Published on: September 6, 2018 Last modified: May 24, 2021

Challenge Wrongful Levies by the IRS

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    A common complaint concerning the IRS is the little time they give taxpayers to challenge certain determinations. Yet the IRS recently announced businesses and individuals will have additional time to bring claims concerning levies and seizures of property.

    The Tax Cuts and Jobs Act of 2017

    Under the recent Tax Cuts and Jobs Act of 2017, there has been an extension from nine months to two years to bring an administrative claim or file a lawsuit for wrongful levy. Also, for administrative claims within this two-year period, there is an additional extension of 12 months from the filing of the claim or for six months from when there is a disallowance of the claim for bringing a lawsuit – whichever happens to be shorter.

    This applies to levies made after Dec. 22, 2017 where the IRS sold the property that was the subject of the levy. There is no time frame whatsoever if the IRS is still in possession of that property.

    If there is a determination that a wrongful levy occurred, the IRS will return either:

    • The property in question
    • An equal amount of money levied
    • Money equal to the value of the property sold

    What is a wrongful levy action?

    Those subject to the levy should receive a notice from the IRS. However, the IRS does make mistakes. Sometimes, the IRS levies property that arguably belongs to someone other than the taxpayer.

    In the event a wrongful levy does occur, the IRS requires a letter be sent to the appropriate IRS Advisory Group. There are a number of advisory groups as well as publications published by the IRS.

    What is important to remember is that the issuing of a levy can result in significant hardship. It can mean a permanent loss of property and bank accounts proceeds as well as garnishment of wages.

    How do I get an extension?

    Whether it concerns administrative hearings or litigation in tax court, it’s extremely difficult to take on the IRS on one’s own. The IRS has unlimited resources for bringing legal actions such as levies or wage garnishments.

    Few taxpayers have the knowledge or resources to take this government agency on. Therefore, it is extremely helpful to have experienced tax attorneys who know how to negotiate with the IRS and challenge decisions the agency makes.

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