Don't Let an IRS Levy Ruin Your Holiday (or any other day)
Many IRS Collection employees take time off during the Holidays which can pose challenges for those delinquent taxpayers that have received a levy just before the Holiday hiatus. If your Revenue Officer is out of the office for two weeks and you’re trying to get a bank levy released before the 21 day hold expires, you could be out of luck due to an empty IRS office.
The IRS has an unwritten rule about enforced collection activities during the Holidays. Most IRS Collection employees will not send out bank account levies, A/R levies, wage garnishments or other seizures during the last two weeks of the year. That doesn’t mean you’re absolutely safe from it, but most delinquent taxpayers won’t wake up to a zero balance in their bank account on Christmas Eve.
Here are a few common questions about levies, garnishments and seizures.
Do I Have a Levy or a Lien?
A lot of people mix up the words lien and levy. A tax lien is a legal claim to an asset as security for a back tax debt. It simply records a claim to the property. A levy is a seizure of an asset to satisfy a back-tax debt. It allows the IRS to take the property to pay the back-tax. A garnishment is a continuous levy on wages, salaries and other income to pay back tax owed to the IRS.
If the IRS has taken money from of your bank account or pay check, quickly take steps to request a release.
Quick Tip: The IRS is not allowed to levy or seize the following:
- Unemployment Benefits
- Workmen’s Compensation
- Books and tools of the trade
- Certain public assistance payments
- Undelivered mail
- Certain service-connected disability payments
Will I Get a Warning Before Being Levied?
If you owe back taxes to the IRS chances are good that you receive tons of letters from the Service, which can be confusing to say the least. Some of the notices that you may receive are time sensitive and can be easily overlooked or disregarded. The IRS procedure is to send you a series of notices that may include CP-504, Notice of Intent to Levy and Notice 1058 / Notice LT11, Final Notice of Intent to Levy. The Final Notice of Intent to Levy is a 30 day time sensitive notice. Once your 30-day Appeal rights have expired the Service can issue wage garnishments, bank and A/R levies without further notice. If you have already received any of these notices, it is very important to act quickly to secure a formal resolution to the back taxes. It is never a question of “if” the IRS will levy but rather a question of “when” the IRS will levy, if you don’t resolve your back-tax debt.
Quick tip: If you ever receive a certified letter from the IRS chances are good that you are receiving time sensitive notices that should be dealt with right away. Do not delay in opening, reading and responding to these notices. Delaying will likely increase the chance of enforced collection actions, such as garnishments and levies.
If you get overwhelmed by the stack of notices that you received from the IRS please contact us. Our Tax Advisors are happy to answer any questions you have and can help remove the stress and anxiety of dealing with the Collections Division of the IRS.
How Do I Release My Levy or Garnishment?
The IRS should release a levy or garnishment if an alternative payment resolution, such as an Installment Agreement or CNC status, can be secured. The IRS may also release a levy or wage garnishment if it is causing a financial hardship. You will need to prove to the IRS that the levy is causing a hardship by providing documentation. With a hardship release, the Service will expect a resolution to be set up at the same time as the release or soon thereafter.
Quick Tip: The IRS is required to release a levy under the following circumstances.
- The tax debt has been paid or collection time limit has expired
- Release of the levy will facilitate collection of the tax debt
- The delinquent taxpayer has entered into a formal Installment Agreement
- It has been determined that the levy is creating an economic hardship on the delinquent taxpayer
- The fair market value of the levied property is greater than the tax debt owed and part of the asset may be released from the levy without hindering collection of the tax debt
What If the IRS Will Not Release My Levy or Garnishment?
If the IRS representative or Revenue Officer will not release your levy or garnishment, you may have additional options available to you.
- Collection Group Manager – Ask to speak with the IRS representative’s Group Manager. A manager is often able to quickly resolve disputes.
- IRS Appeals – You can Appeal an IRS decision that you disagree with, but speak with a Collections Manager first.
- Taxpayer Advocate – An independent organization within the Internal Revenue Service that assists taxpayers experiencing hardships due to IRS actions.
- The levy or garnishment is Uneconomical
- Your case is in Appeals
- You have a pending Offer in Compromise
- Your case is in Pending Installment Agreement status
- You are currently in a Bankruptcy proceeding
- The time limit to collect the tax has expired
- Your balance has been paid in full
- You have a formal Installment Agreement in place
- Your case has been placed into Hardship status or Currently Not Collectible
- During the 30 days following the rejection of an Installment Agreement
- During the 30 days following the termination of an Installment Agreement
If you’ve received any of the following notices, contact M&M Financial at (866) 487-5624.
- IRS notice 1058 Final Notice of Intent to Levy and Your Right to a Hearing
- IRS Notice CP504 Notice of Intent to Levy,
- IRS Notice CP 90 Final Notice of Intent to Levy and Your Right to a Hearing, or
- IRS Notice CP 297 Final Notice of Intent to Levy and Your Right to a Hearing
Oct 1, 2017 by
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