Taxation & Estate Planning

How the IRS can hurt you with a Tax Levy & what to do about it!

By Darrin Mish

If you owe back taxes one option the IRS can use to collect them is a tax levy.  If you have received notice from the IRS of a tax levy, your IRS Problems have reached a critical point.  It is now time for you to explore your options.

First, what is a tax levy?  A levy is used to seize your assets up to the amount of back taxes you owe the IRS.  These assets include your bank accounts, home, vehicles, wages, life insurance, inheritances, state income tax refunds, Social Security benefits, and securities.

If this happens to you, your ability to pay your expenses and live a normal life will be hindered.  If your IRS Problems have grown to the point that you might receive a tax levy, you and your family are already stressed.  Now is the time to investigate your options and work on solving your IRS Problems.

The Levy Process

Three things need to happen before the IRS can seize your assets with a tax levy:

?    You receive a Notice of Demand for payment from the IRS.  When you receive a Notice of Demand for payment, your best option would be to pay your tax debt in full.  This would also include any penalties or interest your taxes have accrued.

?    You refuse to pay your taxes in full.  If you refuse to pay your taxes in full, your options include obtaining an Offer in Compromise or an installment agreement or, if necessary, filing for bankruptcy.

?    You receive a Final Notice of Intent to Levy.  If you reach the step where you receive a Final Notice of Intent, your assets will be seized.  This notice has to be received at least 30 days prior to the levy taking effect.  You will have 30 days to resolve the issue before the levy goes in to effect.

Other Options

Other options you may want to consider include showing that the levy will cause extreme financial hardship on your family, the statute of limitations expires before the levy is served, or that you can prove to the IRS that not seizing your assets will make it easier for it to collect the taxes.

To avoid a tax levy altogether, let our knowledgeable staff help you evaluate your situation and determine the option that will work best for you and your family.  Your IRS Problems can be a thing of the past.  Contact us today.

Full post as published by IRS Problem Solver Blog on February 06, 2008 (boomark / email).