An Overview of the IRS Tax Collections Process for Non-Tax Lawyers
28. IRS Levies
A levy is a seizure of property or assets. Mostly what IRS levies are associated with is our bank levies. The IRS will come in and will levy a taxpayer’s account.
Levy is different than liens. Liens do not immediately effect property in terms of seizing that property. A levy is a seizure. So, the IRS can levy bank accounts. They can levy accounts receivable. They can levy brokerage accounts or other financial assets.
Levies are often a source of stress for taxpayer and when we get the majority of our levies clients, “Hey, the IRS wiped out my bank account.”
Levies can be defeated with a number of things. The most important thing to defeat a levy is prevention. You want to make sure that you’re working with a revenue officer or with a CS to avoid any levies.
When levies are issued it is important to fight them. You can fight them I numerous ways. The easiest way to fight a levy is to substantiate a documented hardship with the IRS.
For example, IRS frequently levies businesses, and for those businesses that need that money to pay rent or payroll or other necessary expenses that are essential to the operation of that business, oftentimes you can go in and negotiate a release or a partial release to that levy.
IRS levies can also be challenged to what’s called the CAP or collection appeal. That is a very fast process that challenges the procedural nature of why the IRS filed that levy to begin with.
Captured various tools. In the instance that your client does get levies that is usually a fairly serious situation, so you often want to consult a tax professional for the best way to deal with that.
Often levies indicate that the taxpayer has not been cooperating with the IRS or has been frustrating collection efforts. So, it’s important to step in and address the situation and make sure that you are appropriately dealing with them.