Possible Actions to Take When Subjected to a Tax Lien or Levy

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The IRS has significant power to seize assets due to the ability to implement a lien or levy when back taxes remain unpaid. And the property that the IRS seizes can include account receivables for your business, bank accounts, wages, tax refund and even your vehicle.

Lien and levy

There is a difference between a lien and a levy. A lien concerns claims the IRS places upon property. This lien could remain in place until tax debt is paid. A levy, on the other hand, is the actual seizure of the property that was subject to the lien. In either instance, it is important to take quick action.

There are certain steps the IRS must take before levying property. The agency must first provide a taxpayer with a “Notice and Demand for Payment.” In the event payment of the taxes remains unresolved, the IRS may then serve a “Final Notice of Intent to Levy” and send a “Notice of Your Right to a Hearing.”

Actions can result in removal or modification of the levy. However, such measures may only extend the timeline for the IRS to collect upon the debt. Also, the deadlines for taking such actions may be short.

Taxpayers can request a collection due process hearing within 30 days of receiving the “Notice of Intent to Levy.” Still, such action may only accelerate the time frame for when the placing of a levy. Also, you will need to present compelling evidence in the case before removal or stoppage of the levy will take place.

It is also possible to enter into an installment agreement or enter into an offer in compromise with the IRS. In either instance, the taxpayer will need to bargain for an agreement that they realistically can live with.

It is also feasible to request a collection appeals program. This will still involve offering the IRS a solution, and it could end any opportunity for judicial review of the matter.

What should you do

Michigan taxpayers facing either a lien or levy must understand the seriousness of a tax lien or levy. The IRS has significant discretion to accept or reject any settlement offer. Therefore, it’s extremely helpful to have a skilled tax attorney guide you towards the best possible option.

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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