Preventing An IRS Tax LevyThe IRS uses the tax levy as a tool to collect unpaid taxes.. An IRS levy is different from an IRS tax lien. When a tax lien is attached to a property, the IRS is using it as security to ensure that the taxes which are due get paid back to it. However in the case of an IRS levy the IRS claims the property directly and sells it in order to satisfy its dues. The IRS levy can be applied to both the real and personal property of an individual or business. It can cover any part of the tax payer's property like real estate, bank accounts, cars or wages or even the person's right to property. Being at the receiving end of an IRS tax levy can result in financial pressures for the tax payer who may then find it difficult to meet personal and business expenditures. It is implemented directly and not through any court. The IRS can approach the relevant court when it wants to apply the levy to property that is usually considered beyond the purview of a levy. This could include property like wearing apparel, school books, furniture and personal effects up to a certain limit, some business paraphernalia and so forth. Before an IRS levy is carried out the tax payer has to be informed in writing about it. This will normally be done 30 days before it comes into force. The tax payer can stop the levy by taking appropriate action in this period. But usually the implementation of the levy is a foregone conclusion once the notice has been served. The best way for a tax payer to avoid an IRS levy is to actually pay back the taxes which are due along with the interest and other additions. This will result in the tax lien being removed and consequently no IRS levy can be charged later. If paying off the tax dues is not an option, the tax payer can contemplate an Offer in Compromise. This involves working out a settlement with the IRS whereby the tax payer pays a lower amount than what was due and promises to pay all future taxes on time. If the IRS is convinced and it feels that this would be better than waiting for a payment that may never materialise, it can remove the tax lien. There is a small chance that the tax lien itself may expire and therefore the possibility of a levy being filed becomes less. However this is not a fool safe option and the IRS can always re-file the lien and with it the threat of an IRS levy. It is best to seek professional legal help when dealing with an IRS tax levy so that an effective solution can be worked out. |