How Long Does an IRS Tax Levy Last?
An IRS levy lasts until you pay the back taxes you owe or agree to a payment plan. Generally, the IRS puts a levy on a bank account when it has tried to collect taxes more directly, for example, by sending notices to the taxpayer, but has been unsuccessful. For the IRS, the next step is a levy on assets.
The IRS typically will not continue the levying enforcement action against a taxpayer when:
- A payment plan is currently in effect
- A payment plan is under consideration by the agency
- The IRS is evaluating an appeal of a rejected or terminated agreement
- You’re within a 30-day period after a plan request is rejected or terminated
Tax problems can be complex and overwhelming, and a levy escalates matters which can impact your business or family security. When your account is levied, advice from an experienced tax attorney at Ayar Law can help you resolve these issues, especially if there are substantial assets involved.
How to Remove an IRS Levy
When you learn your assets are unavailable to withdraw, your first thought may be what to do if the IRS has filed a tax levy? That’s understandable, as it will interfere with your ability to support your family. However, the levy or garnishment may be lifted by either payment in full or entering into an IRS Direct Debit Installment Agreement
Upon entering the installment agreement, the IRS will notify your bank to permanently lift the levy. It often doesn’t require a commitment to pay all at once. Requesting a payment plan generally will also suspend the levy while the request is pending. Entering into an IRS Form 9465 Installment Agreement is sometimes called a “Streamlined Installment Plan.” The IRS does not inquire into your income, assets, or other financial data. The goal is much less intrusive. Instead, the IRS makes an agreement with you that focuses on a schedule and an agreed-upon sum for payments.
What Kind of Payment Plans Are Allowed by the IRS?
- Short-term payment plans
- Long-term payment plans
Short-term payment plans are available in which payment must be completed in 180 days or less. In short-term plans, balances over $25,000 must be paid by direct debit from a bank account. For business taxes, the same method of payment applies for tax balances over $10,000.
Long-term payment plans are called Installment Agreements which are more complex. Installment Agreements carry fees, fines, and interest during the term of the agreement. Penalties may continue to accrue during the repayment period unless expressly waived. Payment options include debit and checks.
What if the Levy is Unfair?
If you have special circumstances, the IRS will consider vacating the levy, and may include the following:
- Innocent spouse
- Economic hardship
- IRS collection of an outdated debt
These legal arguments can be complex, and the assistance of a tax lawyer will be invaluable.
What Can I Do About a Wage Garnishment?
As noted, the IRS can levy bank accounts, but it also can take a portion of your salary or paycheck–a process known as wage garnishment. The IRS may continue to garnish wages until the entire debt is paid, even if it takes a long time. The IRS is restricted in how much it may take from your pay in a given pay period, depending on how many dependents you have and your tax filing status. However, it is not restricted in how much it may take in other aspects of your compensation.
If you have a financial windfall, such as a bonus or commissions, the IRS may be able to garnish the entire amount rather than a percentage. Wage garnishment of bonuses and commissions can be stopped by negotiating an agreement with the IRS to pay back taxes. Also, as you file tax returns going forward, any refunds due to you will be taken by the IRS rather than paid to you.
Contact us at Ayar Law
Ayar Law’s experienced tax lawyers represent individuals and businesses dealing with large and serious tax challenges. Whether these problems are related to you, your spouse, or to the businesses you own, our tax attorneys can help with a wide range of issues. You should never face this alone. We can resolve your tax problems with the urgency, personal attention, and confidentiality you deserve.
Contact us to learn more or for a free, no-obligation consultation on your tax issues.