Tax Debt Solutions Blog

Tax Relief: Recognizing a Tax Lien from a Tax Levy

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The IRS collects taxes by tax lien and tax levy.  You must identify and understand how the IRS files a lien and issues a levy.

Tax Lien

For the IRS to safeguard rights to your property they file a tax lien.  The lien affixes to property you possess when filed and property you buy thereafter.  Real estate is influenced by Federal tax lien.  The lien provides the IRS with a stake in your property the same as a mortgage company.

If your property’s value is $100,000 and your mortgage is $75,000 your equity is $25,000.  Prior to the filing of an IRS tax lien the $25,000 would be yours.  After the filing of the lien, the $25,000 is the property of the IRS.  Should you sell your property, equity at close of sale goes to the IRS.

Should the IRS file a lien there is thirty days for an appeal.  It is a collection due process appeal.  At time of expiry of the IRS Statute of Limitations on Collection, the lien also expires.  It usually takes ten years.

Tax Levy

When the IRS wants your property, a levy is issued.  Your retirement accounts, wages, accounts receivable, bank accounts and subcontractor pay can be levied.  Vehicles and homes can be seized and less frequently business apparatus.  The levy is more damaging than the lien.  Code 6334 provides exceptions like tools of your trade, unemployment benefits, household goods and workers’ compensation.

If the IRS anticipates opposing you they must provide you with a Final Notice of Intent to Levy prior to a levy on your property.  You have thirty days to lodge an appeal against the IRS’ intention.  When you appeal, the IRS may not act against you until the hearing is finalized.  The objective is to arrive at a decision to levy action prior to it taking place in the form of uncollectible, offer in compromise or installment agreement.

The Department of Justice must file a lawsuit opposing you before the IRS can take / seize your property.  Government’s inclination is to avoid this action.

Tax Relief: Who Has More Power - IRS or Credit Card Companies?

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The sooner you take action the sooner you can resolve your finance issues.  Remember, if you don’t do something it will only get worse.  It would be accurate to point out that many Americans don’t know what to do.  Even the most basic knowledge is better than none at all.

When it comes to being indebted to credit card companies and the IRS there are two issues you should know about.  Credit card companies use their influence and tactics to make you think they have an enormous amount of power over the individual.  However, in comparison to the very real power of the IRS, credit card companies use much less clout.

Once your card application is approved you get a statement once a month.  The companies include what you spent, how much you owe, minimum monthly payment and interest fees.  You must make your minimum monthly payment by a certain date.  If you miss the date you pay more interest.  If you don’t pay you get reminders, letters of demand and phone calls.  If you still don’t pay your account is handed to a debt collector and more pressure is applied. 

Credit card companies’ tactics are hard-line when compared to the IRS’.  Once your tax return is filed, the IRS provides you with a number of notices and then eases off.  You probably will continue to get a statement once every year.  It is not the policy of the IRS to send out a statement every month.  They only do so if you have an installment agreement.  They hardly ever phone to ask for payment.

Tax Relief: Dont Be Caught Without Warning

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Tax payers indebted to Uncle Sam due to back taxes receive protection.  If you are in such a situation, the IRS must notify you thirty days prior to taking action of a levy.  See the Internal Revenue Code, Section 6330.  You must get a final notice that states ‘Final Notice of Intent to Levy’ and thereafter you are legally entitled to an IRS appeals conference.  This appeal allows you to halt the procedure and challenge the IRS’ intention to collect.

However, Uncle Sam has the right to levy your property under 3 specific circumstances with no warning:

Disqualified Employment Tax Levy

Any business continually refraining from giving the IRS employee tax withholdings because it utilizes the money during periods of difficulty is pyramiding employment tax responsibilities.  Pyramiding is not allowed.  Both Congress and the IRS decided to allow exclusion in the case of the usual condition of notice prior to levy and seizure.

An employment tax levy that is disallowed becomes participatory once you get a Final Notice of Intent to Levy, from the IRS, to collect an older tax period, if you applied for a collection appeals hearing.  It is possible the IRS could also levy the newer tax period sans a notice.  This could happen if your taxes pyramided within the two years from the time you appealed.

Jeopardy Levy

The IRS has the right to take action if they suspect you are placing collections of tax at risk i.e. in jeopardy.  They can do so without any notification prior to the levy.  Uncle Sam regards the collection of taxes being in jeopardy when resources leave the country under concealment, corruption or passed on to third parties.  These actions are damaging and provide the IRS with the right to seize sans any warning.

State Tax Refund Levy

If you hold a state income tax refund and owe money to the IRS then they have the right to take hold of what you owe, without giving you a notification.    

Tax Relief: Liens and Levies – The Basics

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A call for tax relief must be founded on one of three points:

• Tax liability was fulfilled prior to filing of the lien
• Evaluation of a tax liability didn’t honor the Notice of Deficiency Procedure or Code of Bankruptcy
• Termination of the time for bringing in the liability before filing of the lien

Prior to a complete payment the IRS is allowed to remove a tax lien due to the following:

• Either the lien notice was too early or not in accordance with the admin process
• In order to fulfill the tax liability the taxpayer enters into a contract
• Collection of taxes is aided by the lien notice being withdrawn
• It is to the advantage of the government and the taxpayer if the lien notice is withdrawn

If a notice of tax lien is withdrawn it gives up lien priority by the IRS at the time of filing.  It does not influence the fundamental tax lien.

A levy must be released by the IRS when:

• Due to a time lapse primary tax liability is fulfilled and is unenforceable
• Tax levy release aids the gathering of tax debt as decided by the IRS
• The carrying out of an acceptable installment payment agreement by the taxpayer
• Economic hardship is the result of the levy as decided by the IRS
• The tax liability is more than fair market value of property and limited levy release is not an obstacle in collection of tax

Tax Relief: The IRS Can Seize Your Property

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When your property is confiscated to fulfill a tax debt you owe, the action is called a levy.  The seizure of property for that reason is a lawful action.  A levy of this nature is not a lien.  A claim for the purpose of providing security for a tax debt is a lien.  It is a levy that is responsible for taking the property to pay the tax debt.  Uncle Sam has the power to take your property and sell any kind of personal or real property you own or have a stake in, if you refrain from settling tax debt or contacting the IRS to make other arrangements to pay.  The IRS may:

• Confiscate and sell assets such as your house, car and/or boat
• Levy property held by another person but owned by you e.g. cash loan value of your life insurance, commissions, wages, rental income, retirement accounts, bank accounts, accounts receivable and licenses.      

The IRS can levy if three requirements exist:

• A Notice and Demand for Payment is sent and your tax is evaluated
• You did not pay tax or declined to pay tax
• You were sent a Final Notice of Intent to Levy and Notice of Your Right to a Hearing also called a Levy Notice.  This must take place thirty days prior to the levy.  You may also be handed the notice personally, notice may be left at your place of business or home, or it may be sent registered or certified to your latest known address.  A replacement receipt is necessary.

An IRS official may assess your situation or a Collection Due Process hearing in conjunction with the Office of Appeals at your request.  A Collection Due Process hearing is filed with the IRS that is given on your notification.  The following may be conversed:

• You paid up prior to the sending of the levy notice
• The IRS reviewed the tax and sent the levy of notice during bankruptcy
• The IRS erred in the procedure of their assessment
• The Statute of Limitations terminated prior to the sending of the levy notice
• No chance for you to argue the evaluated liability
• You want to talk about collection choices or
• You want to present a spousal defense       

At the end of a hearing the Office of Appeals delivers a resolution.

Circumstances That Allow You to Get IRS Bank Levy Release Help

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To get IRS bank levy release help, you should first note that there are two main ways you are able to get released from a bank levy: if the levy has been paid off (meaning you are no longer in debt to the IRS) or if the statutory collection period for the levy has expired. In the later case, if the issue of levy has been served before the end of the expiration period, you will still have to pay. You will only be released from paying the bank levy if you are not served the levy within the statutory collection period.

However, you can get relief from a bank levy in certain other circumstances. IRS bank levy release help can be gained if it is determined that it will result in some kind of economic hardship if you pay off the levy. “Economic hardship” is defined based on the minimum income an individual needs for their basic needs of food, shelter, bill payments etc. If it is determined by the IRS that you will be unable to pay for these things, the levy will be cancelled.

One of the most common methods of getting IRS bank levy release help is through making an installment agreement with the IRS. You may wish to do this if you owe a lot (especially if you owe more than you have) or if you don’t have a lot of income. How much you will have to pay per installment can vary, but installment agreements are a very good way to get bank levy release help as they can really take the strain off your finances.

5 Ways to Get a Tax Levy Release

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If you are unfortunate enough to get a tax levy, this means the IRS has given you chances but you didn't cooperate with them, or maybe just threw that mail away.  Either way, you will need to work fast to make sure you don't end up with collections coming after your assets.  Here is a small list of 5 ways to get a tax levy release.

1. Pay what you owe.  This is the fastest and easiest way to resolve the situation before any of your assets get seized.  This could cost a lot of money but it may be easier to pay small interest for a bank or other loan so you can handle this right away.

1. Ask the IRS to let you set up a payment agreement.  This is much like the installment agreement the IRS allows but the payments you make will be smaller.  This is a great option to get a tax levy release while still taking care of your debt with the IRS.  Make sure you keep to the payment schedule and don't miss any payments at all.

1. Prove that your assets don't have equity.  If you are already facing hard times and your car is a piece of junk, let the IRS know this.  They won't seize your vehicles if they are old, need severe repairs, or don't run. They don't know the car you bought 2 years ago was destroyed by vandals but a picture will help you get that message across clearly and immediately.

1. Appeal.  Yes, you can appeal the IRS levy right away then you may not have to worry about a tax levy release at all.  Sometimes collectors won't use ethical practices when dealing with you. If you suspect they weren't honest with you, that's definitely grounds for appeal.

1. File Bankruptcy.  This should be a last resort option but this can be a tax levy release by order of the courts.  This isn't a step that should be rushed so make sure you consult your accountant or a tax professional.