Owing taxes can be stressful. If you cannot pay your federal tax bill, the Internal Revenue Service will find other ways to collect. The most common method is a levy. This is when the IRS will garnish your wages and/or seize your assets to resolve your debt.
Losing control of your money, house or vehicle is frightening — especially if you’re not sure how you’ll pay your tax bill. You may be wondering if you can get legal assistance.
The answer is yes. Read on to learn everything you need to know about tax relief and whether a tax attorney can stop a levy.
What is a tax levy?
If you owe money to the IRS and do not attempt to make payment, they assume you don’t intend to pay at all. To statist your debt, they will seize any assets they can. Depending on what you own and the amount due, levies can include:
Wage garnishment:
The IRS can collect up to 75% of your net pay until your debt is resolved. This could impact your ability to pay your mortgage or rent, utilities, and other living expenses
Seizure of bank accounts:
The IRS may freeze your checking or savings account and/or withdraw funds to settle your debt. Typically, they will force your bank to prevent withdrawals or debit transactions. After 21 days, the bank must send your money to the IRS.
Seizure of property:
If you don’t have sufficient income or bank account balances to cover the debt, the IRS may seize any vehicles or real estate you own. They then sell those to pay off your tax debt.
Any of these levies can be personally devastating. However, you have options. With the help of an attorney, you may be able to obtain back tax assistance.
Before discussing your options, let’s review how levies are created.
The IRS tax levy process
Don’t worry: the IRS won’t automatically show up to take your house if you make an error on your taxes. Levies are placed when you have significantly underpaid or owe a lot of back taxes. The IRS only issues levies if they have good reason to believe you don’t intend to pay.
However, that can happen if you’re struggling to pay your tax bill and don’t let the IRS know. In a moment, we’ll discuss negotiation options.
If for whatever reason the IRS decides to place a levy, they will notify you first. You’ll receive a letter demanding payment of your tax bill. If you don’t respond, they’ll send a “Final Notice to Levy.”
This gives you 30 days to request a hearing where you can explain your circumstances. If you neither pay nor request a hearing, though, the IRS will place the tax levy.
Once the levy is issued, the only way to avoid your assets being seized is to qualify for a levy release. That’s where experienced tax attorneys can be a huge benefit.
Can you negotiate a tax levy?
The IRS is willing to work with you to resolve your tax obligation. If the amount you owe is beyond your means to pay in full, they may consider:
- An installment agreement in which you make payments until the debt is resolved.
- A settlement of less than what you owe also called an Offer in Compromise. (Possible for those who owe a high amount and have little cash, assets, or equity in their property.)
- A financial hardship plan, which offers payment plans and deferments for those who qualify.
Once the levy is issued, though, your options change. You’ll need to negotiate a levy release. With the help of a tax attorney, you could request an installment plan. If the levy itself creates a hardship (e.g., you no longer have a roof over your head), the IRS may consider releasing the levy.
Other situations where you could be released include:
- Your property’s total value is more than the amount owed and you indicate you will pay.
- The levy prevents you from affording reasonable living expenses (as determined by the IRS).
In any case, you’ll need expert legal assistance to help you navigate the situation.
What can I do to stop a tax levy?
Once the IRS issues the levy, it can take effect very quickly. The Final Notice to Levy is your 30-day warning. If you don’t pay or request a hearing within that timeframe, the IRS will begin seizing their assets at the end of the 30 days.
It’s important to take action quickly if you receive the Final Notice. Contact the IRS immediately to discuss possible payment plans, Offers in Compromise, or hardship deductions. If you are unable to make any sort of payment, request a hearing. A tax attorney can file this for you. Ideally, the hearing would grant you more time to pay or an option to settle your debt.
Let’s say you miss the Final Notice or otherwise don’t take action. What now? The good news is that a qualified tax attorney can often buy you some time. They will negotiate with the IRS on your behalf.
One option is to get a collection to hold placed on your account. This can help you retain access to your funds while your attorney negotiates with the IRS.
A collection hold can also delay wage garnishments until you set up a payment plan.
A tax attorney can also appeal the levy for creating a hardship. If the wage garnishment or bank account seizure means you can’t afford housing or food, the IRS may release the levy.
However, any of these options will require good documentation of your financial situation. This can be difficult to prepare and argue. Once again, a skilled tax attorney can help you alleviate tax burdens and deal with the stress of a levy.
Myths about tax levies
Some common myths deter many people from seeking tax relief. Here are the facts:
Myth: The IRS can take any money owed to you.
Fact: Certain types of funds, including workers’ compensation and disability payouts, are ineligible for levies. The IRS generally seizes existing cash and incoming paychecks from your employer. They may also reduce your refund after you file your tax returns.
Myth: The IRS would rather levy than negotiate.
Fact: Debt collection is costly and tedious for the IRS. Also, they prefer not to deal with seizing vehicles or houses. That’s why they’re usually open to making payment plans. The key is to communicate. A qualified tax attorney can help.
Myth: A levy can take your property later to pay your debt.
Fact: That is a tax lien, not a levy. A federal tax lien is a claim against your property in the event you don’t pay your taxes. A levy is an actual seizure of the property. In either case, talk to a tax attorney immediately.
Conclusion: Tax Relief is Possible
If you can’t pay your tax bill, realize that you have underpaid, or receive a Final Notice to Levy, don’t delay: contact the IRS to discuss your options. Expressing an intent to pay will help your case a lot. That said, the IRS will still expect quick payment in full. Otherwise, they’ll want thorough documentation of why you can’t.
To navigate the situation and ensure that you can fully avoid a levy or get released from one, contact a tax attorney right away. Once you enlist them, the IRS deals with them, not you. You’ll have a better chance of getting a payment plan or deferment — or perhaps even having your tax bill reduced!
Don’t delay: get a tax attorney in your corner before the IRS can seize your assets. Many offer free consultations to help you determine your needs. Take a look at the IRS Tax Relief Network for guidance. Tax relief is possible!
