What is an IRS Levy?
An IRS Levy is a tool used by the IRS to reclaim back taxes. It allows the IRS to freeze your wages, retirement funds or bank accounts and withdraw any available funds to pay off your debt. The IRS does not care about the bills you have to pay or the fact that you may need to put food on the table. Once they have their levy, they will use it to drain as much of your funds as possible.
How do I know if the IRS has a Levy?
The IRS is required to send out a notice of levy before they can actually drain your bank accounts or take your money. This notice will tell you that the IRS is intending on issuing a levy against some of your assets. The IRS uses multiple different notices concerning levies (examples of notices can be seen here).
How Much Time Do I Have?
It can vary based on the type of levy, however, you typically have 30 days from the date the notice is issued to contact the IRS. If you do nothing, the IRS will issue the levy after the 30 day period expires.
What can I do to Stop the Levy?
Request a Hearing. You can request a hearing with by filing an Appeals Collection Due Process Hearing Request (form attached here.) You must file the appeal within 30 days from the notice date on the levy.
Setup a Payment Plan. You can call the IRS (use the number located on the notice of levy) and request a payment plan. The payment plan must be agreed to by the IRS but if you can find a payment option that works, it will stop the levy.
Establish a Hardship. Any type of levy will cause a financial hardship, what you have to establish is that the levy will interfere with your family having basic necessities (i.e., food, shelter, medical bills). The IRS doesn’t care what you pay for bills, they will only allow IRS standard allowable amounts, which are almost always less than what you need. In order to see if you qualify for a hardship removal of the levy, call the IRS and explain your financial situation.
Submit an Offer in Compromise. If you have an offer in compromise pending, the IRS will not levy your accounts or wages. An offer in compromise is done by completing two forms: IRS Form 656 and 433-A.
File Bankruptcy. Filing Bankruptcy provides what is known as the “Automatic Stay”, this simply means that the IRS cannot continue collection efforts while the Automatic Stay is in place. If you have a levy, then file bankruptcy, the IRS will remove the levy. Bankruptcy can also allow you to discharge some or all of your IRS debt (depending on how old the IRS Debt is, among other factors). In addition, even if you cannot discharge your IRS Debt, you may be able to pay the debt at 0% interest and waive the penalties. In some cases, you would only have to pay the IRS based on the value of your property minus any existing liens.
Remember, there are always options. Doing nothing is not going to work. Sometimes, just having a plan in place will take away the stress and let you focus on getting your financial house in order.
As a Mesquite bankruptcy lawyer, I have dealt with the IRS for years now and have successfully helped thousands of individuals deal with their IRS debt. If you have questions about your IRS debt, please contact my office at 469-554-9529 or send an email to firstname.lastname@example.org. There is no charge for the first meeting, so use it to get as much information as you can concerning your options with the IRS.