An IRS levy is a legal seizure of property to satisfy a tax debt. It is attached to a taxpayer's personal property. The IRS will usually levy after they have assessed a tax balance and sent a "Notice and Demand for Payment", the taxpayer neglected or refused to pay the balance due, and a "Final Notice of Intent to Levy" has been sent at least 30 days prior.
The IRS attempts to collect from the following sources:
1. Wages- An IRS wage levy is the most common form of IRS levy. It is sent to your employer to deduct a certain percentage (usually a high percentage) of your wages per pay period.
2. Bank Accounts - This type of IRS levy is sent to your bank. The levy will seize the amount in the bank account up to the amount of the tax balance. It is a onetime levy however, the IRS can levy the bank account again.
3. Social Security- The IRS can levy up to 15% of your Social Security through the Automated Federal Payment Levy Program (FPLP), and manually there is no limit on what they can levy.
4. Retirement Accounts, Life Insurance, and Annuities - Mostly any third party accounts in your name.
5. Property- This is the least common form of IRS levy. The IRS can take personal assets including houses, vehicles and about any kind of personal property with a few exclusions. If you do not pay your taxes (or make arrangements to settle your tax debt) the IRS may seize and sell any type of real or personal property that you own or have interest in.
How Long Does An IRS Levy Last?
An IRS levy will continue until the tax debt is satisfied in full, the time to collect the tax has expired or until the levy has been released.
How to Stop IRS Levy Action?
First, in order for a levy to be released the taxpayer must be compliant in the filing of tax returns.
Once returns are filed, you can appeal the levy and the IRS will usually suspend the collection process while the appeal is pending. If the Appeal s is successful, the levy will be released. However, it is my experience that very few taxpayers win in the Appeals process because they do no establish a why the IRS was wrong to place the levy or why it should be released.
A levy can also be released if you pay the tax debt in full, set up a monthly payment plan to pay back the tax liability due (Installment Agreement), have the IRS will put the case in a temporary hardship status due to extreme circumstances or lack of financial ability to pay or submit and Offer in Compromise and settle the tax liability for less than what is owed (this in and of itself will not release a levy. It will still have to be released by either an Installment Agreement or hardship but the taxpayer can move on to submit an Offer in Compromise, if they qualify, to resolve the tax balance due).
Having a tax professional on your side who has experience in working with the collection department of the IRS will ensure that the tax laws are worked to the tax payers advantage. An experienced tax representative will also know the options for resolving any tax liabilities and the quickest way to have the levy released.
Cynthia Kuhne has been helping people resolve their tax problems successfully for over 16 years. She is a licensed Enrolled Agent with both the knowledge and experience to stop IRS levy action quickly. She is the founder and president of CKTax Inc., a full service tax relief company with an "A+" BBB record. If the IRS has attached a levy to your assets, is about to, or you just have a tough tax problem, visit http://www.cktax.com/ or call 888-894-2005 now.
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