It’s understandable to be concerned about the possibility of the IRS issuing a levy on your assets or bank account.
It’s understandable to be concerned about the possibility of the IRS issuing a levy on your assets or bank account.What’s levy?
The IRS defines a levy as “a legal seizure of your property to satisfy a tax debt”.
Could it happen to you?
If you have not paid your tax debt, the IRS may seize and sell of type of personal property that you own. This could include anything from a car, boat, or house, to your wages.
A levy is usually only issued after your tax has been assessed, you have refused or been unable to pay your tax debt, and you have received your ‘Final Notice of Intent to Levy and Notice of Your Right to a Hearing’. If it’s determined that the levy is creating an economic hardship, the levy may be released and you may be exempt from paying the balance owed. However, if you are not exempt, you still have some other options to handle your tax debt.
What to do if you have been issued a levy?
If you have a levy placed on your wages, it is important to contact the IRS as soon as possible to begin resolving your tax issue. You can ask an IRS manger to review your case, and can request a Collection Due Process (CDP) Hearing with the Office of Appeals. This must be filed within 30 days of the date on your notice. Issues that may be discussed include anything from the fact that you had paid all the debt, to a procedural error made in the assessment, to not having the appropriate amount of time to dispute the liability.
Option 1: Being placed in Currently Non-Collectible status
Being placed in Currently Non-Collectible (CNC) status will prevent your assets from being levied. CNC status differs from an Installment Agreement, as the IRS can remove your currently non-collectible status. Currently Non-Collectible is therefore only a temporary status and the IRS will review your file again periodically to determine if there your collection status has changed.
Option 2: Request an Installment Agreement
A more permanent solution to avoid IRS levies is to request an Installment Agreement. An Installment Agreement is an IRS program which allows individuals to pay tax debt in monthly payments, instead of paying their tax liability all at once. Once this is requested, the IRS will not issue a levy unless you default on this agreement.
Option 3: Join the Offer in Compromise (OIC) program
Another possible way to resolve your tax issues and avoid IRS levies is the Offer in Compromise (OIC) program. The OIC program is a collection alternative that settles a taxpayer’s debt for an amount less than what they owe, and suspends any levy actions. With an Offer in Compromise, the taxpayer is showing how much they can reasonably pay back to the IRS and how collectible they actually are. In some instances, a taxpayer may incur more expenses then income they earn in a month. You must meet the programs outlined parameters to qualify for the Offer in Compromise, but it can be a great program to avoid IRS levies and have your tax debt reduced.
If you are a potential levy threat, it’s important to discuss your tax issue with a tax professional to have your issue resolved in the best way for you and as soon as possible. Contact us at or schedule a initial consultation today.