If you receive a notice from the IRS regarding a tax levy, you may feel like you have nowhere to turn. The thought of receiving any letter in the mail postmarked by the IRS can make anyone fearful. Much of the fear of the IRS stems from a lack of understanding about how the government agency works, and that fear can severely affect your physical and mental health. Fortunately, the IRS will not surprise you with seizure of your wages and other assets. You will receive many warnings beforehand to which you can respond.
The IRS is the most powerful debt collector in the country, and has broad powers to garnish money from your paychecks or levy the funds in your bank account. A wage garnishment or bank levy can be an unwelcome surprise if you have bills to pay and it can throw your finances into disarray, setting you back months on accomplishing your financial goals. We at Community Tax will help you navigate this process every step of the way, and give you the best plan to help settle your debt.
What is a Notice of Intent to Levy?
A Notice of Intent to Levy—or CP90—is the last of several notices that inform a taxpayer that the IRS will start to seize assets. It is no wonder these notices are scary—IRS issues and letters can seem confusing, especially with the added stress of having the IRS on your back. The Notice of Intent to Levy is only sent if you have failed to make outstanding payments on your taxes. If you did not respond appropriately to the other notices, the Final Notice of Intent to Levy declares that within thirty days of the posted date on the letter, the IRS will levy your wages, bank account, or other available assets.
Before you received your Notice of Intent to Levy, the IRS sent you a series of four other IRS collection notices. Note that none of your assets or wages will be seized during the time period in any of these letters; assets will only be seized after the 30 days from the posted date on the Notice of Intent to Levy. These notices are cautions to make sure you pay your tax debt, and to warn you that your payment is virtually unavoidable (except in rare circumstances). The longer you ignore these warnings, the more dire the consequences.
The first of these notices is called the NoticeCP14, Status 21. This letter is meant to notify you that you have been assessed for federal tax liability that you owe the IRS, and that you are now a part of a five letter sequence (the fifth being the Notice of Intent to Levy). Remember that your assets will not be seized at this time. It is ideal that you respond to the first letter, to prevent any further interest or penalties that will inevitably accrue over time if you do not respond before the Notice of Intent to Levy.
The second notice is called the CP501, Status 20. If received by a business entity, it is the first of four sequential letters. The CP501 serves as a recap that you are still on the radar of the IRS. The third notice, or CP503, Status 56 also applies to business entities, and there is no legal significance to this notice, but it is still a reminder that you only have so much time before the Final Notice of Intent to Levy. The fourth notice, called the CO504, Status 58, and will have a return receipt requested. For a business, this notice does have legal significance, because it allows the IRS to levy your state tax refund. However, the IRS will still not levy your assets.
The IRS cannot levy to take your income in any of these notices before the CP90. However, the Final Notice of Intent to levy is by far the most critical of all letters and you must configure a plan to pay off your tax debt, or seek financial experts to ensure your security. Of course, you can prevent receiving a Notice of Intent to Levy if you respond to one of these letters with payment. However, if you do not respond, you can expect a CP90 to arrive in your mail.
The notice is essentially a call to action for you to respond by either paying your outstanding balance or respond with another viable option that the IRS will consider. If you do not respond with a payment in full or negotiate a payment plan, then after the thirty days, the IRS will start to seize all assets until your owed tax debt is covered. This also includes all incurred penalties and interest.
How Can I Stop a Tax Levy?
Fortunately, there are many ways to navigate a potential garnishment or levy. If you pay the amount in full, including interest and penalties, then the IRS will instantly stop all seizure of assets and income. If you would like to pay the total sum immediately, but do not have the money up front, you can refinance your home, get a loan, get an equity loan, use credit, or enlist the help of generous family and friends.
For many, however, this is not a viable option. You may not be in a position to afford such a cost in the present, or perhaps it may not be wise for your finances in the long-term. Many people feel at a loss if they cannot pay the full amount straightaway. However, there are other options available. The only trouble is that most taxpayers are unaware what their options are or how to effectively navigate through them. The experienced professionals at Community Tax can help you stop tax levy actions if the IRS has one in place. Contact us now and we may even be able stop collection problems from ever starting. Community Tax can guide you through a series of options, including offer in compromise, installment agreements, and uncollectible debt declarations.
Should I Ask for an Offer in Compromise?
An offer in compromise is an agreement with the IRS to pay a smaller amount than what you actually owe. While in the process of approval, all collection of assets and wages is halted. While acceptance for an offer in compromise is rare, this can be a wonderful option for taxpayers facing hefty debts. The filing process is complicated, but a tax professional can help you determine whether or not your request is likely to be accepted. A formal process is required that must contain complete and detailed financial information including the finances of your spouse. Your form will be scrutinized, so it is important to go over your financial history effectively. Should it be accepted, your levy will be released and you will be considered in good standing with the IRS.
What About Installment Agreements?
You may also consider filing for an installment agreement with the IRS. This is a plan between you and the IRS that says you will pay off your debt in monthly increments until it’s settled completely. Once an agreement is accepted, your levy will likely be released and you’ll remain in good standing as long as you keep up with monthly payments. Tax professionals can help you determine the appropriate requests to ensure a better chance of acceptance.
There are four different kinds of installment agreements, and they are all designed to help you pay off your debt efficiently. The IRS wants your owed taxes, therefore they are likely to provide you these options so they can collect. Here are the various types of installment agreements:
- Guaranteed Installment Agreements. If your balance due is $10,000 or less, you may be eligible to set up a Guaranteed Installment Agreement. In order to qualify, you must have a history of filing all of your taxes. You must have also filed and paid on time in the last five years. In addition, you must also not have had an installment agreement in the previous five years. Finally, you must agree that your installment payments will pay your full balance, including interest and penalties, in thirty-six months or less. As long as you follow these rules, and agree to file and pay on time for the future, the IRS is obligated to comply and set up this payment system for you. One of the best reasons to use this plan is because the IRS will not file a federal tax lien. If you are issued a tax lien, then it will become difficult to earn credit moving forward.
- Streamlined Installment Agreements. Taxpayers are qualified for a streamlined installment agreement if he or she owes $50,000 or less. However, just as the installment listed above, there are other criteria. For instance, you must be able to pay off the balance in seventy-two months or less. You must also agree to file all of your taxes, including late files, and that you will pay your taxes henceforth. This agreement is part of the “Fresh Start Program” instituted by the IRS, which lifted the required amount owed from $25,000 to allow more chances for people who owe more.
- Partial Payment Installment Agreements. A partial payment installment agreement is best suited for those who do not qualify for either the guaranteed or streamlined installment agreements. This plan is designed so that a monthly payment is customized based on what you can afford minus living expenses. The partial payment installment agreement is designed for those at lower income levels and can be set up to cover a longer repayment term, contrary to the other two plans. One con with this plan is that the IRS can still file a tax lien to protect its interest, and this will leave you vulnerable to being unable to obtain credit. In order to obtain this installment agreement, you must be aware to fill out a financial statement form as issued by the IRS. The IRS will then examine it and determine what you can pay.
How Can My Debt Be Declared Uncollectible?
It could be that in your financial case, it is unfair for the IRS to collect any overdue taxes. Community Tax can help you determine if this applies to your dilemma. However, they will only cease collections once it is proven that it is actually unfair. If you can prove that a wage garnishment causes undue financial hardship, then the government will stop its collection. Cases for financial hardship include the inability to pay for food, shelter, and other basic necessities. Unfortunately, this is a temporary solution, but can be essential for those struggling to come up with the necessary funds. A tax professional can analyze your financial, work, and tax situation to determine the best solution for you.
To stop tax levy actions you need to file all required back tax returns and reach a resolution with the IRS such as an installment agreement, hardship status, or a settlement. Community Tax has helped thousands of taxpayers file back tax returns and reach resolutions with the IRS. Community Tax will custom tailor a resolution plan for you that can stop or prevent tax levies and put your account into good standing with the IRS.
If you need IRS tax levy services, let Community Tax’s experienced tax professionals design a plan to stop tax levy actions on your account today. Our company gives customers a rare opportunity to work directly with our entire tax resolution team, comprised of enrolled agents, CPA’s, tax attorneys, case analysts and case managers. This stems from our company’s dedication to customer satisfaction and quality service. We work diligently to ensure that our customers are kept informed and that their tax problems are handled efficiently. Unlike other resolution companies, in which customers pay high upfront fees, Community Tax always undergoes a detailed investigation of our client’s finances and ensures that they receive the services required to completely resolve their tax issues. Get a free consultation today and find out how you can get IRS tax levy services and your other tax resolution needs met today. Call 1-888-676-4319.