A Final Notice of Intent to Levy is generally the last notice you receive from the IRS before a levy is served. Essentially, a tax levy gives the IRS the right to seize your property in order to cover your tax debt. So how should you respond to a Final Notice of Intent to Levy and how can you protect your assets?
Follow the 30 Day Deadline
After receiving a final notice of intent to levy, you will have 30 days to respond to the IRS. It’s imperative that you act within the given timeframe as the IRS can start levying on your wages or on your bank account in order to collect the balance.
File an Appeal
If you want to contest the levy, make sure you also file an appeal within 30 days. This informs the IRS that you have dispute the levy, whether you believe the balance to be incorrect or just want to discuss payment options.
File Form 12153
In order to contest the levy, you will need to submit Form 12153 which you can find on the IRS website. Form 12153 is a Request for a Collection Due Process or Equivalent Hearing. While the hearing date is pending (anywhere from 3 to 6 months), you will have the opportunity to gather your records and consult with a tax attorney.
Collection Due Process Hearing
During your collection due process hearing, you have the opportunity to dispute the levy and inquire about the collection process including payment options. In certain circumstances, you may be able to dispute the tax balance. While disputes may vary from case to case, during a Collection Due Process Hearing you can raise the following payment options:
Installment Agreement
The simplest solution, establishing an installment agreement with the IRS allows you to pay off your tax balance in scheduled installments. An installment agreement is a monthly payment plan. By paying in installments, you are able to maintain financial security while still addressing the balance. Additionally, an installment agreement generally prevents a levy as long as timely installment payments are being made.
Offer in Compromise
In cases where you can’t pay the full amount and an installment plan isn’t feasible, you may be able to submit an offer in compromise to the IRS. Essentially, you propose an amount less than the full tax debt you owe and pay that instead of the full amount. The IRS will perform a review of your income, expenses and assets to determine if you qualify. As not everyone qualifies, it’s highly recommended that you consult with a tax attorney beforehand.
Currently Not Collectible Status
For individuals who can’t afford an installment agreement or an offer in compromise, the IRS may temporarily grant you Currently Not Collectible Status. For a temporary period determined by the IRS, you will be granted Currently Not Collectible Status and will not be required to pay your tax debt during this time. Once the period is over, the IRS will again review your case to determine if your status should remain Currently Not Collectible or if you can now afford payments.
Currently Not Collectible Status DOES NOT erase or remove your tax debt. In fact, due to interest and penalties, your tax debt can increase during this time period. Once your status is again collectible, you will be expected to pay your tax balance via installment agreement or offer in compromise.
Innocent Spouse Relief
Normally, spouses who file a joint tax return are liable for all taxes, penalties, and interest. However, in certain cases where your spouse or former spouse failed to/incorrectly report their income or claimed improper deductions/credits, the IRS may determine that you qualify for relief. Innocent Spouse Relief may also be available in cases where the correct tax was reported but was not paid in full. The IRS may grant relief in whole or in part depending on the circumstances of your case.
While these options won’t erase your tax debt, they can stop the IRS from issuing a levy on your property, at least for the time being. For more information on how to handle your specific case, consult with a tax attorney who can best represent you before the IRS.
Trouble with Levies?
Do you need help with your levies? Speak with a licensed expert for personalized tax advice. Contact Mindy Meigs expert tax attorney for help managing a Final Notice of Intent to Levy.