An IRS levy is a legal action by the IRS to seize specific assets. “A Notice of Intent to Levy” is the last notice in a sequence of notices sent out by the IRS. This notice indicates the intentions of the IRS to levy specific belongings if you do not reply within thirty days. The IRS will usually send out either a wage levy or a bank levy, although they are able to levy almost any personal assets with only a few exceptions.
A Bank Levy
A bank levy is a onetime levy where the IRS seizes what is in the bank accounts the day the levy is presented. Banks are required to send the money to the IRS only after they have been held for twenty one days. If the levy is not removed during this time the bank will send the funds in the account to the IRS. Unless the taxpayer can show a severe hardship (cannot pay mortgage or rent, utilities, or that essential family needs will be disrupted), a bank levy is difficult to have released.
A Levy On Wages
An IRS wage levy is a continual tax levy and one of the most typical forms of IRS levy. The employer is required to hold a amount of wages, usually most of it. The IRS is required to leave the standard exemption amount along with the personal exemption amounts depending on the number of dependents and filing status.
To prevent a levy it is essential to reply to the IRS notices and to take appropriate action or have representation before the IRS.
How to have a tax levy removed
An IRS levy will need to be released by a Hardship case, an Installment Agreement or an Offer in Compromise if the taxpayer qualifies.
Also, in order for a levy to be removed the individual must be up to date in the submitting of tax returns.
Stop IRS levy activity through the following:
1. Pay the debt - For various individuals this is not an option as they do not have the funds to pay the tax debt
2. Installment Agreement - A repayment plan paid in monthly installments to pay the tax liability.
3. Hardship case - This is where the IRS will put the case in a temporary hardship due to extreme circumstances or lack of economic ability to pay anything.
4. An Offer in Compromise - An Offer in Compromise is a onetime settlement based mainly on assets and ability to pay. This in and of itself will not release a levy.
An individual can appeal the levy and the IRS will typically suspend the collection process while the appeal is pending. A successful appeal will discharge a levy. However, in my experience individuals do not establish a reason why the IRS was wrong to place the levy or why it should be released causing very few to win in the Appeals process.