A tax levy is a legal seizure of property to satisfy unpaid taxes. If you owe back taxes, the IRS or state tax authority may use a tax levy to collect what you owe. A tax levy can be a frightening and overwhelming experience, but the best tax debt relief companies can help you understand what a levy is and what solutions are available to you. They can negotiate with the government on your behalf, help you resolve your tax debt, and provide guidance throughout the process. If you’re facing a tax levy, it’s important to work with a tax debt relief company to protect your assets and resolve your tax debt. In this article, we’ll cover the basics of tax levies, how they work, and what you can do to avoid them. 

Understanding Tax Levies: 

A tax levy is a legal order that allows the government to seize your property to pay back taxes that you owe. The government can levy bank accounts, wages, and property, such as your home or car. A tax levy is a last resort for the government to collect the tax debt and is used when all other collection methods have failed. 

How Does a Tax Levy Work? 

If you owe back taxes to the government, the Internal Revenue Service (IRS) will typically send you a notice to inform you of your outstanding balance. If you fail to pay your taxes or make arrangements to pay your taxes, the IRS may issue a tax levy. Once a tax levy has been issued, the government has the legal right to seize assets to satisfy the outstanding tax debt. This may include bank accounts, real estate, vehicles, and other valuable property.

Reasons for a Tax Levy: 

A tax levy may be issued if you have failed to pay your taxes or have not made arrangements to pay what you owe. The government can also levy your property if you have ignored repeated notices and requests to pay your taxes. 

Types of Tax Levies: 

There are several types of tax levies, including wage garnishment, bank account levies, and property levies. Wage garnishment allows the government to take a portion of your wages to pay your back taxes. A bank account levy allows the government to seize funds from your bank account, while a property levy allows the government to seize your property to pay your back taxes. 

Notice of Intent to Levy: 

Before the government can levy your property, they must provide you with a notice of intent to levy. This notice will include information about the taxes you owe, the amount of the levy, and the steps you can take to avoid the levy. 

Tax Debt Resolutions:

Offer in Compromise:

An offer in compromise is a settlement agreement between you and the government. With the help of a tax debt relief company, you can submit an offer in compromise that proposes to pay a reduced amount of your tax debt. If the government accepts your offer, you can settle your tax debt for less than what you owe. This resolution is available for debtors who are currently facing extreme hardship.

Innocent Spouse Relief: 

If you filed a joint tax return with your spouse or ex-spouse, you may be eligible for innocent spouse relief. Innocent spouse relief can release you from the responsibility of paying any tax debt that was caused by your spouse or ex-spouse. 

Collection Due Process: 

If you receive a notice of intent to levy, you can request a Collection Due Process hearing. This hearing allows you to challenge the tax levy and present evidence to show that the levy is not warranted. A tax debt relief company can help you prepare for this hearing and present your case to the government. 

Currently Not Collectible: 

One option for dealing with tax debt is to request currently not collectible (CNC) status. This means that the government recognizes that you owe back taxes, but they agree that you are currently unable to pay the debt. In this case, the government will halt collection efforts, including tax levies, until your financial situation improves. It’s important to note that CNC status does not eliminate your tax debt, but it does provide temporary relief from collection efforts. Additionally, interest and penalties will continue to accrue on your tax debt while it remains unpaid. This status is available to those who qualify by extreme hardship.

Installment Agreement: 

Another option for dealing with tax debt is to set up an installment agreement with the government. An installment agreement is a payment plan that allows you to pay your tax debt over time. This can be a good option if you are unable to pay your tax debt in full but can afford to make monthly payments. When setting up an installment agreement, you’ll need to provide detailed financial information to the government, including your income and expenses. Based on this information, the government will determine your monthly payment amount. It’s important to note that interest and penalties will continue to accrue on your tax debt while it is being paid off through an installment agreement.

How Tax Debt Relief Companies Can Help: 

Tax debt relief companies can help you avoid or release a tax levy. They can negotiate with the government on your behalf, set up a payment plan, submit an offer in compromise, or request hardship status. These companies have experience dealing with the government and can help you navigate the complex tax system. They can negotiate with the government to reduce the amount of taxes you owe, or help you qualify for an installment agreement, which allows you to make monthly payments over a set period of time. If you’re facing a tax levy, it’s important to work with a tax debt relief company to protect your assets and resolve your tax debt. 

What To Do If You Have Any Unsecured Debt?If you have unsecured debt, such as credit card debt or personal loans, a debt relief company can help you resolve it for the most favorable terms possible. Debt settlement services involve negotiating with creditors with the goal to settle your debts for less than what you owe. This can also potentially free up money to help with the tax issue.