How to Release and Prevent an IRS Levy

April 17, 2024 by Kaylie Jonutz
Levy written on a calculator

Receiving notice of an IRS levy is something that can cause a lot of anxiety for taxpayers. This blog goes over how you can prevent an IRS levy from occurring or release a levy once it has occurred.

For the IRS to levy an asset, such as a bank account, retirement, securities, or even your home, there has to be something called an assessed balance. An assessed balance is the total amount of tax the IRS believes you still owe.

The IRS can have an assessed balance if you:

  1. Filed a tax return that resulted in an amount due and you have not yet paid the amount,
  2. Underwent an audit that resulted in additional taxes due, or
  3. Never filed a tax return and the IRS filed a Substitute for Return on your behalf, which resulted in additional taxes that are still unpaid.

What if I owe the amount but can’t pay?

There are a lot of avenues available to taxpayers to prevent a levy. One of the most common resources is setting up an Installment Agreement with the IRS to pay off the debt over time. There are also collection alternatives, such as an Offer in Compromise or Currently Not Collectible status. For more information or assistance with these resources, please reach out to TaxAudit’s Tax Debt Relief team for a free consultation.

Final Notice of Intent to Levy

Anytime the IRS believes you owe them additional tax, they usually send you a bill to inform you about your assessed balance. If you ignore the first bill, the IRS will send you a second bill after 45 days. If you still don't pay the amount owed after the second bill, the IRS will send you a Notice of Intent to Levy about 45-60 days later, which means they will take additional actions to collect the money you owe.

This Notice of Intent to Levy allows the IRS to levy state tax refunds and other smaller property rights. However, before the IRS can levy any bank accounts, the IRS must first send out a Final Notice of Intent to Levy.

In response to the letter of Final Notice of Intent to Levy, the taxpayer can file a request for a Collection Due Process Hearing within 30 days of the date on the notice. You can request a hearing if you are contesting the amount owed. Additionally, if you have grounds to do so, you can request penalty abatements that were previously denied, work out an installment agreement, or even an Offer in Compromise. If the request for a Collection Due Process Hearing is filed, the IRS can only levy your account once the hearing is finalized, and then you can still appeal the Collection Due Process determination in Tax Court.

What if a Levy is already assessed on my account?

If a levy has already been assessed on your account, the first thing you should do is file all tax returns that are due. The second thing you need to do is provide the IRS with a Collection Information Statement – either Form 433-A or 433-F, depending on if you are dealing with the Automated Collections System or a Revenue Officer within the IRS.

The Collection Information Statement may need supporting documentation, such as current paystubs, Schedule C or current year profit and loss statement, itemized expenses, copies of delinquent state and local taxes, student loan balance and payments, or court-ordered payments. Once you provide your Collection Information Statement, the IRS will propose an Installment Agreement or place you on Currently Not Collectable status, depending on your financial situation. At that point, the levy should be released. If the IRS refuses to release the levy, you can file an appeal through the Collection Appeals Program.

In the video below, Arnold van Dyk, Esq, Director of Tax Services at TaxAudit, goes into greater detail about the Collection Appeals Program.

If you have received a Final Notice to Levy from the IRS and are looking for assistance with releasing or preventing the levy, our Tax Debt Relief team can help. We specialize in resolving IRS collections issues and work towards achieving the best outcome for our clients. Contact us immediately, and our Tax Professionals will guide you through the process and provide the necessary support you need.

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Tags: IRS levy, levy


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