How to Release an IRS Levy: Remove Federal Tax Levy
Once the IRS sends you their final notice of intent to levy and 30 days have passed and you have not taken any actions to rectify the situation, the IRS will begin to levy. The levy will remain in place until the IRS has levied enough assets to satisfy the outstanding tax liability or you have made another arrangement to settle your tax debt. Know that the IRS does not like to levy and would much rather settle in another manner, even if that means allowing the taxpayer to settle for less than they actually owe. Below are ways you can release the tax levy. The method you choose should be determined by how far along you are in the collection process, your tax situation, and your financial situation.
Pay the IRS in FullThis is the most obvious way to stop the IRS levy. Once the amount plus interest and penalties has been received by the IRS they will stop their collection efforts and put you back into good standing with them. Typically most people get into the situation of a tax levy because they cannot pay their taxes. The IRS does offer other ways to settle taxes other than paying in full.
- installment agreement. With an installment agreement the IRS allows you to pay back the taxes you owe in monthly increments over a period up to three years. There are other payment options available but they are only available to those that don't qualify for a standard installment agreement.
Expiration of Statute of LimitationsThe IRS has 10 years from the date of the assessment to collect the taxes. Once this period is up the IRS can no longer collect the taxes. So if by chance you had a levy in effect and the IRS was not able to collect everything in that 10 year period, they would have to remove the levy and stop collections actions. This is not an advisable solution because much time would be wasted avoiding and hiding from the IRS and it would be much easier to come to some other sort of agreement with the IRS. It is also very likely that the IRS will try to find some way to extend that statute of limitations if they know they are likely to expire.
When it comes to releasing a levy the most common and suggested methods are to pay in full, enter into an installment agreement, or to file for an offer in compromise. Out of all IRS matters a tax levy is the harshest and most serious collection mechanism out there. If you are being faced with a levy it is high suggested that you use a tax professional to help you get back on track with the IRS as soon as possible. Tax professionals know how the IRS and will be able to determine quickly what solution would be best for you.