TERRY BIRRELL
CERTIFIED PUBLIC ACCOUNTANT
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A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.
If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or in which you have an interest. The IRS may also levy against (or garnish) an individual’s wages. However, the IRS usually levies property only after sending you a Notice and Demand for Payment and a Final Notice of Intent to Levy. Thus, adequate response to these letters will generally forestall the levy. However, please be advised that a vague promise to pay will not be considered an adequate response.
Since a levy can disrupt normal business operations or normal living conditions, it is extremely important to forestall a levy.
Once a levy is issued, the bank is legally obligated to immediately freeze any and all of your accounts. The bank must then hold those funds for 21 days in order to give you time to resolve the debt. If you have not resolved the debt in those 21 days, the bank must send the funds and accrued interest to the IRS.
Once a levy has been issued, you may ask an IRS manager to review your case or you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a Collection Due Process hearing within 30 days of the date on your notice. However, the real issue is frequently one of ability to pay and not due process. Communication and follow-through are key to resolving ability to pay issues with the IRS. It is best to start communicating early in the process, but, if you have waited, start immediately. Contact
Settlement of Back Taxes – Offer in Compromise
If a taxpayer is clearly unable to pay, then the IRS may settle for a reduced liability. In such cases, the taxpayer must submit the appropriate forms which include documentation of income and expenses (or receipts and expenditures) and of income and liabilities. A payment plan, initial payment and fee are also usually required.
A number of commercials advertise that back taxes can be settled for pennies on the dollar. In certain circumstances, this may be the case. However, certain commercials may cause taxpayers to have exaggerated expectations of this process. Contact
If the unpaid taxes are sufficiently large or if there are other liabilities which the taxpayer is also unable to pay, then the taxpayer may wish to contact legal counsel regarding the various consequences of filing for bankruptcy.
Schedule a free, introductory consultation by calling me at 909-861-4913 or requesting, via e-mail, a callback. Contact
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Copyright 2008.Terry L. Birrell. All rights reserved.