If you have unpaid tax debt, you are at risk of having the IRS place a levy. You should know that dealing with IRS tax debt is not the same as dealing with any other type of debt collector. The IRS has the power to recoup money without filing a lawsuit. Before an IRS tax levy can be placed, the IRS would reach out to you and provide ample notice before taking anything from you. So, what is an IRS levy?
According to the IRS, a placed “levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property.”
The best way to stop a levy is to file your taxes on time and pay any amount owed to the IRS. However, what happens if you do not have the money to repay what you owe? You should not ignore any notices sent to you by the IRS. You have the ability to contact the IRS and make repayment arrangements. If you are not in a position to fulfill any arrangements made with the IRS, you should contact an experienced attorney.
You have several options to stop an IRS levy:
Set up an installment plan: Do you owe less than $50,000 in tax debt to the IRS? Have been consistently filing your tax returns? If so, you can get set up an installment plan with the IRS to get caught up on your debt. The IRS website has a form available for you to apply for an installment agreement. Click here to get the form. This agreement will give you 72 months to pay off what you owe to the IRS. Do you owe more than $50,000, but less than $100,000 in tax debt? You may still be able to set up an installment agreement.
Remember, interest will continue to accrue on your debt while you are repaying. Also, there are penalties to consider, so do not miss a payment! If you miss a payment on an installment plan with the IRS, your settlement agreement can be revoked. It is important that you take time to research this further.
There are two important requirements to qualify:
Your excess income or disposable earnings is determined from the information that you provide on Form 433 on your taxes. To determine the liquidation value of your assets, the IRS will look at a quick sale value. This is around 80% of the amount made from the sale of your assets.Once you know your excess income and the liquidation value of your assets, you can submit your offer to the IRS.
A Chapter 7 takes less time and will stop the IRS collections process for a short amount of time. However, once the bankruptcy if over, collections will resume. A Chapter 13 will enable you to set up a payment plan, while eliminating a fair amount of interest and penalties.
Before you take any action, be sure that you are informed. Call us for a free consultation to find out the options that will work best to help eliminate your IRS tax debt.