If you owe a tax debt to the IRS, they may have the right to file a levy against you to collect payment on delinquent taxes. An IRS levy allows the agency to seize your property or garnish your wages to pay what you owe.
As confusing and stressful as an IRS tax levy can be, it’s essential to know your rights regarding the tax levy procedure. Understanding what the IRS can and can’t do and how to challenge a levy can help you through the process.
If you face a tax lien or levy, work with an IRS tax levy attorney from Abajian Law to guide you through the filing. We can help you understand your rights and explore possible alternatives for paying your taxes without a levy.
An IRS tax levy allows the IRS to legally seize your property to secure payment of a tax obligation. Tax levies typically follow a tax lien, a legal claim the IRS makes on your property. When the IRS hits you with a tax levy, they are exercising the claim of the lien by taking your property.
The IRS can levy any property you own, like your house, car, or boat. This can include:
Certain items cannot be seized, such as unemployment benefits, certain disability payments, workers’ compensation, certain annuity and pension benefits, and some child support payments. However, if you are hit with an IRS tax levy, your paycheck, bank accounts, and home could be jeopardized.
Before the IRS can enforce a levy, they must send out IRS Form Letter L-1058, known as the Notice of Intent to Levy and Right to Request a Hearing, or IRS Form Letter L11 (a more recent version). These notices state what you owe and give you the right to a hearing.
Common IRS levies include levies on your bank accounts or wages. These levies can interrupt your cash flow and cause hardship in meeting other financial obligations.
The IRS can place a levy on your bank account to collect on your debt, allowing it to take your funds. If the IRS places a tax levy on your bank, you have 21 days to negotiate with the IRS for a release of the levy before your bank sends your money to the IRS.
During the 21-day window, you have the opportunity to seek IRS tax levy help from an attorney who can help get the levy removed.
The likelihood that you will get an IRS tax levy release depends on:
The IRS can send a tax levy directly to your employer to recover unpaid funds through your earned wages. If this happens, you will only receive the portion of your paycheck exempt from the levy, while the rest will go directly to the IRS to pay off your debt.
The exemption amount depends on the standard deduction, your filing status, and the number of dependents you can claim. The IRS tax levy garnishment calculation is based on the deductions and dependents exemptions in Publication 1494.
Although you can’t eliminate the tax liability that caused the IRS to file a levy against you, you may have options to remove the levy action to avoid garnishment or property seizure. Alternative ways to approach paying your tax debt include the following:
The IRS offers short-term and long-term payment plans, also called installment agreements, to individuals with tax levies. An installment agreement is a payment plan the IRS allows for people who owe back taxes. You can request an installment agreement by contacting the IRS tax levy phone number as soon as you receive the notice of the levy.
You may apply for a short-term or long-term payment plan with the IRS. Both arrangements may be subject to additional fees, and you’ll have to make your payments by Direct Debit.
The short-term payment plan allows you to pay off your existing debt within 180 days. With this plan, you will have to pay accrued penalties and interest on your tax liability.
Under a long-term installment agreement, you can pay your debt in fixed monthly installments. If you pay through Direct Debit, the program costs $31 to apply and set up online or $107 by mail.
If you choose a different payment type, such as a non-automatic debit from a checking account, you must pay $130 to apply for the program online or $225 by mail. Penalties and interest accrue for the duration of your installment agreement.
If you can prove that the tax levy is causing your household severe economic hardship, the IRS may work with you to create an alternative payment option. Each individual or business’ economic hardship threshold differs; however, the IRS will base its judgment on whether the levy would render you unable to pay basic living expenses such as shelter, food, and clothing.
You may be able to request hardship status, also called Currently Not Collectible (CNC), if your income doesn’t currently allow you to put money toward paying off your debt.
You may request an Offer in Compromise (OIC) to remove the levy, which allows you to settle your debt for less money than you owe. According to the IRS, it typically accepts an OIC if your offer reasonably represents what you can pay in a reasonable time.
To help you decide on the appropriate action, work with an IRS tax levy attorney from Abajian Law who can review your potential options and negotiate a payment plan with the IRS.
Generally, the IRS issues a Notice of Intent to Levy and Right to Request a Hearing before it levies an account. After receiving your notice from the IRS, you usually have 30 days from the letter’s date to file a Collection Due Process (CDP) hearing request. This hearing allows you to challenge the IRS’ decision with the help of a tax attorney to change the judgment against you.
To request a hearing, submit a Collection Due Process request form from the IRS website. The IRS will send a CDP Notice of Determination following your hearing that states the result. After an IRS auditor has issued a Notice of Determination, the auditor’s findings are considered final.
An IRS settlement officer oversees collection matters within the IRS, such as whether the IRS followed proper procedures when proposing a tax levy or imposing a lien. An IRS settlement officer can work with you on your levy case to settle the dispute outside of a full court hearing.
Officers can negotiate on your tax debt and agree with you and your legal team for a fair settlement of your liability so you can pay it off and move forward with your life.
Abajian Law’s experienced tax attorneys can help you navigate the process if you or a loved one face an unbearable tax levy. We can help you understand your repayment options, work with the IRS to get you a fair settlement of your tax liability, or have the levy removed if you are facing economic hardship or if the IRS placed the levy in error.
Work with our tax lien and levy attorneys to address your IRS tax levy situation and come to a resolution. Contact us today to request a consultation.