Tax Relief: Guard Against Three Unexpected Levies
Posted by LWM Team on Tue, Jul 06, 2010
Three Unexpected Levies
Section 6330 of the Internal Revenue Code demands that the taxpayers are given a prior warning of thirty days if the IRS intends to seize or levy property. A final notice is a letter with the heading ‘Final Notice of Intent to Levy’. Once it’s issued the taxpayer may lawfully ask for an IRS appeals conference to halt and challenge the planned collection act.
It is important to know there are three situations when a prior IRS warning is not required.
Jeopardy Levy is when the IRS thinks your measures will place tax collection at risk. If so, they don’t have to issue a prior warning. If assets are hidden, dissipated, transferred to a third party or moved out of the US it is considered a collections risk. Due to instant damage, the IRS may lawfully seize your property without any warning.
State Tax Refunded Levy arises when the taxpayer is indebted to the IRS but has a state income tax refund. In such a case the IRS may lawfully take it without prior notification.
Disqualified Employment Tax Levy occurs if a taxpayer ‘pyramids’ employment tax responsibilities. This takes place when an employer doesn’t pay the IRS tax withholdings from its employees on a regular basis. The employer makes use of that money for cash flow during periods of difficulty. Both Congress and the IRS view this in a serious light. They make this an exception to the normal requirement of notification prior to levy and seizure.
If you receive a Final Notice of Intent to Levy to gather an older period of tax under appeal, then a Disqualified Employment Tax Levy becomes participatory. The new tax period could be levied with no notification if in the two years after your appeal you pyramided your employees’ taxes and therefore incur new tax bills.
Apart from the three exceptions the IRS is not obligated to provide another notice after a Final Notice of Intent to Levy for a specific tax period is issued. To avoid unexpected levies always know your place in the procedure and you must reply to all IRS notices.