IRS Final Notice of Intent to Levy. Now What?
In my prior post, I described how the IRS bills taxpayers. One of those dreaded letters is the final notice of intent to levy. If you see the following line on your IRS notice, sit up and take notice: Intent to seize your assets and notice of your right to a hearing
Then look for the following language (around the middle left of the page:
We haven’t received full payment
despite sending you several notices
about your unpaid federal taxes. The
IRS may seize (levy) your property.
However, you can appeal the proposed
seizure (levy) of your assets by
requesting a Collection Due Process
hearing (Internal Revenue Code Section
6330) by XXXXXX.
Like a rattlesnake, this is the IRS warning to you that it is about to strike. It may be helpful to explain briefly what an IRS tax levy is.
What is a tax levy?
A levy is just a fancy word for the IRS taking your assets, often money in your bank account or from your paycheck (this levy is called a wage garnishment). Levies are the IRS way of getting taxpayers to stand up and take notice. The IRS has realized that taxpayers often ignore IRS notices, hoping the problem will just go away. Enter tax levies.
Tax levies can also extend to other assets like your retirement accounts or social security benefits. In extreme situations, the IRS can seize jewelry, business assets, real estate (to include your personal residence) and automobiles.
Tax levies are nasty and to be avoided at all costs. So how do you keep the IRS wolf at bay?
What are your options once you get the Final Notice of Intent to Levy?
What you should do turns a lot on your personal situation. I will keep it simple and assume you cannot fully pay the taxes due. Once you have this notice, you have 30 days to work out something with the IRS to avoid the levy. So what are your options?
Do nothing. Not a great option. IRS levies always happen at the worst time, like right after you get paid. You can unwind the levy but it is time consuming and may not fully get rid of the levy.
The notice provides you an opportunity to work out something with the IRS. You can do this informally by calling the IRS using the phone number on the notice or request a hearing with the IRS to fight the levy.
What is a collection due process hearing
This IRS hearing is called a collection due process hearing. The actual workings of this hearing is complicated and so I will leave details for another post. For now, understand that IRS collections have to cease if you request a hearing within the 30 day window. The hearing is your opportunity to work out a deal with the IRS. This is a great benefit to taxpayers who cannot fully pay their taxes.
At the hearing, you have an opportunity to propose a payment plan, request an offer-in-compromise, seek hardship status or offering up some other alternative to avoid the levy. If the IRS rejects your proposed plan, you have an opportunity to appeal your plan into court.
Understand that you need to act before the 30 days runs and you face an IRS levy. It is so much easier to deal with the IRS when not working from a disadvantage. I can tell you that it is much easier to set up a payment plan when you are not worried if you can get your rent or mortgage money back from an IRS levy.
I am Maine’s IRS Problem Solver. My firm helps Maine taxpayers in trouble. If you or someone you know in Southern Maine wants more information on how to resolve your unpaid taxes, please feel free to contact me directly at 207-502-7181 or by filing out my contact form. A Maine tax attorney can help you consider your options.
James D. Wade, Esq.
Law Office of James D. Wade
57 Portland Road, Unit 3
Kennebunk, ME 04043