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Who Do I Call About A Tax Levy

A tax levy is a very serious and costly consequence of owing back taxes to the IRS. There are several different types of tax levies, and all of them can result in your assets being seized. 

The IRS will typically only use a levy when all other options to collect have failed. The process of getting a levy takes some time, but once they are set, it can be difficult to stop them. 

If you currently have a tax levy against you or owe the IRS back taxes, you should take immediate action to settle the back taxes. Consulting with a tax professional is a good way to resolve any issues that you have with the IRS. 

Coast One Tax Group tax levy experts can review your situation and recommend the best way to remove tax levies and settle any amount owed. 

Who Should You Call About Tax Levies?

If you received a notice about a potential tax levy or currently have an active levy, you should immediately take steps to resolve the issue. There are a lot of financial consequences that can come from a tax levy. The longer you wait to fix the problem, the harder and more expensive it will be for you. 

The best course of action is to consult with a tax professional as soon as possible. They can review the details of your finances and offer solutions for settling your tax bill with the IRS. It’s possible that they can reach an agreement with the IRS and convince them to remove any levies placed on you. 

These are a few of the options at your disposal to get a levy removed:

Pay Off The Amount

The most effective way to stop a tax levy is to pay off your owed tax. The IRS doesn’t apply levies because of anything personal; they simply want you to settle your amount owed. You should pay off your liability as soon as you can to avoid further penalties. 

If you can’t afford to pay it off all at once, you may want to take out a personal loan to cover that amount. The penalties of owing the IRS can add up quickly. You may have to pay interest on a personal loan, but it will probably still be less than the late fees added by the IRS.

Enter Into A Payment Plan

A payment plan is a good way to make affordable payments each month and slowly pay off your owed taxes. However, you should remember that it will continue to accrue interest and late penalties until you pay it off completely. 

A payment plan operates in a similar way to wage garnishment. The key difference is that you would be required to make the payments instead of the IRS seizing them. The IRS prefers that you pay off your tax obligation as soon as you can. It’s pretty rare for a payment plan to last more than a few years at most. 

There is a fee for applying for a payment plan, so be sure you have at least $225 before filling out the paperwork.

Ask For An Offer In Compromise

An offer in compromise is a request to settle your back taxes for less than what you owe. These options are a little bit of a longshot, especially if the IRS already has an active lien on you. You aren’t in a very good position to negotiate, but it can still be worth a try. 

The IRS usually doesn’t accept these offers and is under no obligation to consider them. They can deny your request, withhold an explanation and continue any collection attempts they see fit. 

There are a few criteria that can automatically disqualify your offer. You must have filed all of your previous tax returns, be in compliance with current taxes, and cannot be in the middle of bankruptcy or audit proceedings. 

What Is A Tax Levy?

The IRS and local governments can use tax levies to collect tax money owed to them. 

Tax levies are much more of a headache than normal tax bills. Filing for bankruptcy can eliminate a lot of liabilities and financial obligations, but it usually doesn’t affect back taxes. As if that wasn’t bad enough, failing to repay most back taxes will only impact your credit score. 

Credit cards and banks don’t have many options for collecting outstanding liabilities. There are a few different types of tax levy that the IRS can employ:

Withheld Tax Refunds

The most common tax levy is when the IRS withholds the refund from your tax return

Most jobs will withhold a certain amount of taxes from your paycheck every week. These funds are given to the IRS to cover your income tax obligation over the year. Whenever you file your return at the end of the year, you’ll be calculating the total amount of taxes that you owe. 

If you have exceeded your tax obligation payments for the year, then you would be entitled to a refund from the IRS. However, the IRS can withhold this refund if you currently owe them back taxes. 

The amount of the refund would be applied to your outstanding tax bill. The IRS will continue to seize your potential refunds until the owed tax is paid off or otherwise settled.  

Garnished Wages

Most employers withhold a certain amount of your check that’s applied to your current annual income tax obligation. If you owe the IRS back taxes, they could require that your employer withhold even more from your paycheck. This is known as wage garnishment and is a common collection tactic used by the IRS. 

Wage garnishment can legally seize up to 25 percent of your paycheck and apply it toward your tax bill. The exact percentage can vary depending on your deductions and dependents. The IRS will continue to garnish your wages until the owed tax is settled or an agreement is made. 

Bank Levy

A bank levy is one of the most powerful collection tools used by the IRS. Using this collection method, the IRS can legally take funds directly from your bank account. Bank levies are usually the final option utilized by the IRS to collect back taxes. 

After receiving a notice from the IRS, your bank freezes your funds and assets for 21 days. You would be prevented from making any withdrawals or transfers during this time. If you don’t take any actions to settle the amount or establish a payment plan, the bank will send the requested funds to the IRS after 21 days from the date the bank received the levy notice. 

Most creditors will need to get a court order before they can apply a bank levy. However, the IRS doesn’t need to get a court judgment and can apply a bank levy to your account at any time. 

You should act if you’ve received a notice from the IRS that threatens a bank levy. Otherwise, you could end up losing the money in your bank account and overdraft. 

Asset Forfeiture

Like a bank levy, asset forfeiture is only used in extreme tax situations. The IRS is capable of seizing your personal property in order to cover outstanding back taxes. Your home, vehicles, and real estate property are a few examples of items that can be legally seized by the IRS. 

These items can be seized even if they are not in your possession. As long as they are in your name, then the IRS can legally seize them. The items will be placed up for public auction, and the proceeds of the sale will go towards your tax liability. 

How Do You Know You’re Being Levied?

The IRS can’t just apply a tax levy without notifying you first. If there are any discrepancies in your tax return or you owe money, the IRS will inform you via written letter. There are a few different forms that you might receive depending on the issue. The form that you receive should provide information regarding the issue on hand and how much money you owe. 

There should be a contact number on the form notifying you about a potential levy. If you are unable to find any contact information, you can call the IRS directly at 1-800-829-1040. 

They should be able to answer any questions that you may have about your taxes and any levies that might have been applied. 

The Takeaway

A tax levy is a tactic used by the IRS to seize your assets to legally pay off the tax bills. A few different collection methods are possible, including withholding your refund, garnishing your wages, freezing your bank account, and seizing your property. It can be difficult to stop a lien once it has been applied, so it’s best to take action as soon as you can. 

If you’ve received warnings from the IRS of a potential levy or they’ve already instituted one, then you should consult with a tax expert. Coast One Tax Group professionals can review your situation and offer a few ways to stop the levy. Contact them today and ask them how you can get your fresh start. 

SOURCES:

Held or Stopped Refunds | Taxpayer Advocate Service.

Offer in Compromise FAQs | Internal Revenue Service.

9 Bizarre Items Seized by the IRS | Philadelphia Inquirer

What a Bank Levy Is and How It Works | The Balance

Payment Plans Installment Agreements | Internal Revenue Service

Wage Garnishment: How It Works and What You Can Do | NerdWallet

What Is a Tax Levy? | The Balance