Are you facing an IRS levy and unsure of where to turn? As a taxpayer, it’s essential to understand your rights and options when dealing with the Internal Revenue Service. An IRS levy can be a daunting and stressful experience, seizing your assets and impacting your financial stability. That’s where a trusted tax consultant in Meridian, ID, can provide expert guidance and support. The experienced tax professionals specialize in resolving IRS levies and other tax-related issues, helping individuals and businesses navigate the complex world of tax law and regain control of their financial futures.
In this article, we’ll explore the ins and outs of IRS levies, including what they are, how they work, and most importantly, how a seasoned tax consultant can help you resolve them.
Table of Contents
What is an IRS Levy?
A lawful seizure of assets to pay off an unpaid tax liability is known as an Internal Revenue Service (IRS) levy. In order to collect delinquent taxes, interest, and penalties, the IRS may levy a taxpayer’s property or rights to property, including bank accounts, salaries, retirement funds, real estate, and automobiles. This enforcement action is typically taken after the IRS has sent multiple notices to the taxpayer, and the debt remains unpaid.
Types of IRS Levies
There are several types of IRS levies:
- Bank Levy: Freezes bank accounts, allowing the IRS to seize funds.
- Wage Levy: Deducts a portion of the taxpayer’s wages.
- Asset Levy: Seizes physical assets, such as real estate or vehicles.
- Account Levy: Freezes and seizes funds in retirement accounts or other financial accounts.
How Does an IRS Levy Work?
The IRS follows a specific process when imposing a levy:
Step 1: Notice of Intent
- The IRS sends a Notice of Intent to Levy (CP90 or LT11) to the taxpayer.
- The notice explains the amount owed and the intent to levy.
Step 2: Waiting Period
- The taxpayer has 30 days to respond or pay the debt.
- During this period, the taxpayer can:
- Pay the debt in full.
- Set up an installment agreement.
- Request a Collection Due Process hearing.
Step 3: Levy Implementation
- If the debt remains unpaid, the IRS implements the levy.
- The levy is typically continuous, meaning it remains in effect until:
- The tax debt is paid in full.
- The IRS releases the levy.
What Are The Consequences of an IRS Levy?
An IRS levy can have severe consequences, including:
Financial Consequences
- Loss of assets: The IRS can seize bank accounts, wages, and other assets.
- Financial hardship: Levies can lead to insufficient funds for living expenses.
- Business disruption: Levies on business assets can disrupt operations.
- Credit damage: Levies can negatively impact credit scores.
- Increased debt: Accruing interest and penalties on unpaid taxes.
Professional Consequences
- Business reputation damage: Publicly disclosed levies can harm a business’s reputation.
- Professional license implications: Levies can impact professional licenses.
- Employment consequences: Levies can affect job security or prospects.
Long-Term Consequences
- Tax lien filing: Unpaid taxes can lead to a tax lien on property.
- Wage garnishment: Continuous levies on wages.
- Asset seizure: Permanent loss of seized assets.
- Increased scrutiny: Future tax returns may be closely examined.
What Are The Options for Resolving an IRS Levy?
Taxpayers facing an IRS levy have several options:
- Pay the Debt: Paying the outstanding tax debt in full.
- Installment Agreement: Setting up a payment plan.
- Offer in Compromise: Settling the debt for less than the full amount.
- Levy Release: Requesting the IRS to release the levy.
- Tax Professional Representation: Seeking professional help to negotiate with the IRS.
An IRS levy is a serious consequence of unpaid taxes. Understanding the process, types of levies, and options for resolution can help taxpayers navigate this complex situation. Preventing an IRS levy is always the best course of action. If faced with a levy, seeking professional help and exploring available options can mitigate the consequences.