An IRS levy is a legal seizure of your property by the IRS to satisfy a tax debt. It comes commonly as a wage levy or bank levy. Knowing which type of levy is crucial to its eventual release.
STEP #1 - Examine the Notice you have received
The following are types of Notices sent out by the IRS before levying:
CP501 - This is a Reminder Notice that you have a balance due.
CP503 - This is a 2nd Notice to let the recipient know immediate action is required.
CP504 - Final Notice that a levy will be placed on certain assets if the balance due is not paid.
CP 297/90 - Final Notice of Intent to Levy and Notice of Your Right to a Hearing- This Notice is to inform the recipient that the balance is due and the IRS intends to levy on certain assets if the balance due is not paid.
CP 91 - Final Notice Before Levy on Social Security Benefits - This Notice is to let the recipient know the IRS intends to levy on Social Security Benefits if the balance due is not paid.
CP 523 - This Notice is Intent to Levy on certain assets because the recipient defaulted on the Installment Agreement.
A Notice of Intent to Levy can be given to the taxpayer in person, left at a home or usual place of business or mailed to the last known address on file.
If you have received one of these Notices, it is imperative that you contact the IRS immediately or have representation before the IRS to contact them for you.
Did your employer receive a Notice of Levy on Wages, Salary and other Income or did your bank receive a Notice of Intent to Levy?
A wage levy is a continuous levy where as a bank levy is a onetime levy effective only on the amount in the bank account the day the levy was presented to the bank. A levy on 1099 income is also a onetime levy effective only on the income due the taxpayer the day it was received. A bank is required to hold the funds in the account for 21 days and if the levy is not released to send the funds in the account up to the balance due to the IRS.
STEP #2 - Ways To Stop IRS Levy Action After Placement
Get compliant with all tax filings?
The IRS will require that you be current and compliant with tax filing before releasing a levy.
If you have returns that have not been filed, this is a first step, the IRS will require that you be in compliance and current with any tax returns that are required to be filed.
Pay the balance due immediately.
If you pay the tax liability due the IRS will release the levy. Filing bankruptcy will also stop a levy.
If you cannot pay the balance due immediately and you are not filing for bankruptcy.
If you cannot pay the balance off, then you can either set up an Installment Agreement or have the case put in a section 53 (hardship).
If the balance is under $25,000 the IRS will set up a streamline Installment Agreement where the balance is paid off over 60 months.
If the balance is over $25,000, you cannot make the minimum payment required in an Installment Agreement or cannot make a monthly payment plan at this time due to a hardship, then financial disclosure will be required.
The IRS will require full financial disclosure of income/expenses and assets/liabilities. This is typically done on a 433A. This will also require manager approval of any agreement.
Obtain Representation.
I always recommend professional representation if you will be required to disclose financial information. An experience profession will know how to work the tax laws to your advantage, what disclosures are legal and they can also usually expedite the process.
If the balance is under $25,000 and it is a streamline Installment Agreement that would depend on how comfortable you are dealing with the IRS. I have heard stories from taxpayers on how they were put on hold and transferred many times with no results, were asked to disclose certain assets to see if they could pay it off, were treated rudely and overall found the IRS very difficult to deal with.
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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