There are two words that you don’t want the IRS to associate with your name: tax levy. The IRS issues a tax levy to seize your assets to satisfy an outstanding debt. In other words, if you have not paid your taxes or at least made and adhered to payment arrangements, the government can go into your bank account and levy what is owed to them. They can take possession of your property, like your car or house, and sell it to pay off the taxes that are past due. This is never a situation anyone wants to face. There are ways to stop this from happening, if you think a tax levy may happen to you.
First, know that the IRS is required to properly notify you by sending both a Notice and Demand for Payment and a Final Notice of Intent to Levy at least 30 days in advance of the levy. They must also send a letter stating your right to a due process hearing. Waiting for these letters to appear in the mail is not the proactive stance you need to have to stop a tax levy.
Ideally, you have savings or an emergency fund you can access to pay back what is owed. However, if you are facing financial hardship and cannot pay back your taxes in one payment, discuss your situation with a tax debt relief professional who may help stop IRS tax levy proceedings.
Millions of Americans receive these notices in the later months of the year when taxes have been assessed and payments have gone several months past due. If you cannot pay your tax balance, you may be able to avoid the levy by making a payment arrangement with the IRS. At this point, it may be in your best interest to consult with and retain the services of a business that is well-versed in helping taxpayers in these predicaments. They can outline your available options and serve as a go-between for you and the IRS.
If you cannot satisfy an installment agreement or your financial status leaves you without the funds to make the payments necessary, there is also an option of an offer in compromise. This is a solution that you will want to explore before you even file your taxes. Waiting too long will make you ineligible, especially if you have previously defaulted on payment.
It can seem overwhelming, but you can take steps to prevent IRS levy action. If you are in a temporary financial setback and know you can come up with the money in the near future, then an extension might be the solution. If the lump sum is what’s stressing you, then a payment arrangement may be better suited for you.
A tax levy is typically one of the last actions the IRS will take to collect the taxes owed. If you have received notices regarding this or if you know you are behind on payments, speak with the IRS or a tax debt relief specialist to go over your options before you don’t have any left.