IRS Business Levy

When the IRS threatens to levy, it means that the government is going to seize your property to satisfy tax debt. According to the Code of Federal Regulations, “the term ‘tax’ includes any interest, additional amount, addition to tax, or assessable penalty, together with costs and expenses.”  Federal tax levy is not easy to release, and often creates a difficult situation for business owners.

Prevention is always the best option. An IRS levy is usually possible to predict and to avoid, because the IRS has to follow certain rules before a levy is issued. If you already received an IRS Notice of Demand and did not do anything about it, now is a good time to settle your tax debt with the IRS before a Final Notice of Intent to Levy is mailed to you.

After the IRS issues a Final Notice of Intent to Levy, you have 30 days to full pay the debt, negotiate a repayment option, or appeal the IRS decision to seize your property. If you have not done any of these things, the IRS might proceed with enforced collections.

An IRS levy means seizure of the property that is in your possession, or that someone holds on your behalf. A bank levy is one example. Some of the levies are continuous, which means they are in effect from the time when a levy was issued until it is released. However, a bank levy is instantaneous, and usually applies to the amount of money that you have on your account at the time when the levy was received by the bank.

When the IRS issues a Notice of Levy, the bank has to immediately process this document and freeze all applicable accounts for 21 days. This is the time frame during which you can try to arrange a levy release. If you miss this period, the bank will send the money to the IRS.

It is sometimes possible to release an IRS levy. Paying the tax debt in full is the most obvious way to do this, but it is not necessarily something that many taxpayers are able to do, especially when all bank accounts are frozen. Another option is to negotiate a payment plan with the IRS. However, if your business has large federal tax liability, which cannot be resolved through a Streamline Installment Agreement, the IRS might need more that 21 days to review your financial situation. Therefore, the levy might not be released in time.

Fortunately, there are other ways to persuade the IRS to release the levy. Proving that the levy created economic hardship for your business and its employees is one of them.  The IRS might also release the levy if you show that doing so will make collection of the tax liability easier. For example, if the levy will force you out of business, your collection potential could be impaired.

Because the IRS only gives you a limited amount of time to negotiate the release of the levy, and taking into consideration the complexity of the IRS rules and regulations, it is advisable to hire a tax professional to represent you in this matter.

This guest post was provided by Ian Jackson, a tax professional who writes for one of the premier tax resolution companies. Find out more at http://2020taxdebthelp.com.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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