It’s not necessarily true that the only thing that’s certain is death and taxes. The other thing that is certain is that the IRS will get their money. If you have unpaid taxes, the IRS can issue a levy to take a portion of your income and assets. You’ll see it coming, too, as the IRS is required by law to send a notice and demand for payment, a notice of intent to levy, and a notice of a right to a Collection Due Process hearing. These will come in the form of five letters called a “notice stream”, so the levy certainly won’t come as a surprise. Leaving your state or even the country won’t help. It’s time to face the music and we can help. Just think of how much better you’ll feel once this is taken off your already overcrowded plate of to-dos. Read on for what actions to take if you think you have an IRS tax levy coming.
Head the Levy Off at the Pass:
Be proactive and take care of the levy before it’s officially issued. You can do this by getting into an agreement with the IRS to pay the balance. A tax professional can help you look at your financial situation in relation to what you owe to pursue your options. One of the most common ways to handle this is to get an extension of 120 days to pay the balance and sidestep the levy altogether.
Arrange an Installation Agreement:
If an extension won’t do, you can ask for an installation agreement or monthly payments. Or you can ask for not collectible status, which means you are temporarily unable to pay. Because these are both formal agreements made with the IRS, they won’t issue the levy once they are in place. However, these statuses can be reversed if the IRS discovers that you are able to pay after all.
Go for an Offer in Compromise:
The OIC allows you to settle your debt for less than what you owe while simultaneously suspending the levy. As any tax pro will tell you, however, OICs are rare, as most taxpayers don’t qualify. Use websites like http://helpwithtaxproblems.org to find out what your options are—and don’t waste the time formulating an offer in compromise if it’s unlikely to be accepted. If your offer is rejected, make sure to arrange an alternative way to pay because, otherwise, the levy will still be issued.
Apply for a Levy Release:
If you can prove economic hardship because of medical costs or other viable reasons, the IRS might grant you a levy release. If they deny your request to release the levy, you can appeal the decision. This appeal can occur either before or after the levy has been issued. If you are able to prove the levy has caused economic hardship after it’s been issued, you can file a claim to have the funds returned to you.
According to IRS.gov, a levy release is required if the IRS finds that: You’ve paid what you owe, the period for the collection came to a close before the levy was issued, releasing the levy will enable you to pay your taxes, you enter into the aforementioned installation agreement, the also aforementioned economic hardship has been proven (the levy prevents you from meeting basic needs), and the value of the property is more than the amount owed and releasing the levy will not affect the ability to collect what’s owed. Of course, the IRS makes sure to point out that the release of the levy doesn’t equate to the balance being forgiven. Arrangements must still be made with the IRS to take care of the tax debt or the levy will be reissued.
A levy can be stressful and shame-inducing, but it doesn’t need to be. Keep these tips in mind and head off the financial trouble before it starts.