Tax Levy
Once you’ve entered into straightforward payment agreements, the IRS will promptly lift any levy or garnishment.
Discover how we can assist you with resolving a tax levy or garnishment.
Having funds withdrawn from your bank account or wages by the IRS is not uncommon. This action is termed a ‘levy’ when applied to bank accounts and ‘wage garnishment’ when it pertains to paychecks. When faced with this situation, there are steps you can take. You can request the IRS to lift the levy, provided you enter into a payment arrangement or settle all outstanding tax debts.
Tax levies can be contentious, yet they serve as a means for the IRS to recover overdue debts owed to them. Tax obligations can pose challenges for many individuals, leading to various consequences. It’s essential to grasp the stages of this process and how to navigate them effectively.
Understanding how tax levies impact you and the necessary actions to mitigate their effects is crucial. While staying current with tax and other financial obligations is paramount, circumstances may arise that make it difficult to do so. Defaulting on tax payments could result in an IRS tax levy, necessitating awareness of what it entails, its implications for you, and steps to have it released.
What is a tax levy?
An IRS tax levy involves the lawful seizure of a taxpayer’s assets to satisfy an outstanding debt that remains unpaid. When a levy is enacted, the IRS can seize assets such as bank accounts, vehicles, real estate, and other personal property, as well as sources of income like retirement funds and wages. Typically, this step is taken when the IRS determines no alternative recourse is available, and specific conditions must be met before a levy can be enforced.
When is a tax levy issued?
Understanding the circumstances under which a tax levy may be issued is crucial for taxpayers. Importantly, a levy is not the initial action taken by the IRS. Prior to issuing a levy, several requirements must be fulfilled:
- The taxpayer must have received a tax bill (Notice and Demand for Payment) from the IRS.
- The taxpayer failed to pay the tax owed, either due to inability or refusal.
- The IRS has provided the taxpayer with a notification stating their intention to levy assets, typically 30 days after sending a Final Notice of Intent to Levy and Notice of Your Right to A Hearing.
Resolving Tax Levies: Understanding the Process
When facing the prospect of a tax levy, many find it impractical to settle their outstanding taxes in full. As a result, opting for an IRS payment plan agreement becomes a viable option. However, individuals considering this route are often concerned about the procedural timelines involved in completing the necessary paperwork and ensuring the IRS halts the levy/garnishment or refrains from imposing further charges.
Navigating Tax Levies: Ensuring Timely Resolution
Securing a payment extension prior to entering into agreements can facilitate resolving tax levies effectively. An extension request, if granted, provides an additional 120 days. However, if already facing a levy, the maximum extension to settle the balance or enter into a payment agreement is typically 60 days.
Upon approval of an extension to pay, promptly request the immediate release of your levy or garnishment. Coordinate with the IRS representative to ensure your employer, bank, or payer receives the levy release notification promptly.
An alternative approach to expedite levy release is initiating contact with the IRS for a simple monthly payment plan or streamlined installment agreement. Finalize the agreement during the call, and the levy release will be faxed immediately to your employer, payer, or bank.
In cases involving a bank levy, funds undergo a 21-day holding period before remittance to the IRS. Swift action is essential to resolve the issue promptly. Contact our tax experts to initiate an agreement swiftly. Once finalized, the bank levy will be lifted, and access to your funds restored.
Complex payment agreements with the IRS can prolong the release of your levy by several months. In cases where simplified installment agreements or extensions to pay are insufficient, requesting a more intricate installment plan from the IRS becomes necessary. This process requires detailed documentation of your financial situation to determine eligibility, which naturally extends the timeframe.
Similar documentation requirements apply if you opt for IRS programs tailored for individuals facing financial hardships, such as Offer in Compromise, Currently Not Collectible status, or Deferred Payment. These programs necessitate demonstrating financial hardship as the primary reason for requesting levy release. However, the levy remains active until the IRS completes processing the necessary paperwork for the agreement. It’s crucial to explicitly request levy release once the agreement is successfully established, as this detail is sometimes overlooked by the IRS.
The most efficient way to initiate an agreement with the IRS is typically through phone communication. Promptly providing any required follow-up documents is essential for expediting the process.
For those unwilling to navigate the complexities independently, our dedicated tax team offers assistance. Our in-house experts can help identify the most suitable payment plan with the IRS for your situation and handle the levy release request on your behalf. Arrange a meeting or schedule a free consultation with us here or call 949-359-9306.