When the IRS takes your property to satisfy a tax liability, it’s called a levy. A levy is different from a lien; a tax lien does not yet involve the taking of property whereas a levy involves the seizure of assets. Of course, being on the receiving end of an IRS levy can be a distressing and stressful prospect. It’s understandable to be upset that the IRS is taking your hard-earned assets. Despite the bleakness of the situation, there are ways to fight off an IRS levy. Sacramento tax attorney Jin Kim helps clients avoid tax levies and resolve IRS tax obligations. To learn more about your tax resolution options call her office at (916) 299-9913 for a free consultation.
Lien vs Levy
The terms may sound confusingly similar but a tax lien is different from a tax levy. A tax lien is merely a notice that the taxpayer owes the government some money. It doesn’t take your property away from you, although it can still affect you adversely. When you’re the subject of a tax lien, your property will not be taken away from you yet, especially if you can make arrangements with the IRS regarding your debt. A levy, on the other hand, refers to the process where the government actually takes away your property to pay off your debt.
Normally, the IRS files a notice of lien before proceeding to levy the taxpayer’s property, but this isn’t always the case. Since it’s not mandated by law that the IRS file a notice of lien first then there are instances where the IRS can immediately proceed to the levy stage.
What Happens During the Levy?
The levy process is actually quite long and drawn-out and you can use this to your advantage. The IRS is mandated to strictly observe this process whenever they’re effecting a levy, and any deviation from the process can render the levy void. In other words, if the IRS takes shortcuts in your levy, then you might end up with your property back.
The first thing the IRS does is to serve a Notice of Intent to Levy. This is a written notice that is sent to your last known address. This notice will also come with an explanation from the IRS on how you can appeal this decision, usually in the form of a letter. It might not sound like much consolation, but it’s a good idea for taxpayers to take advantage of this and delay the levy process; you might be able to find a source of funds to pay off the tax during this time.
Note that the Notice of Intent to Levy has to be sent to you at least thirty days before the IRS can levy your asset. They can’t just go ahead and take your properties as soon as you’ve received your notice (one exception to this are so-called jeopardy levies). Even if you receive the notice today, you still have a grace period of one month or more to plan out a course of action.
If your appeal is rejected, you’re also offered more options, one option being a case filed in tax court. Most taxpayers shy away from the prospect of challenging the IRS in court, but the process is actually quite straightforward, especially if you have a passionate advocate such as a tax lawyer fighting for you.
The IRS is mandated to strictly comply with these requirements. If any of these requirements are missing, you can get back your property even if they have already been seized by the IRS.
Additionally, since IRS notices are computer-generated, then there’s a chance that the notice of intent to levy that you’ve received is actually a mistake. If you believe this is the case then you should contact the IRS as soon as possible to address it.