You will receive all kinds of collection notices if you don’t pay your taxes. It starts with late payment reminders, which aren’t terribly serious, but the situation can quickly escalate to intent to levy notices if you continue to ignore letters from the IRS.
These are serious notices, and once you receive them, you should appeal or make arrangements to pay your tax debt. If you don’t, the IRS will start taking your assets. Need help now? Contact us at Wiggam Law. Our tax attorneys will help you find the best solution for your unique situation and keep your assets protected.
What is a Notice of Levy?
An IRS notice of levy is a letter informing you that the IRS plans to take your assets for unpaid taxes. There are several different levy notices, and they focus on different assets. But be aware that once the IRS starts taking some assets, the agency will quickly begin to take more.
Types of Levy Notices
The IRS sends out a few different levy notices. For example, the CP504 notice lays out that the IRS is going to seize your state tax refund, and if that doesn’t cover the debt, the IRS will start to come after other assets.
The following intent-to-levy notices all explain that you have a right to a hearing, and if you don’t pay or request a hearing within 30 days, the IRS can seize your wages, bank accounts, assets, and Social Security benefits:
If you receive any of the above notices, you need to contact the IRS to request a hearing or set up payment arrangements. Overwhelmed and trying to figure out what to do? Then, contact a tax attorney who will be able to help you through the process.
In rare situations, the IRS sends out a Notice of Jeopardy Levy. A jeopardy levy is when the IRS levies your assets without giving you a chance to request a hearing. This only applies in situations where the tax collection is at risk — for instance, the IRS thinks you’re going to flee the country or get rid of all your assets.
What Assets Can the IRS Levy?
The IRS can levy almost all of your assets. This includes tax refunds, wages, commissions, bonuses, bank accounts, retirement accounts, and property. The IRS can also take money that other people owe you, such as rent payments. There are very few assets that the agency cannot take.
Generally, the IRS starts with the lowest-hanging fruit. This means garnishing your wages and seizing the funds in your bank account. Then, the agency moves on to seizing and auctioning off real assets.
What to Do When You Receive a Notice of Intent to Levy
Don’t ignore this notice. You need to respond. If you don’t agree with the levy, contact the IRS to appeal. Generally, the appeals hearing happens over the phone, and you get to propose alternatives to the levy. Or you can explain why the levy would cause you financial hardship. For best results, you should get professional help from a tax attorney.
Alternatively, you can make arrangements to pay your tax debt. In most cases, as long as you request a suitable repayment or settlement plan, the IRS won’t move forward with levying your assets. To ensure you choose the best plan for your situation, you may want to work with a tax attorney who has a clear understanding of the tax laws and how they apply to your unique circumstances.
Keep in mind that it’s always easier to set up payments before the levy starts. Once a levy starts, it can be hard to stop. If you’re dealing with an active levy, call us right away, and our experienced tax attorneys can help you protect your assets while we negotiate a resolution.
How to Appeal an IRS Intent to Levy
You’ve received an intent to levy notice and want to appeal so the levy doesn’t move forward. So, what should you do next? Follow the instructions on the notice to request a hearing, and make sure to pay close attention to deadlines.
First, ask for a managerial review. This has a manager look at the employee’s decision to ensure that they agree with the levy. If the manager doesn’t stop the levy or if they never get in touch with you, file Form 9423 (Collection Appeals Request). The IRS will issue a decision based on the information on this form, but unfortunately, if you disagree with their decision, you cannot appeal again.
To be on the safe side, you should work with a tax professional during the levy appeals process, but make sure to contact them quickly. You typically only have 10 days to appeal property levies. There isn’t a strict deadline for wage or bank levies, but if you don’t act quickly, the IRS will start the levy.
How to Make Payments to Stop a Tax Levy
After you receive a notice of intent to levy, you have 30 days to make payment arrangements. Here are the main options:
- Installment Agreement — You make monthly payments on your tax debt. You must be able to pay off the debt by the collection statute expiration date. You typically don’t need to provide financial details if you owe less than $250,000 and a revenue officer hasn’t been assigned to your account.
- Offer in Compromise — You make an offer to the IRS to settle your tax bill for less than you owe. Then, you give the IRS detailed financial information so the agency can decide if you can afford more than you offered. Because there can be a lot of subjectivity in this process, working with a tax attorney is recommended to increase your chances of a successful offer application.
- Partial payment installment agreement — You prove to the IRS that you can’t pay the minimum monthly payment for a traditional installment agreement. Then, the IRS lets you make payments that you can afford. When the collection statute expires, the IRS waives the remaining portion of the debt.
- Currently not Collectible — You provide financial information to the IRS, and once the agency sees that you really cannot afford to pay, they mark your account as uncollectible and stop collection actions. However, they will look at your situation every couple of years and start collections again if your financial situation changes and they determine that you can afford to make payments.
What if the Intent to Levy is for Your Spouse
If your spouse receives a notice of intent to levy for a tax return they filed on their own, you are not responsible for the debt. However, the levy will likely still affect you. The IRS may be able to levy jointly held property or bank accounts in this situation.
Now, if you filed a joint return, you are both responsible for the tax debt. However, in situations where your spouse misled you, and you had no reason to know about your tax situation, you may be able to separate the tax bill on your jointly filed return by filing for Innocent Spouse Relief. That means that you will only be responsible for your part of the bill. However, the IRS may still be able to levy your jointly-owned property.
What if You Don’t Agree With the Tax Bill
By the time the IRS sends the intent to levy notice, you should have received several other notices outlining how to contest the tax bill. Unfortunately, at this point, you may have lost the right to appeal the tax assessment related to the levy. But that doesn’t mean that you’re out of options. The IRS has a surprising number of different options that you can explore in case of an incorrect assessment.
For example, you may be able to apply for an Offer in Compromise based on doubt as to liability. When you apply, you explain why you don’t really owe the bill, and if the IRS agrees, your owed balance will be reduced. Or you may be able to pay the bill under protest and then request a refund. These are tricky situations, so again, it is recommended that you consult an experienced tax attorney to help you achieve the best possible outcome.
Get Help With an Intent to Levy Notice
If you have received an intent to levy notice, you need to take action. This is one of the most serious notices the agency sends, and you risk losing your assets if you don’t respond.
To get help today, contact us at Wiggam Law at (404) 233-9800 or fill out the online consultation form. Our expert tax attorneys focus on helping people resolve their tax debts, and we can find the best resolution for your unique situation.