If you owe the IRS money, they may decide to place a levy on your property. For anyone who is not an accountant by trade, this can be pretty confusing. Many people do not understand what a levy is and do not know how to deal with them. The first step to taking care of your levy is gaining an understanding of what it is, how it happened, and what your options are.
What is a Levy?
When the IRS issues a levy, they are conducting a legal seizure of your property in order to satisfy the debt that you owe them. A levy is not the same as a lien; a lien is a claim against property, not a property seizure order. A levy can be applied to any property of a taxpayer, except any property that the IRS exempts.
When Can a Levy be Applied?
Before a levy can be applied to a taxpayer’s property, the IRS must take a series of peremptory steps. First, they must send you a tax bill, officially called a “Notice and Demand for Payment.” If you ignore this bill, the IRS must send you a “Final Notice of Intent to Levy and Notice of Your Right to A Hearing.” This notice is intended to alert you to the fact that you are being considered for a levy, and to inform you of your right to fight the levy. After all of this, a levy can be placed on your property.
Why is a Levy Issued?
If you owe a significant amount of debt to the IRS and make no arrangements to settle this debt, the IRS will determine if a levy is the next reasonable action. This happens if you do not pay your share of Federal taxes.
What Property is Subject to Levy?
Any property that you own or have any interest in can be levied. This includes wages, dividends, savings accounts, rental income, commissions, the cash loan value of a life insurance policy, licenses, and bank accounts. The IRS may also choose to seize physical property and sell it. This can include your home, car, boat, or other property with high cash values.
How Can a Levy be Released?
Any levy that the IRS issues must be released in certain situations. These situations include:
- You have paid off your debt;
- You enter into an agreement to pay your debt that does not allow the levy to continue;
- The collection period ended before the levy began;
- The IRS has determined that the levy would prevent you from paying for reasonable, basic living expenses;
- Release of the levy would help you to pay your taxes.
What are the Next Steps?
If you fear that a levy may be issued on your property, it is time to contact a professional. At Civic Tax Relief, we have a full staff of attorneys, agents, and tax professionals who can help you get through this stressful situation. If you are ready to resolve, understand, negotiate, and do it right, get in touch with us today.