July 15, 2008
The IRS Notice of Levy
The levy is the IRS's method of making sure that you settle your tax debt or penalties. They can levy your properties and your income. It is a drastic measure that can financially incapacitate you, so if you receive a Levy Notice, it's advised to act quickly.
The initial step to avoiding a levy is to get the help of a tax lawyer. When you consult with the lawyer, you will have to reveal your IRS issues and any payment information or notices received from the IRS. Taxpayers usually get a Demand for Payment statement from the IRS before being issued the Levy Notice. You will have to justify why this Demand for Payment was not settled. Why the penalties or taxes are unpaid have to be explained with documentation.
A Collection Due Process hearing can be requested at the IRS Office of Appeals in your area within 30 days after you receive the IRS Levy Notice. You should prepare for the hearing if advised to do so by your tax lawyer. If the levy is the outcome of an IRS error, you will still need to attend the hearing to justify the situation and give evidence that your taxes were settled and the IRS has, in fact, committed a mistake. When people ignore the IRS Levy Notice, they become victims of unfair levies of property and wages.
The IRS cannot puruse a levy for various reasons like filing for bankruptcy and quick settlement after the Levy Notice. The IRS also can't collect taxes assessed over 10 years ago because of the statute of limitations. If the IRS levy was mailed after the expiration of the tax collection period, you don't need to pay your taxes.
The Collection Due Process hearing is also a chance to work out an installment plan for settling outstanding taxes. You will need to work out a settlement option with the Office of Appeals if you are not able to settle the entire amount of what you owe the IRS. While not the best option, the installment plan will be less of a financial problem than having your wages garnished or your bank account levied.
The IRS will pursue the levy, until your debt is settled, it it is released officially, or the statute of limitations is met. If you file for reimbursement within 30 days after the IRS erroneouslyly levied your bank account, your bank fees will be refunded.
Ignoring a Levy Notice will only increase your IRS problems. It's better to get assistance immediately to safeguard your assets.
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