An IRS levy is a property seizure to satisfy unpaid tax debts. This can be a scary process, but rest assured that many steps must be taken before the levy can become a reality.
First, the IRS must send you a Notice and Demand for payment. If you don’t pay, the IRS will then send you a Final Notice of Intent to Levy & Your Right to a Hearing. These notices advise you that the IRS will be contacting third parties to collect your tax debt.
To keep your finances secure, let’s dig into what you need to know to stop an IRS levy.
Types of IRS Levies
There are three common types of IRS levies.
- Continuous levy: Attaches to wages, salaries, social security benefits, and other types of funds. The IRS will continue to levy these amounts until the tax debt is satisfied.
- Bank levy: Attaches to your bank account. The account is frozen on the date the bank receives the levy. The bank has 21 days to respond to the IRS levy.
- One-time levy: Attaches to all the funds or other property that a third party (such as a client, customer, or tenant) is holding on your behalf on the day the levy is received.
Three Ways to Resolve an IRS Levy
There are three possible ways to resolve an IRS levy. Expect the process to take between one week and one month; it varies depending on the taxing agency and levy type.
- Pay the tax owed in full.
- Enter into an installment agreement. This is a monthly payment plan for you to pay off your debts over time rather than all at once.
- Contact the tax agency and provide current financial records to show that the levy would cause an economic hardship. This option is only available for individual taxpayers, not businesses.
To prevent your funds from being seized, it’s important to respond to a levy as quickly as possible, since failing to honor a levy could result in tax penalties.
Consult Tax Attorney Mindy Meigs to Navigate Your IRS Levy
If you have any questions about an IRS levy, consult with tax attorney Mindy Meigs. She worked for 15 years as a trial attorney for the IRS Office Chief of Counsel, so she’s well-versed in all areas of tax controversy and litigation.
You don’t have to handle an IRS levy on your own. Respond to the levy correctly the first time around by contacting Mindy Meigs for legal guidance today.