Feeling The Squeeze: Take these 8 Steps If You’re facing an IRS levy

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Are you deeply steeped in tax debt? Have the IRS issued a levy notice against you? Does it look like you are about to lose your property or your rights to property to them in order to pay off that debt? Are you feeling squeezed but trapped, like toothpaste in a closed cap tube? Fear not, there is a way out.

What can I do?

The key is to take some form of action. Inaction on your part may lead to the threatened action by the IRS. This means that if you do nothing within the thirty days after they send you the ‘Notice of Intent to Levy’ coupled with the ‘Notice of Your Right to A Hearing’, they will begin to seize your property to recover the debt, including all penalties and interest accruing to them.

Once you receive such a notice, if you believe that you are being unfairly charged, you can ask an IRS manager to review your case. Otherwise, the easiest and most direct way of stopping the levy is by paying off your debt. Most times however and for most people, the amount owed is too huge to be cleared off at a go.

There are various options available to you if you find yourself in such a predicament. Each option, as with everything, has its advantages and disadvantages. Consider the pros and cons before you choose which option to go for. It will be better for you if you are able to get professional advice before you make your decision for example from tax attorneys, accountants or IRS tax experts who offer precision tax relief.

The options involve making a requisition for a levy release. You can request for any of the following:-

Collection Due Process Hearing

Within thirty days after you have received your ‘Notice of Intent to Levy’ letter or CP90 and ‘Notice of Your Right to A Hearing’ from the IRS, you can request for a Collection Due Process Hearing. This is done by filling form 12153 titled, ‘Request for a Collection Due Process or Equivalent Hearing’. This is a hearing with the Court of Appeal. When you opt for this it means that you are out to challenge the IRS’ intent to levy you. You will have very little time to make a case for yourself. You will have a case, for instance, if you can prove that the period for collection ended before the levy was issued or that a levy release will assist you to pay your taxes. If you were in the middle of bankruptcy proceedings when the levy was issued, you should also be able to make a strong case.

Collection Appeals Program

This is similar to but usually works faster than the Collection Due Process Hearing and it gives you access to a broader range of appeals. However, the right to make appeals in tax courts is lost.

Online Payment Plan

If you have filed all your tax forms and you owe the government less than fifty thousand dollars, you can opt to negotiate for an online payment plan.

Offer In Compromise

When you are able to prove that you are unable to pay off the full tax debt, the IRS will compromise on the full amount owed and allow you to pay what you are able to. This proposal may be rejected if the IRS sees that you have future earnings or sources of income that will enable you to pay the tax debt. Acceptance of this request is rare but if you effectively present your financial information in detail, their scrutiny may lead to the IRS’ acceptance of this proposal.

Guaranteed Installment Agreement

In order to qualify for this option, you will need to fulfil a number of requirements. If you have a history of filing your taxes and your tax debt is less than ten thousand dollars, and if in the previous five years you filed and paid your taxes on time and had no installment payment plan, then you can apply for this. You must, however, guarantee that within thirty-six months or less, you will have repaid your tax debt in full, penalties and interests included.

 Streamlined Installment Agreement

This is where you negotiate to secure a monthly payment plan that is affordable for you. You are eligible for this if you owe fifty thousand dollars or less and will agree to clear off your debt within seventy-six months. You must also agree to make a fresh start, meaning that you declare that you will begin paying and filing all of your tax returns.

Partial Payment Installment Agreement

This is for those who do not qualify for either the Guaranteed or the Streamlined Installment Agreements. This option is similar to the Streamlined Installment Agreement. The only difference is that the monthly installment fee is calculated and decided based on what you can afford rather than what you owe. The IRS will evaluate your proposal and then decide on whether to accept or reject it.

Currently Not Collectible Status

When you declare this as your status, you must prove to the IRS that the levy will cause economic hardship in your life. This means that if they seize your property, you will be unable to meet your basic needs. If this request is accepted, the levy will be temporarily released and you will also not be required to make any monthly installments. The IRS will, however, continue evaluating you periodically.

Conclusion

If any of your requests are denied or unsatisfactorily addressed, you are allowed to appeal against the decisions taken. Please note that once you succeed in stopping your tax levy, you will still be required to clear your tax debt. If you do not, the IRS might just come after you again with their most pressurizing collection tactic – the tax levy. This is usually taken as a final resort when all their other methods of tax collection fail. Once the IRS seizes your property, it is highly unlikely that you will get it back. Take a step today instead of doing nothing and just accepting that tax levy.