
If a taxpayer or business fails to pay the taxes they owe, or if they fail to file their tax return, the IRS will send a notice warning them that they need to fix the problem. If the taxpayer or business continues to ignore the warnings from the IRS, then the IRS has several options to collect unpaid taxes. These are typically reserved for seriously delinquent tax debt, like very high debt or years of unfiled federal tax returns.
If you find yourself in this situation, the IRS has the right to seize assets such as your bank accounts, Social Security benefits, retirement accounts, your state tax refund, and your wages. They can also put a lien on assets like your house, car, real estate, and anything else you own that has value, and you will likely struggle to sell the asset unless the federal tax liability is paid. In addition, your credit score will be affected, and you will find it very difficult to secure a loan or line of credit.
There are several ways the IRS can seize your assets:
The IRS will give you plenty of warning before they resort to these measures, so if you take immediate action, you can typically prevent liens and levies.
RELATED: Can the IRS Levy a Business Account for Personal Taxes?
If you have an unpaid tax liability, the IRS will give you time to respond and correct the problem. However, if you continue to ignore it, they will send additional collection notices in the mail. You should receive five letters before they actually freeze and seize your accounts and assets:
The IRS’ final notice of intent to levy also notifies you of your right to appeal the tax levy. If you appeal, this moves your case from the Collections Division into the Appeals Division and typically gives you several months to figure out a resolution. You have 30 days to file your Collection Due Process appeal, then you must fill out a form listing your income, expenses and assets, plus propose an alternative collection method for the appeals officer to cconsider.
RELATED: Know These 5 Warning Signs of an IRS Levy
If you receive a notice of IRS tax debt, or IRS levies, then you should take action to begin paying off that debt in order to stop the levy process. However, there is probably a reason that you have incurred debt, and you may not be able to pay the entire tax bill at once.
Fortunately, the IRS is frequently willing to work with you to make your debt more manageable. They offer different payment options, but you must qualify in order to take advantage of them.
An experienced tax professional can help you choose the best option for your financial situation, and will be able to negotiate with the IRS on your behalf in order to find a solution that fits your budget. This can be extremely beneficial, and can prevent you from committing to a payment solution that will leave you stretched too thin.
IRS tax levies can be stressful and complicated, especially if you do not have the funds to stop the tax collection notices. You may feel like you have no options. However, the team at S.H. Block Tax Services is on your side, and wants to help you prevent tax levies from making your situation even worse. If you’ve received a final notice of an IRS levy, it’s especially important that you contact us right away to prevent the IRS from seizing your money or other assets.
We offer a free consultation, so you can bring us the details of your case at no obligation. Contact us at (410) 872-8376 or complete this online form to schedule a meeting with one of our tax professionals. We can talk about your payment options to avoid the proposed levy from the Internal Revenue Service.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
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