When a taxpayer owes money to the Internal Revenue Service (IRS), their assets could be subject to levy, which is a collection tool the IRS uses to ensure it receives payment for a tax debt. A levy is a seizure, meaning the taxpayer will no longer have access to the asset being levied. Depending on the asset, a levy could cause significant hardship.
The IRS will send a Final Notice of Intent to Levy and it is wise to contact a tax attorney as soon as you receive the notice. A Bethesda tax levy lawyer could develop the best solution to release the levy and settle your tax issues if they are valued at more than $50,000.
Federal law under 26 United States Code § 6331(a) authorizes the IRS to levy a taxpayer’s property to satisfy a tax debt. The IRS uses liens and levies frequently, and sometimes people use the two words interchangeably. However, they are not the same.
An IRS lien notifies other creditors that the subject has tax debt that has priority over other forms of debt. It prevents the owner from selling the asset unless the IRS receives the proceeds from the sale.
A levy is a seizure of the property, and the taxpayer cannot access or sell it while the levy is in place. The IRS can levy bank accounts, retirement accounts, tax refunds, real property, vehicles, and anything else of value.
A levy means the IRS is asserting ownership of the property to pay a tax debt. Depending on the property seized, the IRS will often release a levy if the taxpayer makes appropriate arrangements to pay the tax owed.
The individual or business might experience economic hardship if the IRS levies a taxpayer’s bank account. The taxpayer would not be able to access their money and might have no way of paying bills. In such cases, an attorney in Bethesda could propose a levy release if the taxpayer agrees to enter a collection alternative to satisfy the rest of the tax debt, such as:
When the IRS levies real property, a vehicle, or other asset, it usually does not want to invest the time or accept the expense of selling the property. It might release the levy and allow the taxpayer to sell the asset and apply the proceeds to their tax debt.
It is possible to stop a levy before it happens but the taxpayer must act quickly. The IRS will send a Final Notice of Intent to Levy before it seizes a taxpayer’s property. The letter allows the taxpayer 30 days to request a hearing before the IRS Independent Office of Appeals.
A taxpayer should consult a Bethesda tax levy lawyer upon receiving this notice. They could protect the taxpayer’s rights by requesting a Collection Due Process hearing, temporarily preventing the levy from being applied. This hearing is informal and usually conducted via a phone call between the attorney and the IRS after a written exchange of financial information including a Form 433, Collection Information Statement.
At best, a tax levy could cause a major inconvenience, and at worst it could cause significant hardship. A taxpayer should get legal help as soon as they learn of the IRS’ intent to levy. If the levy is already in place, Pontius Tax Law could push for the levy to be withdrawn by proposing a collection alternative.
A Bethesda tax levy lawyer could help you settle your outstanding tax issues and put an end to IRS collection efforts. Call today and talk with our team to determine how we can best help you.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Vienna, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.