August 9, 2016

manlookingattaxesThe IRS utilizes various tools and collection activities to collect unpaid taxes, such as a tax levy. Examples of tax levies are the seizure of wages, bank deposits, commissions, tax refunds, homes, cars, and other assets with value.

The most drastic and uncommon form of tax levy is the seizure of the taxpayer’s property or rights to property. If needed, the IRS has the power to seize both property in the possession of the taxpayer, as well as property being held by another individual or entity. Typically, property seizure is the agency’s last resort.

Prior to seizing a taxpayer’s property, the IRS typically follows a three-step process to ensure the taxpayer is given sufficient notice of the planned seizure, and is also given the opportunity to contest or appeal the proposed tax levy. The first step is sending the taxpayer a Notice of Demand for Payment, giving the taxpayer due notice of the issue and demanding payment. The second step is the taxpayer’s refusal to pay the tax obligation to the IRS. Afterwards, the IRS issues the taxpayer a Final Notice of Intent to Levy. This is personally delivered to the taxpayer, sent by certified or registered mail, or is left at the taxpayer’s last known address.

While the easiest and most obvious way to stop the IRS from seizing your property is to fully pay the taxes you owe, the good news is there are other options for those who have otherwise failed, neglected, or refused to pay tax obligations that are due. The U.S. Tax Code makes available different remedies to prevent, release, or stop levies, garnishments, and other collection activities.

One way to stop the IRS is to negotiate a settlement with the IRS, which stops any imminent collection activity. You can also initiate a Collection Due Process Hearing, which calls for a review of the proposed collection action.

A common option is to negotiate with the IRS for an installment agreement that you can afford, which allows you to settle your unpaid taxes or make partial payments over a specific period of time. Note that a payment plan will delay the seizure, but will not stop it completely. Another alternative is to apply for an offer in compromise, which enables you to settle unpaid taxes at a reduced amount. However, the acceptance rate of offer in compromise applications is generally low since most taxpayers do not meet the agency’s stringent qualifications. If approved by the IRS, any of the abovementioned actions will stop collection actions—at least temporarily.

When it comes to property seizures, the most critical factor is time. If you wish to negotiate, it is crucial that you take action within 21 days of the bank levy being issued.

Keep in mind that the IRS does not want to seize property unless they really have to, as they would much rather work out a deal. It would be most beneficial to seek advice from an experienced attorney and educate yourself about the options available to you.


Categories: Blog, IRS, Tax Levies, Taxpayers' Rights, Uncategorized