Dealing with the IRS when you have a tax debt can be a delicate procedure. Depending on where you are in the collections process, you may or may not yet have obtained the assistance of a licensed tax professional. If you’re facing an IRS levy, you’ll definitely want to get some help.
It’s important to understand what a levy is and what it means to have one. A levy is a seizure of your property or assets by the IRS to satisfy your unpaid tax debt. This action can target specific areas of your financial life and, once taken, can be difficult to get reversed. Should you receive the Final Notice of Intent to Levy from the IRS, make sure you’ve got an experienced tax professional on your side. Here’s what you can expect:
Order of Operations
First, in order to reach the advanced collection stage of a levy, you have probably been ignoring your tax debt for some time. There is a possibility that the government has simply been unable to locate you for an extended period of time, but chances are, you’re well aware of your balance. You can avoid, disregard or make believe for only so long before it catches up to you. After providing you with a string of notices and ample opportunities to pay your tax debt, the IRS may enact a levy to get your attention.
A levy can be placed on your bank account, effectively wiping out your checking or savings; you may see a wage levy, which will siphon money out of each of your paychecks. Ultimately, your property – house, car, jewelry – can be taken. When you receive the Final Notice of Intent to Levy, this is your warning flag. Bear in mind that the proposed levy does not have to go through, provided you take the action necessary to prevent it. This is where the licensed tax professional (LTP) comes in.
Based on your financial situation, your LTP may try a couple of different things. First, if you can simply pay off the debt, you’ll likely be instructed to do just that. If this isn’t a possibility and you don’t foresee being able to do so within a six-month timeframe, your professional will attempt either a temporary or formal resolution.
Formula for a Resolution
Your tax professional may be able to secure a temporary resolution by having you classified as Currently Not Collectible, or CNC. This prevents the IRS from taking collection action against you for a period of time, typically as a result of your financial situation. This will be reassessed periodically by the IRS to determine if your ability to pay improves.
After a check of your finances, your LTP may determine that you can afford to pay, just not the entire amount. He or she will propose an installment agreement tailored to meet your budget, which will prevent the levy from moving forward. As long as you satisfy the terms of this arrangement, your money, property and wages will be secure. Your tax professional will provide an affordable solution that protects everything you value from the IRS.