Fact Sheet: IRS Levy

An IRS levy allows for the legal seizure of taxpayer property to satisfy a tax debt. It can seize or sell personal property, such as cars and real estate, garnish wages and take money from your bank account. While a lien is a legal claim against property to secure tax debt payment, an IRS levy actually takes the property.

Overview of an IRS Levy

The IRS will levy after these three requirements are met. It has sent you a Notice and Demand for Payment, you've neglected to pay the tax bill and it has sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. This notice may be left at your home, place of business or in person. When taxes go unpaid or arrangements to settle the tax debt aren't made, an IRS levy is the next step the IRS takes. Not only can the IRS levy property that is yours, but property that is held by others, such as rental income, accounts receivables, wages, retirement accounts, cash value of life insurance policies and commissions.

IRS Prequalifier to Stop an IRS Levy

There are several options to stop an IRS levy.

• Collection Due Process Hearing – a Collection Due Process hearing with the IRS can be requested before the bank levy process begins. During the hearing, it is possible to persuade the IRS that a bank level should not be issued. Various reasons for the argument against a bank levy include a procedural error in the tax assessment, the tax was assessed while you were in bankruptcy proceedings or the collection statute expiration date for a particular year has expired.
• Financial Hardship – Another option to avoid an IRS bank level is to have back taxes declared uncollectible due to financial hardship. Individual taxpayers will need to prepare IRS Form 433-A, and businesses will have to fill out IRS Form 433-B in order to receive uncollectible status with the IRS.
• Repayment Plans and Offer in Compromise – The most common way to avoid an IRS bank levy is to set up a monthly repayment plan with the IRS. Over time, you can repay the back taxes and stay in good standing with the IRS. An Offer in Compromise is another solution to avoid an IRS levy. Eligible taxpayers can settle their tax debts for less than the total amount owe with an Offer in Compromise.

A Closer Look at an IRS Levy

If you're at risk of an IRS levy, it's critical to take action immediately. An IRS levy is a harsh IRS collection mechanism that can severely impact anyone financially. The IRS will not impose a levy if you cooperate. It is highly recommended to hire a tax relief professional to help resolve the problem. These professionals can act quickly and have an in-depth knowledge of the ins and outs of the IRS.