stop irs levy

An IRS levy is a legal seizure of a person’s property by the IRS to pay for a tax liability. It comes commonly as a wage levy or bank levy. Understanding which type of levy is in effect is the 1st step in moving towards releasing it.

STEP #1 -  Review the Notice you have been given.

The IRS sends the following types of notices before they issue a levy.

CP501 – This is a Reminder Notice that an individual has a balance due.

CP503 - Notice #2, letting the individual know that immediate action is demanded.

CP504 - Is a final notice alerting the individual that if the balance is not paid, an IRS levy will be placed on certain assets.

CP 297/90 - Final Notice of Intent to Levy and Notice of Your Right to a Hearing- This Notice is to inform the recipient that the balance is due and the IRS intends to levy on certain assets if the balance due is not paid.

CP 91 - This Notice is to let the recipient know the IRS plans to levy on Social Security Benefits if the balance due is not paid.

CP 523 - When the individual defaults on the Installment Agreement, this Notice of Intent to Levy is issued.

A Notice of Intent to Levy can be given to the tax payer in person, left at a home or usual place of business or mailed to the last known address on file.

If you have received one of these Notices, it is imperative that you communicate with the IRS immediately or have a representative before the IRS to contact them for you.

Did your employer receive a Notice of Levy on Wages, Salary and other Income or did your bank receive a Notice of Intent to Levy?

A wage levy is a ongoing IRS levy where as a bank levy is a one-time levy effective only on the amount in the bank account the day the levy was presented to the bank. A levy on 1099 income is also a onetime levy effective only on the income due the taxpayer the day it was received. A bank is required to hold the funds in the account for 21 days and if the levy is not released to send the funds in the account up to the balance due to the IRS.

STEP #2 - Ways To Stop IRS Levy Action After It Has Been Placed.

Become compliant with all tax filings.

The IRS will demand that you be current and compliant with tax filing before they release the levy.

The IRS will require that you be in compliance and current with any tax returns. The first step will be to find out if you have unfiled tax returns and prepare and file them as soon as possible.

Pay the balance due immediately.

If you pay the tax debt due the IRS will stop IRS Levy action. Bankruptcy also stops IRS levies.

If you cannot pay the balance due immediately and you are not filing for bankruptcy.

If you are unable to pay the balance off, then you can either set up an Installment Agreement or have the case put in a section 53 (hardship).

If the balance is under $25,000 the IRS will set up a streamline Installment Agreement where the balance is paid off over 60 months.

If the balance is over $25,000, financial disclosure is required. It is also required if you cannot make the minimum payment required in an installment agreement or if you have a financial harship.

The IRS will require full financial disclosure of income/expenses and assets/liabilities. This is typically done on a 433A. Manager approval is also required for any agreement.

Hire A Tax Expert.

I always advise professional representation if you are required to reveal financial information. An knowledgeable professional will know how to work the tax laws to your benefit, what disclosures are lawful and they can also usually expedite the process.

If the balance is under $25,000 and it is a streamline Installment Agreement that would depend on how comfortable the individual is with dealing with the IRS. I have listened to stories from individuals on how they were put on hold and transferred many times with no results, were asked to divulge certain assets to see if they could pay it off, were treated rudely and overall found the IRS very hard to deal with.