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Dealing with a IRS Tax Levy, Wage Garnishment, Tax Liens
Being a former IRS agent I have learned that most taxpayers fear getting an IRS tax Levy, a wage garnishment or have a federal tax lien filed against them.
Many taxpayers simply do not know what to do to avoid this IRS enforcement action.
But steps may be taken to avoid the IRS tax Levy, wage garnishment, and the filing of the federal tax lien.
 
 Quick Tax Facts
 

•  The IRS files 2.8 million tax levies and wage garnishments each and every year,

•  The IRS files 920,000 federal tax liens each and every year,

• The IRS settles 38% of all the cases they receive through the offer in compromise process

 
If federal debts go on pay the Internal Revenue Service will issue levies on bank accounts and on wages. There is a process that must take place before IRS can issue these enforcement procedures.
 
The Process – Collection Action for Enforcement

 
For the IRS to proceed with any enforcement action the IRS is required by law to provide the taxpayer with:
 

• Notice and demand for payment,

• Notice of intent to levy,

• Notice of a right to a Collection Due Process hearing,

 
The IRS accomplishes these requirements by sending five letters, starting about six weeks after the taxpayer files a return. IRS works on a cycle system. One week is one cycle.
These tax notices are sent form there Cade 2 computer.
 
The five letters are sent by the to as the automated collection or ASC.
IRS collection notice stream cycle,
1.CP14,
2.CP501,
3.CP503,
4.CP504, and
5. L1058/LT11).
 
Should the taxpayer receive the last notice and does not pay the balance or make other arrangements to pay the balance, the IRS can levy the taxpayer’s income and assets, including garnishing wages and or self-employment income and seizing funds in bank accounts. These  levy’s are on tax form, 668A, 668W.
 
Please note:
On all bank levies and there is a 21 when day freeze on your money. IRS wage garnishment’s are immediate seizures and the money will be sent to IRS on your next paycheck.
 
How to Immediately Avoid an IRS Levy
If you know the balance is due and owing, it’s best to call the Internal Revenue Service and walk through  the process of obtaining a settlement. Call the number on your notice  or a tax professional like our firm.
 
When calling the IRS to avoid a tax levy or Wage Garnishment, the IRS will want a current financial.   
IRS will want a collection information statement or financial statement. You can find that form on our website. They are usually on form 433-F.
After you complete the form you will need to sent or fax to the IRS a copy of completed form along with your income verification (pay stubs) expenses, copy your bank statements, and verification of all monthly and installment expenses. They will carefully review before reaching a conclusion.
Key Tip:
 I recommend that all taxpayers call the IRS and have a fax machine nearby. If IRS has already issued the IRS tax Levy or notice of wage garnishment and they receive a fully completed financial statement along with all documentation they can release the tax levy and wage garnishment that day.
Please note – The IRS will compare that financial statement against the national and regional expenses in your area and apply the national standards test to your financial statement.
It is best to contact a professional tax firm to make sure your financial statement is correct and you get the very best deal possible.
 
After the review of your financial statement the IRS will place you in one of three categories. They have the option of placing you into a:
 
1. Current Hardships,
2. Installment Agreements,
3. Have you Filing  an Offer in Compromise.
 
You may always ask for an extension.
One simple, common solution is an extension of time to pay the balance in full.
IRS extensions allow you up to 120 days to pay the balance and avoid a levy.
 
What about a Tax Settlement called the Offer in Compromise
The IRS offer in compromise (OIC) is a collection alternative that settles a taxpayer’s tax debt for less than the amount owed, and it also suspends levy actions.
It’s important to note that if the IRS determines that you are purposely delaying the collection process, the IRS can use liens and/or levies even while it considers your request for a collection alternative.
It is critical you file all your back tax returns and make sure your courage on your withholding or estimated tax payments.
 
IRS Tax Lien vs. IRS Tax Levy
A lien is not a levy.
A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt.
If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.
 
Dealing with IRS Tax Levy, Wage Garnishment – Former IRS