If you’ve been issued a tax levy by the IRS, you have thirty days until the IRS seizes your assets. During this period you can seek out options to have the levy released. Ideally, the surest way to get the levy released is to pay the tax liability in full. Since this isn’t a viable option for most, there are other options you can explore in order to get your levy released. One option may be to challenge the tax levy issued by the IRS. Another way is to choose a tax resolution option that will get the IRS off your back and away from your assets – such as an offer in compromise or an installment plan.
How To Stop A Tax Levy
The following are ways through which you prevent the IRS from seizing your assets and levying on them.
This is the most ideal course of action if you’ve already been issued a notice of levy by the IRS. If you pay your tax liability in full then the IRS will not proceed with the levy process and your assets will be safe. Full payment will include not only the principal amount of tax debt but also includes penalties and interest which may have been incurred. The IRS will often allow a reasonable period of time to raise the amount of money if you believe that you can raise the full amount in a short period of time. If this is the best course of action for you, then you (or your representative) can negotiate with the IRS to release the levy and pay the tax debt within a period of up to 120 days.
Offer In Compromise
Let’s say that you’ve raised an amount of money that’s close to the full amount of your tax debt, but not quite enough to pay it in full. If this is the case then one option that’s available to you is to make an Offer in Compromise. Under this option, you will offer to pay a reduced amount of your tax liability. The IRS will often approve a reasonable offer in compromise. Since making an offer in compromise can be complicated, you should consult with your tax lawyer to know more.
What if your income isn’t looking great right now, but you believe it will pick up in the months to come? In that case, one option that’s great for you is to ask for an installment agreement with the IRS. Under this tax resolution scheme, payments for your tax liability will be spread out over a couple of months until the tax debt is paid in full. You’ll still be assessed interest on your tax debt until the full amount is paid but at least you’re preventing the levy from happening. A bonus: you’ll be able to avoid incurring further penalties while you’re making your payments.
The IRS may back off if you’re able to prove that you’ll suffer undue hardship if they proceed with the levy. Perhaps the levy will deprive you of your only source of income. Or perhaps you’re the sole provider for your family and garnishing your wages will be incredibly difficult for all involved. If the levy will remove your ability to afford basic necessities, then you may be able to demonstrate undue hardship. Typically, the IRS will require you to file financial information to prove this. If your financial situation is incredibly dire, the IRS may place your status as Currently Non-Collectible. This means that the IRS will delay collecting your tax liability until your financial situation improves. If your situation remains the same until the statute of limitations runs out, then your tax debt will be forgiven
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