Frequently Asked Questions Regarding IRS Tax Levies (FAQs)
Can You Stop a Tax Levy?
Yes, you can stop an IRS tax levy. The IRS doesn’t really want to levy anyone’s assets. Seizing assets is the last resort method to collect taxes from uncooperative taxpayers. When the IRS sends the final notice of intent to levy, it gives you 30 days to resolve the issue. To stop the levy, you can pay in full, enter an installment agreement, or setup another type of agreement with the IRS.
What Assets Can the IRS Take Through a Levy?
The IRS can take many things but certain items are exempt. What they can take includes wages, commissions, employee travel advances, payments from clients, money from bank accounts, property including your home, and rights to the property. The IRS can also take 15 percent of your Social Security payments.
What Won’t IRS Take Through a Tax Levy?
The IRS cannot take welfare payments, Supplemental Security Income (SSI), disability payments, court-ordered child support, worker’s compensation benefits, unemployment payments, certain annuity and pension benefits. You can also keep school books, livestock, personal assets up to a certain value, and tools of the trade up to a certain value.
Some professionals argue that the IRS can legally levy public assistance benefits, unemployment, and worker’s compensation benefits. However, the IRS IRM instructs IRS personnel not to do so.
What If I Don’t Agree With the Notice of Intent to Levy?
If you don’t agree with the notice, you have the right to appeal. Rarely, the IRS makes mistakes such as misplacing payments or mixing up paperwork, and in other cases, the agency may not handle the steps correctly. In both cases, you should call the phone number on the notice and do the paperwork to file an appeal.
Can a Tax Levy Be Released?
Yes, the IRS can release a tax levy. To get the IRS to stop a levy that’s already in place, you need to pay in full, set up a payment plan, or settle through an offer in compromise. Alternatively, you can wait for the statute of limitations to expire, or you can get the IRS to label you as “uncollectible”.
How Can I Avoid a Tax Levy?
The best way to avoid a tax levy is to stay in full compliance with the IRS. In other words, filing on time and paying the tax you owe. Moreover, you also need to respond to any notices you receive from the IRS. If you cannot afford to pay your taxes, let the IRS know and try to make arrangements.
What Is the Difference Between a Tax Levy and a Tax Lien?
A tax lien is the government’s “invisible” claim on your property. However, a tax levy is the actual seizure of your assets. With a levy the IRS can take money from bank accounts, garnish wages, or even seize your physical property.
Are There Tax Professionals Who Can Help With a Tax Levy?
Yes, there are many tax professionals who specialize in finding solutions for taxpayers who are in trouble. Tax laws are complex, and a tax professional can help you navigate the situation successfully.