If you have received a “Notice of Intent to Levy” from the IRS, here are the seven things you should do immediately. When the IRS issues an IRS levy notice, there are several steps that must be taken to prevent or minimize the financial consequences of this levy. To ensure that your taxes are properly coordinated and provided for, your tax advisor and tax representation services will help you avoid potential penalties and interest charges for insufficient preparation before any hearing or final determination date.
But first, let’s understand
What is IRS Levy?
A levy is a court-ordered seizure of your property to pay your tax obligation. Liens and levies are not the same things. A levy, unlike a lien, permits the IRS to seize property in order to pay the amount. If you fail to pay your taxes, the IRS or a state agency may seize and sell any real or personal property you own or have an interest in (or opt to settle your debt).
The IRS website states that a levy is a legal mechanism that allows the government to acquire your property to settle a tax obligation. It has the power to garnish your earnings, seize and sell your car(s), real estate, and other personal property, and remove monies from your bank or other financial accounts. After receiving a Notice of Levy from the IRS, taxpayers have 30 days to settle a tax liability. You may face serious repercussions if you do not pay the full amount owing within 30 days of getting the notification.
How many notices does IRS send before sending a notice of Levy?
Two notifications are the solution! The following are the notices:
CP14/CP501: One of your accounts has overdue taxes.
CP503: You haven’t heard from the IRS in a long time yet still owe money.
CP504: This is a notice of intent to levy, not a notice of finality. If you do not pay the debt promptly, your state income tax return will be utilized to cover the gap.
The IRS will send letters to those who owe past taxes alerting them of their present condition. If you disregard these notifications for an extended period of time, you will be more likely to get a Notice of Intent to Levy.
3 Actions to take rightaway
- Take your time reading the letter:
Most IRS letters and notices are related to federal tax returns or tax accounts. Each notice tackles a particular issue and provides precise instructions on how to act. Changes to a taxpayer’s account, taxes owed, a payment request or difficulty with a tax return are all examples of notifications. Taking action on time may save you money on interest and penalties.
- Check for the Collection Date
While reading the letter, make sure to check and make a note of the deadline by which the IRS may confiscate your assets.
- Submit an appeal
After obtaining this last “Final Reminder. Notice of Intention to Levy and Right to a Hearing,” the next step is to file a legal appeal. By stopping the IRS from seizing your assets, you gain time to explore your choices.
By filing an appeal, you are shifting the issue from the Collections Division to the Appeals Division. This gives you many months to fix your predicament.
You may contact the IRS Collections Division even if you do not have an appeal. You might try to work out a deal with them to prevent the IRS from seizing your bank account or other valuables.
There are various ways to pay off your debts, such as,
- Offer in comprise
- Release Wage Garnishments
- Programs for Innocent Spouses
- Installment Plan
However, For this step, it is advised to take professional help. Tax advisors can help you get a great deal and can help you choose the best solution to repay your taxes.
Also, Tax advisors can help you file your appeal even if your records are missing or you have been charged with the wrong notice.
What if you disagree with the Levy Notice?
You may file an appeal if you disagree with the facts on the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. To begin, call the number listed on the notice. However, you may alternatively decide to file an appeal. Calling the IRS is not the same as completing a tax return, and you only have 30 days to do so before the IRS takes action.
In certain cases, the IRS makes a mistake. If you have already created an installment plan, verify with the IRS to confirm that it is reflected in your account. In certain cases, you may also want to start the appeals process.
Conclusion
Now that you’ve seen the notice of intent to levy from the IRS, what should you do? The best thing to do is immediately hire an experienced tax lawyer and CPA. An experienced professional can tell you if the IRS has made a mistake with your tax return or if another issue is at play. This can save you from being under-billed by an exceptional amount and paying penalties and fees for it.
