The IRS can seize property from individuals or businesses even when the agency does not have a judgment by using what’s known as a levy. The IRS uses this strategy when a person has failed to pay taxes.
The Levy Process
The IRS enforces the levy by notifying a third-party property holder of its intent. For example, it might place a levy on the person’s checking or savings account or tell the person’s employer of its intent to garnish wages. The levy continues until the tax debt is paid or released through other means. Legally, the IRS must first inform the taxpayer of the intent to levy.
The IRS takes the following steps before enforcing a levy:
- Verifying the tax debt,
- Checking the financial viability of the levy,
- Looking at other ways to collect the debt and
- Confirming that property value, when applicable, yields sufficient proceeds to make the levy worth it.
Challenging a Levy
Once you receive a levy notice, call the number on your paperwork for assistance. Next, fax in the power of attorney, declaration of representative and Form 2848 to the IRS. You have six months to pay off the account. If you cannot do so, then you must submit financial information, including Form 433-A for individuals or Form 433-B for businesses, to the IRS. The IRS will then set up a payment plan with you, or it might assign the case to currently not collectible (CNC) status. You will need to file delinquent tax returns, and the account will then be removed from levy status. However, the IRS will keep any attached wages, monies from bank accounts or other properties.
Levy Exemptions
The IRS permits numerous exemptions from levies, including the following:
- Personal effects, including clothes, food and furniture,
- Gas,
- School and professional books,
- Unemployment benefits,
- Some pensions and annuities,
- Undelivered mail,
- Child support,
- A partial income exemption,
- Workmen’s compensation payments,
- Public assistance benefits, including those granted under the Job Training Partnership Act,
- Disability benefits and
- The taxpayer’s primary residence.
Retain Professional Help to Fight a Tax Levy
Fighting a tax levy involves negotiating with the IRS, which can be admittedly difficult even if you understand the nuances of tax law, and you have the time and energy to press your case. For a free and confidential consultation, call our tax professionals at 720-398-6088 for assistance.