Stop IRS Levy On Wages
15th January 2012 by Tax Man No CommentsAn IRS levy is an aggressive action by the IRS to seize particular property. The IRS will send a series of notices with the last one being, “A Notice of Intent to Levy”. This is a 30 day notice telling you, that if you do not answer within that time period the IRS plans to levy specific assets. Although the IRS can levy practically any personal assets with only a few exclusions, generally the IRS will send out either a wage levy or a bank levy.
A Bank Levy
A bank levy is a onetime levy where the IRS seizes what is in the bank accounts the day the levy is presented. Before sending the money in the account to the IRS the bank must hold them for 21 days. During this period, if the levy is not removed, the bank will deliver the money to the IRS. Unless the taxpayer can show a serious hardship (cannot pay mortgage or rent, utilities, or that necessary household requirements will be interrupted), a bank levy is tough to have released.
A Wage Levy
An IRS wage levy is a continuous tax levy and one of the most typical forms of IRS levy. The employer is required to keep back a percentage of wages, usually most of it. The IRS is required to leave the standard exemption amount along with the personal exemption amounts depending on the number of dependents and filing status.
To prevent a tax levy it is critical to reply to the IRS notices and to take proper action or obtain counsel before the IRS.
How to have a tax levy released
An IRS levy will have to be released by either an Installment Agreement or hardship, but the taxpayer can proceed to submit an Offer in Compromise if they meet the criteria, to resolve the tax balance due.
Additionally, in order for a levy to be removed the individual must be up to date in the filing of tax returns.
Stop IRS levy activity with the following:
1. Pay the debt - For tourist individuals this is not an option as they do not have the money to pay the tax debt
2. Installment Agreement - A monthly repayment plan can be setup to pay back the tax debt due.
3. Hardship case - In severe circumstances or absence of financial ability the IRS will put the case in a temporary hardship status.
4. An Offer in Compromise - An Offer in Compromise is a onetime settlement based mainly on assets and ability to pay. This will not discharge an IRS levy in and of itself.
Anyone can appeal the levy and the IRS will generally suspend the collection process while the appeal is pending. The levy will be released if the appeal is successful. However, in my experience tax payers do not establish a reason why the IRS was wrong to issue the levy or why it should be released causing very few to win in the Appeals process.
