The IRS Federal Tax Levy is the ultimate collection tool that the IRS uses to grab the attention of the taxpayer who has not filed or paid their taxes. These levies are sent out, and with one mail delivery, a person’s life will change.
Levies are usually sent to three places:
- Your employer
- A 1099 source of income
- Your bank
The IRS gets their levy source information not from a sweep of banks, but from your tax returns. Your employer , banks and third parties issue W-2’s and 1099’s to the IRS and those information documents provide the IRS with what they need to levy.
So, how do you stop a tax levy?
- You can pay the tax in full. Simply send a check to the IRS in overnight mail and they will release the federal tax levy. Not so easy if you are broke.
- You can set up a payment plan or installment agreement. Simply fill out a 433-F and call the IRS.
- You can set up a partial payment agreement. This agreement is based on the fact you are a hardship candidate but want to still make payments.
- Offer in Compromise. There are three types of Offers in Compromise. Check with a tax professional about the filing of an OIC.
- You have a hardship. There are national standards of acceptable living expenses in all parts of the county. If you fall under those criteria, the IRS can put you into a Hardship or uncollectible status.
- You can post a bond. It must be for the full amount of the tax.
- Bankruptcy settlement will release a tax levy, bank or wage by court order and return seized assets to you.
- Let the 10 year statute of limitations expire – The IRS has 10 years to collect taxes from the initial date of assessment. Once the 10 year period is up, the IRS can no longer collect from you.
- To determine the best way to get your levy released, hire a good tax professional.
