Notice of intent to levy is a notice issued by the IRS if it intends to seize your assets. This notice will only get issued if you have a seriously delinquent tax debt that hasn’t been resolved. It typically references a tax period for covering the taxes you owe. The IRS will send this notice for every tax you owe, that it intends to take before possessing your property. The IRS usually can’t take control of your property except if it has provided you with notice beforehand.
If the IRS decides to charge you or your business any tax that isn’t fully paid, IRS will ultimately get around to mail you a number of collection notices. IRS will typically issue four collection notices for business entities. You will need the assistance of a tax lawyer to help you handle the issue. Tax lawyers can help you solve the problem by getting you the best tax debt relief options to solve your notice of intent to levy.
Notice of Intent to Levy Process
Under federal law, the IRS is obligated to follow the guidelines before seizing your property.
- Give you a written or letter notice of intent to levy along with explaining your right to appeal.
- Deliver the notice in person or via a registered mail to your address.
- Give an explanation as to why they are issuing the levy (seizure process, and telling you what your options are) is included.
Note, there are several exceptions to the regular 30-day rule regarding notice of intent to levy. With the following exceptions including state tax refunds, disqualified employment tax levies, if the IRS deems the tax collection to be in jeopardy, and national contractor dues.
What Assets Can the IRS Take When They Sent out a Notice of Intent to Levy?
Here is a list of assets that the IRS can levy:
- Property (vehicles, homes, and personal property)
- Right to property
- Money in bank accounts
- Wages and commission from your employer
- Social Security benefits
- Vendor or contractor payments
- Employee travel advances
- Retirement benefits
- Government retirement benefits from the OPM (Office of Personnel Management).
Apart from that, the IRS is also positioned to take nearly anything you own even beyond the bare essentials. The IRS can take everything you own and leave you with almost nothing or very little until all your tax debts are paid off. However, the IRS will let you know how much of your total income can be exempted from the levy. This applies to wages, commissions, salary, and other forms of payment. It considers your pay frequency, filing status, and the number of recent tax return exemptions you took.
What Should You Do If You Receive the Intent to Levy Notice?
The easiest or fastest way to deal with the intent to levy notice is to pay the tax debt. The moment you make the tax payment, the IRS will stop all collection activities. If on the other hand, you don’t have the whole tax balance to pay, there are other options that you can consider.
The IRS is always open to working with you for the most optimal options to resolve your tax debt. In particular, you will be able to apply for an agreement where you can make the payment in installments, or you make an offer in compromise. In most cases, you will find the best option to resolve your tax debt when you work with an Enrolled Agent, tax attorney, or a licensed tax professional.
Common Ways to Resolve an Intent to Levy Notice
#1 Innocent Spouse Relief
In a situation where you believe that your former spouse or spouse is the person who is solely responsible for your tax debt, you have the option to file for ISR (Innocent Spouse Relief) with the IRS. To carry out this option, you will need to meet all the IRS requirements as listed below:
- You filed a joint return that has an understatement of tax (deficiency) that’s solely attributable to your spouse’s erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they’re incorrectly reported on the joint return
- You establish that at the time you signed the joint return you didn’t know, and had no reason to know, that there was an understatement of tax and
- Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.
#2 Offer in Compromise
In a situation where the IRS chooses to settle your debt for less than what you owe for taxes then an Offer in Compromise will have to be reached. Because of the unique circumstances surrounding this option, the IRS rarely uses this option. They usually only offer this type of arrangement with tax debtors sparingly. In fact, back in 2016, only 43 percent of all Offers in Compromise was accepted by the IRS. Once the IRS decides to approve an offer in compromise, once the taxpayer makes the payment, all kinds of collection activity will stop. However, applying for this option can be a bit complicated so you might want to seek professional help.
#3 Installment Agreement
An AI or installment agreement is when you agree to make monthly payments to cover your debt. An installment agreement typically reduces the penalty for failure-to-pay by at least 50 percent, although the IRS will keep gathering interest. Note that the only way to avoid a situation were the IRS will seize your assets or carry on with other collection actions is if you keep up with your payment as agreed.
#4 CNC Status
Your CNC Status which can also be referred to as (currently not collectible status) hardship status can help you in this situation. With this type of agreement with the IRS, you will have to provide a collection data statement to the IRS as proof that if they (the IRS) forced you into paying the taxes, it would put you in financial hardship.
Still Not Sure What to Do?
Talk to our tax professionals today. We can stop the notice of intent to levy and get you the best option to save your assets.