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IRS Tax Levies – 8 Ways to Remove Them

IRS tax levy

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What we are going to cover:

  • The IRS has many tools at their disposal for recovering a delinquent tax debt
  • Among those tools, is the tax levy
  • A tax levy is when the IRS seizes a taxpayer’s assets (monetary or otherwise) to pay off a tax debt
  • 8 Ways to get an IRS tax levy released:
    • 1.) Pay off your tax debt in full
    • 2.) File an appeal
    • 3.) Installment Agreement
    • 4.) Offer in Compromise
    • 5.) Wait out the statute of limitations
    • 6.) Financial hardship
    • 7.) Partial payment agreement
    • 8.) Bankruptcy
  • For help with tax levies (and other tax matters), contact the attorneys at Ayar Law for free, no-obligation tax advice.  800.571.7175

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When the IRS needs to recover a debt from a taxpayer, they have a bag of tricks they can use to get paid.  Among those options, is the tax levy.

To give you a basic run-down, a tax levy is when the IRS seizes a taxpayer’s assets (financial or otherwise) to satisfy a looming tax debt.

Fortunately, there are several ways to get a levy released.  Read on to find out what those are.

1.) Pay off your tax debt in full

This option is the most ideal (for the IRS anyway) and the easiest way to get a levy removed.  However, I am guessing that if you are reading this right now, that might not be an option for you.  So, in order to protect your property (such as your wages, the money in your bank account, your house, or your vehicle for example), you may want to explore other options for settling your tax debt.

2.) File an appeal

An appeal puts a temporary stop on the levy until the IRS has made a decision about your tax matter.  Upon receiving notice from the IRS that they intend to levy you, you have 30 days to file the appeal.

Filing a formal appeal requires you to fill out Form 9423 (you can find this and all other IRS forms at www.irs.gov).  Bear in mind, however, that filling out the necessary form and filing the appeal does not necessarily mean that the IRS will agree to cease levy actions against you.  At best, yes, that can happen.  At worst, however, the IRS can deny the appeal but at least you would have bought yourself some time while they deliberate on your tax case, as filing the necessary form will put a temporary hold on the levy.

3.) Installment Agreement

One very viable and easy option for you to get a levy released is to ask for an installment agreement.  Typically the IRS will not relinquish its claim on your property until your tax debt can be paid in full.  That could take months or even years.  An installment agreement, however, allows you to have a levy released quickly as long as a you agree to make monthly payments toward your tax debt.

The amount a taxpayer is required to pay every month will vary person to person and is contingent on a few factors.  The IRS will examine your income and come up with a reasonable amount for you to pay each month.

4.) Offer in Compromise

If you cannot afford to pay your tax debt, you may qualify for an Offer in Compromise (OIC).  An OIC allows taxpayers to settle their tax debt for less than they owe.  When you submit an offer, levy actions cease until the IRS decides whether or not to accept your offer.  This period could take anywhere from 6 months to a year.  If your offer happens to be rejected, at least you would have bought yourself some time.  If the IRS accepts your offer, however, he remainder of your tax balance will be completely forgiven.  This is why the OIC is the Holy Grail of tax resolution.

5.) Wait out the statute of limitations

The IRS has 10 years to collect a tax debt from a taxpayer.  Once the clock runs out, your debt expires and you get to walk away from it free and clear.  So if your 10 year expiration date is coming up soon, the best thing to do is to just wait it out.

6.) Make a case for financial hardship

While the IRS would do just about anything in their power to collect a debt, they would never create financial hardship for you and your household.  They must leave you with enough money to cover your basic living expenses.  So, if you could prove (with financials such as pay stubs and bank accounts along with other documents) that a tax levy in place would not allow you to cover those expenses, you can make a case for financial hardship.  The IRS will then leave you alone but they will ask to see updated financials every now and then to see if your financial status has improved.  If it has, they will most likely put the levy back on your account to collect your tax debt.  If that should happen to you, all hope is not lost.  You may be able too get the levy released using some other method.

7.) Ask for a partial payment agreement

Partial payment agreements are for those taxpayers who cannot pay off what they owe – even with an installment agreement.  This agreement allows taxpayers to make reduced payments on their tax debt each month.  This helps the taxpayer avoid financial strain while also satisfying their tax debt.

8.) Bankruptcy

This option should only be utilized as a last resort.  Filing for bankruptcy would drastically and negatively impact your credit score for several years date you have filed.  On the plus side, however, while your case is being filed and deliberated upon, creditors – including the IRS – cannot contact you about your tax debts; nor can they take any collection actions against you.

If you are going to take this route, I feel I should warn you.  Filing for Chapter 7 bankruptcy rarely ever allows for the forgiving of tax debts.  However, you may be able to be your tax debt consolidated into a Chapter 13 bankruptcy wherein you pay off your debts progressively each month.

Conclusion

The 8 methods outlined here can aid you should you ever find yourself with a tax levy on your hands.  The best part is, any one of these methods can help you avoid having to sell off your assets in order to satisfy a tax debt.  An added bonus: some of these methods will make it easier to pay off your tax debt while also minimizing itt.

Contact an attorney

If the IRS has placed a levy on your account, fret not.  All hope is not lost.  Contact the skilled and experienced attorneys at Ayar Law to help you with this matter.  We offer free, no-obligation tax advice and we want to fight for you!  Call us today.  800.571.7175.

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KEY INSIGHTS:

  • Among its many tools for recovering a tax debt, the IRS tax levy is potentially the worst one.
  • A tax levy is when the IRS seizes a taxpayer’s assets (monetary or otherwise) to pay off a tax debt
  • 8 ways to get a levy released
    • 1.) Pay off your tax debt in full
    • 2.) File an appeal
    • 3.) Installment Agreement
    • 4.) Offer in Compromise
    • 5.) Wait out the statute of limitations
    • 6.) Financial hardship
    • 7.) Partial payment agreement
    • 8.) Bankruptcy
  • For help with tax levies (and other tax matters), contact the attorneys at Ayar Law for free, no-obligation tax advice.  800.571.7175.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.