What Actions Does the IRS Take To Collect Taxes?
The Internal Revenue Service (IRS) has broad powers available in the collection of taxes. These actions include:
- Filing a Notice of Federal Tax Lien
- Serving a Notice of Levy; or
- Offsetting a federal or state tax refund to which you are otherwise entitled
In the past a taxpayer could get the IRS to withhold the filing of liens and levies. No more! The mantra is now “to protect the government’s interest … period”
What Is a Tax Levy?
The Internal Revenue Service (IRS) has broad powers available to collect taxes owed that are not paid. When demands for collection fail, the most commonly used power is a tax levy. A tax levy means the IRS can confiscate and sell property necessary to satisfy a tax debt. The IRS can levy your bank accounts, retirement accounts and any other assets you may own including your car, your boat and real estate. Commonly, the IRS may levy your wages or any other income you are receiving to protect the government’s collection interests.
What Is a Tax Lien?
A federal tax lien is a claim by the Internal Revenue Service (IRS) against your property, including property that you acquire after the lien is filed. In filing a Notice of Federal Tax Lien, the government establishes its interest in your property as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. A federal tax lien will generally appear on your credit report and harm your credit rating. Once a lien is filed, the IRS generally will not release the lien until the taxes, penalties, interest, and recording fees are paid in full or the IRS may no longer legally collect the tax.
When Does the IRS Levy?
The Internal Revenue Service (IRS) will usually levy after 3 requirements are met:
- The tax was assessed and you were sent a Notice of Demand for Payment;
- You neglected or refused to pay the tax, and
- You were sent a Final Notice of Intent to Levy at least 30 days before the levy.
What Can You Do?
The most obvious cure is to pay your taxes. The Internal Revenue Service (IRS) must release your tax levy or lien if you pay your tax, penalty and interest owed in full. If you can show that the taxes were paid before the date of the levy, or the tax was assessed and the levy notice was sent while you were in bankruptcy, you may possibly be able to avert the federal tax levy. You may also be able to stop a tax levy where the time to collect the tax has expired before the levy notice was assessed.
How Can We Help?
Sometimes, your financial situation has changed and you just can’t afford to pay anything right now. Most taxpayers intend to pay their taxes, but are often just requiring a little more time. You may also qualify for relief where you can show that the tax levy creates a significant economic hardship for you. When you can’t pay your taxes, the IRS will release a tax levy where you can enter into an agreement to pay the taxes over time (installment agreement) or otherwise settled the taxes owed (offer in compromise). Current economic conditions have prompted the IRS to structure extremely generous payment terms with qualifying taxpayers like never before but you must be proactive!
To stop a levy we may ask an IRS manager to review your case, or request a Collection Due Process Hearing with the Office of Appeals where warranted. You may have the opportunity to dispute the assessed liability, assert an innocent spouse defense or discuss other collection options.
If you’re looking for help with an IRS tax levy or lien, you’ve come to the right place. An IRS tax levy can have a devastating impact on a taxpayer’s financial situation. Where the taxes owed appear overwhelming, this is matter that requires professional help. We have the knowledge and experience to protect your rights and negotiate with the IRS for a release from a tax levy or lien for qualifying taxpayers. We’ve been successful in obtaining releases of dozens of federal tax liens where others have failed. Get your life back and get peace of mind!