What Are Your Rights in an IRS Tax Levy?
An IRS tax levy is a legal proceeding where your property is seized to satisfy a tax debt. A levy is where the IRS actually takes your property where an IRS tax lien is a security claim for a tax debt. If you do not keep your tax filings and payments current the IRS can utilize a tax levy to settle your debt and the IRS has the legal ability to seize and sell any type of property, real or personal, that you may own or have legal interest in.
For example the IRS could:
- Seize and sell property you personally own such as your home or car.
- Levy wages or other assets (such as dividends, interest income, bank accounts) that are owned by you, but being held by someone else.
Typically the IRS will only levy after three conditions are met:
- The IRS assesses the tax and sends you a Notice and Demand for Payment.
- You neglect or refuse to pay the tax
- The IRS sends you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing no less than 30 days before the levy. Notice may be hand delivered to your home, work or mailed, return receipt requested.
Upon receipt of the levy, you can ask an IRS manager to review your case or you can request a Collection Due Process hearing with the IRS office listed, provided you do so within 30 days of the date of the notice. Issues discussed at the meeting will typically include:
- Your filing and payment history
- If the levy notice was sent when you were in bankruptcy, and therefore subject to the automatic stay during bankruptcy.
- How tax liabilities were assessed from either the filing of returns or from IRS tax assessments, as a result of non-filing.
- The time the IRS has according to tax law statutes to collect the tax.
- Any opportunities you had in the past to address or dispute the assessed liability.
- Other collection options, such as an Installment Agreement or Offer in Compromise.
- Any Spousal Defenses.
At the end of the hearing the Office of Appeals will make/issue a determination of which you will have 30 days to contest the determination. If your property is seized or levied contact the employee who took the action as well as the manager and ask to review your case. If the issue is still unresolved you can still take your position and case to the IRS Office of Appeals.
If the IRS levies your bank account the bank is legally bound to hold those monies on deposit for the amount you owe up to 21 days so that there is time to resolve any issues about account ownership, if any. After this period the bank must send the money plus interest to the IRS.
You can contact John Dillard CPA here.