February 23, 2010

Everything About IRS Levies

An IRS levy is a severe consequence to most common IRS issues like late settlement of taxes. To be able to satisfy a taxpayer's unpaid penalty or debt, the IRS can empty bank accounts, seize property, or garnish wages with a levy. The IRS may levy your retirement accounts, rental income, your car, or your house. To stop these drastic and financially crippling scenarios, you should act fast upon receipt of a Levy Notice.

Before a Levy Notice is served, a Demand for Payment will be received. Ask a tax lawyer to get assistance in avoiding a levy and explain with documentation why you weren't able to pay the taxes and penalties that were demanded from you.

A Collection Due Process hearing can be requested at the IRS Office of Appeals in your area within thirty days after you get the IRS Levy Notice. You should prepare for the hearing if advised to do so by your tax lawyer. If the levy is the outcome of an IRS mistake, you will still have to attend the hearing to explain the case and provide evidence that your taxes were paid and the IRS has, in fact, committed an error. When people ignore the IRS Levy Notice, they become victims of unfair levies of property and wages.

There are several cases which will prevent the IRS from continuing a levy. It is the taxpayer's responsibility to make the IRS Office of Appeals know of these situations. If you have filed for bankruptcy, the IRS can't subject you to a levy. You also should not be levied if you have paid the unpaid debt before or immediately following you received the Levy Notice. A loophole to prevent an IRS levy that most people are not aware of is the statute of limitations. The IRS is stopped from collecting taxes assessed over 10 years ago by the statute of limitations. You're exempt from paying penalties and taxes and the levy if the collection period of the tax expired before your IRS Levy Notice was mailed.

The Collection Due Process hearing is also an opportunity to work out an installment plan for paying unpaid taxes. You'll need to work out a payment plan with the Office of Appeals if you're not able to pay the entire amount of what you owe the IRS. While not the best choice, the installment plan will be less of a financial problem than getting your wages garnished or your bank account levied.

The IRS will continue the levy, unless your debt is settled, it it's released officially, or the statute of limitations is met. If the IRS mistakenly levied your bank account, they'll refund your bank fees if you file for refund within 30 days.

If you are having IRS tax issues and are at risk of being levied, please take action right away to protect your assets. Scared and ignorant taxpayers ignore IRS issues. Ignoring a Levy Notice will only lead to more issues because it's the most severe of all IRS actions. If you're currently having hardshipts settling your taxes, be proactive and get help immediately.

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