IRS Notice of Intent to Levy: What It Is and What to Do
If you’ve received a Notice of Intent to Levy from the IRS, it’s time to learn what your options are. The IRS extends relief options to qualified taxpayers and businesses, and you can hire a tax relief firm to help you determine your next steps.
What Is a Levy?
A levy is a collection action that involves seizing assets to resolve tax debts. A levy may be placed on a bank account, retirement account, income, account receivable, or property.
What is a Notice of Intent to Levy?
When a taxpayer has debt and hasn’t been in contact with the IRS, the IRS may send a Notice of Intent to Levy. This notice is a warning that the IRS will be taking funds or assets if a resolution is not met in a certain timeframe. These notices include the IRS’s reasons for levying, what will happen, and how to appeal the levy if you believe it is being done inappropriately.
By federal law, the IRS is required to notify you of its intent to levy at least 30 days ahead of time. The notice may take the form of:
- CP504 (Notice of Intent to Seize Your Property or Rights to Property)
- CP90 (Intent to Seize Your Assets and Notice of Your Right to a Hearing)
- 1058 (Final Notice of Intent to Levy sent by a Revenue Officer)
- LT11 ((Final Notice of Intent to Levy sent by Automated Collections)
It is possible to avoid levies and other collection actions. File your returns and pay your taxes on time, and request extensions if you need more time. You can make an installment agreement with the IRS if you need to resolve a debt. If you have a debt that you do not believe you can pay in full, you may qualify for an Offer in Compromise. It’s recommended that you work with a tax relief firm if you wish to make such an Offer, as the process can be complicated.
Which Assets Can the IRS Levy?
The IRS can seize just about anything, including:
- Automobiles
- Bank accounts
- Commissions
- Compensation from employers (including wages)
- Social Security benefits (up to 15%)
- Employee travel advances
- Vendor and contractor payments
- Residential and commercial property
- Retirement benefits (including federal government retirement benefits distributed by the Office of Personnel Management)
Some income may be exempt from levies per IRS Publication 1494. However, it may be the bare minimum relative to the amount seized.
What Happens if You Don’t Pay Your Tax Debt After a Notice of Intent to Levy?
If you receive notice of the IRS’ intent and do not make a formal appeal or payment arrangement within the given timeframe (generally 30 days from the date on the notice), the IRS will begin seizing your assets.
What Do You Do If You Receive a Notice of Levy?
Paying what you owe will prevent collection actions by the IRS. But if you are unable to pay in full, there are still options that may be available to you. It’s recommended that you work with a licensed tax professional or tax relief firm to figure out which of these may be best for you:
Offer in Compromise
If there is good reason to believe that you cannot and will not be able to pay your tax debt in full, you may qualify for an Offer in Compromise (OIC). OICs are very difficult to get approved, as the IRS wants to collect as much of what they are owed as possible.
Installment Agreement
An installment agreement lets you pay off your debt over a set period. Here are your options:
Long-Term Payment Plans:
- Individuals who owe $25,000 or less may qualify for a 60-month installment agreement.
- Individuals who owe $50,000 or less may qualify for a 72-month installment agreement.
- Businesses that owe $25,000 or less may qualify for a 24-month installment agreement.
- Extended-Term Payment Plan: Commonly negotiated by a tax relief firm on a taxpayer’s behalf. The IRS will take your income, liabilities, and expenses into account.
Qualifying for any of these plans is dependent on meeting certain criteria, such as having all of your required returns filed and being current on your tax deposits.
Innocent Spouse Relief
If you are being targeted for federal tax debt that was incurred by a current or former spouse, consider filing for Innocent Spouse relief. You may qualify if you filed a joint tax return while unaware of a tax liability, or if you have been the subject of spousal abuse or tax return forgery.
Currently Not Collectible (CNC) Status
Similar to an OIC, CNC status is reserved for those who are currently dealing with financial difficulties. Being approved for CNC status means that you will not have to make tax payments until you are financially able to do so. You will need to plead your case to the IRS. They will consider all the factors of your financial situation, including your income, expenses and assets, and may request documentation like pay stubs and bills to prove your case.
If you are approved, the IRS may check on your financial situation at regular intervals. For individuals, this happens every two years, and for businesses, it happens yearly.
About Larson Tax Relief
Larson Tax Relief is a family-owned and operated tax resolution company that’s been helping individuals and businesses around the US since 2004. With an A+ rating from the Better Business Bureau, Larson is comprised of 65 employees, including 17 federally licensed IRS Enrolled Agents.
One of those agents is Larson co-founder and company president Jack Larson, who is a member of both the National Association of Enrolled Agents and the National Association of Tax Professionals.
To learn more, or to get a free evaluation of your situation call us today at 888-589-0955 or fill out our online form below.