An IRS levy notice can be a financial deal if someone receives it. IRS levy is one of the widely used processes of the IRS to recover the back tax value of an individual if it goes unpaid. This allows the IRS to get hold of any possible assets like properties or any other resources through which the IRS can recover the tax amount due.
The IRS can also deduct salaries directly from an individual. Such situations can become a financial burden for anyone. In this article, we shall discuss how to deal with IRS levies causing hardship and the alternatives one can use to pay tax debt causing no financial hurdles.
What is the IRS levy?
An IRS levy is a legal procedure that means the seizure of properties or assets of a particular person if they fail to clear off their unpaid tax debts. IRS levy is the last option the IRS chooses, which means that the IRS has already tried to recover the debt amount through negotiations, notices, and other means but has failed in doing so. Therefore, if a person faces an IRS levy, the taxpayer must not have cleared the outstanding tax even after repeated warnings.
Types of IRS levies
There are different levies through which the IRS tries to recover the tax debt. The below pointers talk about such levies.
- The most common method of the IRS is the seizure of an individual’s assets like properties and putting their car, bike, or any other resource on auction, thus recovering the tax debt.
- The IRS can also directly ask a person’s employer to send them a portion of their salary to clear the debt, thus leaving the taxpayer with a reduced paycheque.
- The IRS also has the power to freeze an individual’s bank accounts and take out money to recover unpaid tax debts.
- Social service benefits refer to the benefits an individual can avail of provided by the government, such as a pension, gratuity, and many more. The IRS can cut some of an individual’s social service benefits, thus leaving them with less fund values.
Options to reduce IRS levies
There are several options to get some relief from the IRS levy causing hardships, which are discussed below:
- Once you get a notice of intent to levy or realize that the IRS has levied your resources, acting quickly is critical. Contact the IRS to investigate choices for settling your tax obligation. In a few cases, the IRS may release the levy temporarily if you illustrate financial hardship or propose an alternative solution.
- If you accept the IRS’s actions are unjust, or if they are causing extreme monetary hardship, you’ve got the right to ask for a Collection Due Process (CDP) hearing. You can show your case during this hearing and possibly end or alter the levy.
- An Offer in Compromise (OIC) is a way that permits you to settle your tax obligation for less than the total sum owed. To qualify, you must illustrate that paying the total sum would cause severe money-related hardship or that you genuinely cannot manage it.
- Arranging an installment agreement with the IRS can be a practical solution. This course of action permits you to pay off your tax obligation in month-to-month installments, making it more manageable and avoiding further demands or garnishments.
- You may qualify for innocent spouse relief if your tax debt resulted from your spouse’s activities or mistakes. This could protect you from IRS collection efforts from your spouse’s tax obligation.
- The complexities of IRS strategies can be overwhelming. If you feel overpowered or questionable about your alternatives, consider counseling a tax professional or lawyer specializing in tax issues. They can offer important direction and speak to your interests amid transactions with the IRS.
- While filing for bankruptcy isn’t a choice to be taken lightly, it can give help from IRS demands and offer assistance to release certain tax debts. If you are considering opting for this alternative, consider the option to consult a tax attorney and discuss opportunities to reduce the levy or mitigate it.
Ways to prevent future IRS levies
Irrespective of the fact whether a person has already dealt with IRS levies beforehand or not, a person must take preventive measures to ensure that IRS levies do not charge them. Below is a discussion about some of such actions.
- Record your tax returns instantly and make payments on time. Maintain a strategic way to avoid the accumulation of tax debts and clear any tax obligations.
- Periodically review your tax withholdings to guarantee that you have the proper amount deducted from your paycheque. Alterations may be necessary based on changes in your monetary circumstances.
- Keep financial records, including tax returns, income documentation, and expenses. These records will be vital in case of future IRS inquiries or disputes.
- Consult a tax professional to assist you in managing your accounts, explore IRS regulations, and make informed financial choices. Their expertise can help you steer clear of tax-related issues.
Final Overview
An IRS levy causing hardship can be a financial and emotional burden and an extremely tough experience. The power of the IRS to seize properties or assets along with other resources poses a vast challenge for taxpayers facing difficulty in managing their expenses.
However, there are specific solutions available that can be used to face such IRS levies. Suppose one gets such notice regarding IRS levies. In that case, one should immediately contact the IRS, explore the different relief methods such as Offer in Compromise, or settle down for installment agreements and seek legal help whenever and wherever needed.
Furthermore, one should be cautious regarding such situations and work for preventive measures such as maintaining tax records on time, reviewing them occasionally, and consulting a tax attorney. Accomplishing the IRS levies with the correct knowledge and path is possible.
