How to Negotiate a Tax Levy Release and Breathe a Sigh of Relief
Posted by LWM Team on Thu, Jan 07, 2010
Being subject to a tax levy can be a devastating experience personally, financially and professionally. Fortunately, you can also negotiate a tax levy release in most cases. A levy can take the form of a wage garnishment, freezing and seizure of your bank account, or a seizure of your property and, if enacted, the levy will be in place until such time as your tax obligation is paid in full. You will have received a letter from the IRS thirty days before such enactment, warning you of the intent to levy and notifying you of your right to a hearing. In the case of a levy on your bank account, the funds in your bank account will be frozen for 21 days in an attempt to force you to pay your taxes. If you do not pay in this 21 day period, your bank account can be seized to pay off what you owe. If your property is seized, it can be sold off to pay your debts.
It is of course easiest to secure a tax levy release before a levy is put into place. In order to do this, you will have to either pay off your debt in full, enter into an agreement to make regular payments, or appear at a hearing to discuss your case. If you choose the latter, you will have to be prepared to prove that a levy would cause undue financial hardship for you and propose a manner to pay off your unpaid taxes in order to secure a tax levy release.
If a tax levy is already in place, the situation is a little more complicated. You will need in this instance to fill out a myriad of forms to secure a tax levy release and again either prove your case for financial hardship, or propose a method to pay off your taxes in full. If you are not able to pay off the amount that is owed, you can apply for Currently Non Collectible Status, which will ease your tax burden temporarily, or to draw up an Offer in Compromise, where you will pay back only a portion of what you owe.