IRS Levies - General

What are the Common Problems Associated with IRS tax levies?

IRS tax levies are among the most problematic effect of owing taxes to the IRS. A levy is an action by the IRS whereby it takes money from a taxpayer's wages or bank accounts. This could have the effect of impoverishing the taxpayer to the point that he cannot pay necessary living expenses such as housing, food and transportation. As such, preventing and releasing IRS tax levies is always a priority.

What are the Dangers of having a non-attorney handle an IRS tax levy?

Generally, in order to release or prevent a tax levy, a taxpayer has to provide personal financial information to the IRS so that the IRS can determine a reasonable payment arrangement for that taxpayer. Once the personal financial information is provided to the IRS, it is very difficult to reverse a mistake. For example, if a taxpayer states that their car payment is $700 per month, then the starting point of an installment arrangement will be approximately $300. This result occurs because the IRS expects a reasonable monthly car payment to be only $400 (this approximate number can change). The difference between the $700 car payment and the IRS expectation of $400 (therefore $300) is directly added to an IRS proposed installment arrangement. However, in this example, the taxpayer is a realtor and uses the additional $300 of car payment for business purposes and therefore the $300 should not have been the starting point of an IRS installment arrangement. This type of analysis is true for all types of personal expenses and taxpayers must be guided by tax attorneys as to the proper presentation of their business and personal expenditures.

What Legal Grounds Does the IRS Have to Levy?

The Internal Revenue Code passed by Congress (so it is the law of the land until the Supreme Court states otherwise) contains section 6331 which authorizes the IRS to levy in order to collect delinquent taxes.

What is the Difference Between a Levy & a Seizure?

There is no legal distinction between an IRS levy and an IRS seizure. Levies are used by the IRS to take bank accounts, wages, other income, or other receivables. Seizures are used to take cars, houses and other business property.

What are the Required Notices Prior to a Levy?

The IRS may not levy (and a levy is reversible) until the taxpayer receives the Notice and Demand, Notice of Intent to Levy and Notice of a right to a Collection Due Process Hearing. One of these IRS levy notices will arrive via certified mail to the taxpayer's last known address.

Are there Any Exceptions to the Notice Requirements?

In the event the IRS determines that the tax collections are in jeopardy, a Jeopardy Assessment and a levy may be issued to secure the IRS's position in a taxpayer's assets. If this is the circumstance, tax attorney involvement is strongly urged.

Where is the IRS Required to File the Notices of Intent to Levy?

Generally, for IRS levy purposes, the last known address is the address on the most recently filed and properly processed return. If a third party provides a verified new address that is not the last known address of the taxpayer, it can be used by the IRS for tax levy and seizure purposes.

Do the Required IRS Levy Notices Become Stale Over Time and Have to be Re-issued?

IRS Levy Notices that were sent more that 180 days prior to anticipated IRS collections do not have to be re-issued. However, if an IRS levy notice is more that 180 days old, then the IRS revenue officer should give an oral warning of impending IRS levy and seizure action, then wait 30 days to give the taxpayer an opportunity to appeal the proposed IRS levy via a CDP or CAP appeal.

How the IRS TaxMasters Resolution System can help

If a taxpayer owes back due taxes but has not yet received the required Notices of Intent to Levy from the IRS, a variety of proactive steps can shift the delinquent tax issue into another posture. For example, immediately filing an Offer in Compromise may move the delinquent tax issue out of IRS enforced collections and into a non levy IRS settlement status. This would have the effect of removing the possibility of an IRS levy or IRS seizure. Other actions alone or in conjunction with an IRS Offer in Compromise can further substantially reduce the possibility of an IRS levy or an IRS seizure. A brief phone call with our attorneys can quickly point you in the right direction and guide you to an easy resolution to IRS pre levy and seizure action.