Levies
are the way the Internal Revenue Service gets your immediate
attention. What
they are saying is, We have tried to communicate with
you but you have ignored us.
Levies
are used to seize your wages (commonly referred as garnishment)
and whatever other assets you have: Checking accounts, savings
accounts, autos, stocks, bonds or anything else that you own.
If you have more in the bank than you owe, the IRS will only
take that amount to satisfy your liability, leaving the rest
for you.
Levies
are different from liens. A lien is a claim used as security
for the tax debt, while a levy actually takes the property
to satisfy the tax debt. Not only can the IRS seize and sell
assets that you hold, the IRS can levy property that is yours,
but held by someone else (such as your wages, retirement accounts,
dividends, bank accounts, licenses, rental income, accounts
receivables, the cash loan value of your life insurance, or
commissions).
Before
the IRS can take any of these actions, the IRS must issue
a “Final Notice of Intent To Levy and Notice of Your
Right To a Hearing” to the taxpayer, allowing up to
30 days from the date of the Final Notice to pay in full or
to find another solution.
If
the IRS levies your state tax refund, you would receive a
“Notice of Levy on Your State Tax Refund, Notice of
Your Right to Hearing.” Ignoring these notices will
only make matters worse.
We
can analyze your situation to find the best course of action
for you to avoid the levy. Once the 30 days have passed, the
IRS does not have to give any further notice before seizing
your assets, including your checking accounts, savings accounts,
and your wages.
A
timely filing within 30 days of the date on the Final Notice
for a Collection Due Process hearing, would stop the levy
and allow us to discuss and resolve your case with an Tax
Court appeals officer.
Some
of the issues on appeal may include:
-
You paid all you owed before the IRS sent the levy notice,
-
The IRS assessed the tax and sent the levy notice when you
were in bankruptcy, and subject to the automatic stay during
bankruptcy,
-
The IRS made a procedural error in an assessment,
-
The time to collect the tax (called the statute of limitations)
expired before IRS sent the levy notice,
-
You did not have an opportunity to dispute the assessed
liability,
-
You wish to discuss the collection options, or
-
You wish to make a spousal defense.
At the conclusion of the hearing, the Office of Appeals will
issue a determination. We would then have 30 days after the
determination date to bring a lawsuit in U.S. District Court
to contest the determination.
If
you decide to do nothing or fail to timely file a request
for a CDP Hearing, the levy will commence immediately and
will end when:
-
The levy is released,
-
You pay your tax debt, or
- The
time expires for legally collecting the tax.
If
the IRS levies your bank account, your bank must hold funds
you have on deposit, up to the amount you owe, for 21 days.
This period allows the taxpayer time to solve any problems
from the levy. After 21 days, the bank must send the money
plus interest, if it applies, to the IRS. If the IRS made
a mistake by levying your bank account and you incurred bank
charges because of the erroneous levy, you may be entitled
to a reimbursement from the IRS by filing a claim with the
IRS within one year after your bank charged you the fee.
