If you fail to pay your taxes, the IRS can issue a notice of intent to levy, by which the IRS exercises its right to seize assets to satisfy your tax debts. By law, the IRS must follow particular steps when issuing a notice of intent to levy.
When the IRS Can Issue an Intent to Levy
The IRS must:
- Give you the Notice of Intent to Levy in writing, which also explains your right to appeal the levy
- Deliver the notice to you personally, have it left at your house, or sent to your last known address at least 30 days before the levy is to take effect
- Explain the reason for the levy, the steps of the levy process, and what you can do to avoid the levy.
The Levy and Property Seizures
This levy can include a number of seizures including:
- Any property, including homes and cars
- Bank accounts
- Securities
- Your income (in the form of wage garnishments)
- Funds that are due you, and yet to be received (“receivables”)
Before you are up against a tax levy, you will have been sent a “Notice and Demand for Payment” which gives you a warning that payment is required immediately. If you do not respond to this notice, the IRS will issue the tax lien, and then a notice of its intent to levy.
If you do not make repayment arrangements or pay the tax bill outright, the levy will go into effect. This is the worst possible scenario, so avoid it at all costs! Depending on which assets are seized, the IRS can empty your bank accounts and have business that owe you money send the IRS the money instead. This means that in addition to having no income and no savings, you can potentially bounce checks and ruin your credit further by having a levy against you.
To Stop a Levy
Of course, paying the tax bill in full will cause the IRS to remove the tax levy. You can also have a levy released if you submit an “Offer in Compromise,” which proposes that the IRS puts your tax collections on hold while you work out a repayment plan.
The IRS may also agree to release the tax levy if you can prove “Hardship,” which means that having the tax levy in place will make it impossible to meet your very basic needs to survive, purchase food, etc.
Getting Help
It is strongly recommended that, if you face a tax levy, you hire a tax law professional to help represent you as you make equitable arrangements with the IRS. Your lawyer can assist you in dealing with the levy in a timely manner that provides the least amount of disruption to your life and assets.
