The Legalities And Issues With An IRS Levy
by: Henry Byers
An IRS levy is an order from the Internal Revenue Security directing TVA to withhold a specified amount of an employee’s pay to satisfy a tax debt. If the IRS determines that we owe back tax then it may issue an IRS levy requiring the deductions from the pay till the back taxes are paid. They may ask the person to sign an agreement of consent authorizing the amount to be deducted. The IRS levy can allow an amount to be exempt from withholding based on the o employee’s tax filing station and the number of exemptions claimed.
A legal step taken by Internal Revenue System to seize anyone’s property in order to satisfy his debt is IRS levy. They are different from liens. Lien is just a claim used as security for tax debt whereas in IRS levy they actually take the property to do so. If one cannot make arrangements to settle the debts then the IRS seizes or sells any type of personal or real property which one possesses. For example, the IRS can seize and sell property like boats, houses, cars, etc. Even they can levy property that is actually the debtors’ but is help by someone else like the wages wit the employee, balance at the bank account, license, rental income, etc.
An IRS levy is issued only when he requirements are met. The first condition is when IRS sends a notice or demand for the payment of the tax assessed by them. Secondly, when the person refuses or neglects to pay the tax and lastly when a final notice of Intent to Levy i.e. a legal notice of IRS levy is sent 30 days before the levy. A person receives one more notice with this notice known as Notice of Your Rights to Hearing. These notices can be given anywhere at our business place, at home or can be registered with the return receipt.
One may ask the IRS to review the case or can even request to Office of Appeals by filing a request to the IRS officer listed in our notice. This request filing should be done within 30 days of the receipt of the IRS levy notice.
When the IRS levy, levy our wages, salary or bank account, the levy ends when it is released or when on e pays the tax debt or at the expiry of the time of legal collection of tax. When the IRS levy, levies the bank account, the bank holds the funds in deposit for 21 days. This time is given as the relaxation period to solve the problem at hand. After 21 days, the bank sends the money to the IRS along with the interest, if applicable, to the IRS.
If IRS makes any mistake, like while levying bank account, the bank charges are borne by the debtor. In such a condition one is entitled to have the reimbursement for such charges. For this reimbursement one has to file a claim to the IRS within one year after the bank has claimed the charges.
There are two different types of IRS levy programs. One is FPLP i.e. Federal Payment Levy program and the other is SITLP, which is State Income Tax Levy Program. Under the FPLP, the IRS may levy money from the federal payments received like Social Security benefits, retirement from the Office of Personnel Management, federal employee’s salaries, etc. FPLP electronic levies the federal payments made through Department of Treasury, Financial Management services. When these agencies levy through FPLP, they take 15% from each of the payments till the account is resolved. One can call IRS employee for assistance if he is already working with them.
Under the SITLP, IR levies the state tax refund. This implies to individual state tax refunds only. Inclusion of business tax refunds in the future is under consideration. If the state tax refund is levied, the state issues a notice of advice about the levy. If one receives an advice, legally, for the Rights of Hearing then this IRS notice of advising is not issued.
Trapped By Taxes? Getting Back On Track
by: John L. Rzepka
A Primer 101 Guide to paying back taxes
It is nerve wracking trying to go about your daily life knowing that you owe back taxes. You may feel scared, confused, and ashamed. YOU ARE NOT ALONE. Many people and businesses are in the same situation. We are all human and make mistakes. It is not hard to fall prey to debt during troubled economic times. A tax problem should not impede your ability to live your life to the fullest; however, the debt will not just go away on its own either. There are options for you to consider.
Where do I start?
This may be the hardest part of the process of becoming, and staying, debt free. Chances are the back taxes owed are accruing interest or other monetary penalties. The quicker you become proactive, the less overall you will end up paying. The first thing you should do is get educated. The more knowledge you acquire in turn will help you feel more in control of your situation. Talking to an expert in the tax field is highly recommended. Find a professional tax expert to sit down with you and discuss your specific concerns, payment options, and possible programs available to your case.
Don’t fall for the scams!!
It seems that everywhere you look businesses are offering to get people out of debt for “pennies on the dollar”. BE VERY WARY of these agencies. These agencies tend to prey upon businesses and people that are already scared and confused as discussed earlier. There is no magic plan to erase your debt! There are, however, some government programs available if specific qualifications are met. This article will discuss those options in further detail.
Bankruptcy: The “easy way out”?
Some people believe that bankruptcy is the only solution to their back tax problems. Although it may be the right solution for your specific circumstances—everyone’s states of affairs is different—do not believe in any way, shape, or form that this is an easy way out of debt. Filing for bankruptcy can have adverse impact on your credit scores, ratings, and if you are filing a business bankruptcy, ramifications can include damaging your community reputation. A professional tax expert can discuss in detail the bankruptcy pros and cons for your set of circumstances. As with most of life’s larger transitions—and bankruptcy is—it can take its toll emotionally, physically, and can create friction with family relationships. Having a cast of strong and supportive individuals in your life is highly recommended when considering this avenue. Bankruptcy does not always discharge back taxes. There are several factors that play into this. A tax expert should carefully explain these factors with you.
Other Tax Relief Options
- Offer in Compromise
The Offer in Compromise (OIC) is a program offered by the Internal Revenue Service. Not a lot of people are aware of this program, and the IRS doesn’t routinely publicize it. It allows individual and business taxpayers with an unmanageable tax debt to negotiate the payment amount with the IRS – not just negotiate a payment schedule, but the amount to be paid. The name of the program says it all: the taxpayer offers a compromise to the IRS and negotiations begin.
It’s not as easy as pulling a number out of a hat, however. There are regulations that must be followed, detailed financial paperwork to fill out, and needs-based calculations to undertake. Navigating through the IRS and negotiating with them can be difficult for taxpayers who go it alone. An experienced professional consultation is recommended before filing for this program.
- Installment Payment Agreement
A monthly payment plan can be set up to pay back the taxpayer's tax liability. The IRS has guidelines as to what amount they will accept and the timeframe they will accept it in. A financial profile is required from the taxpayer before the tax resolution professional can negotiate an installment agreement.
- Currently Not Collectible
When economic hardships arise, a taxpayer may not be able to afford to pay the IRS due to a lack of assets and low income or no income at all due to a layoff or downsizing. The IRS can deem the taxpayer “Currently Not Collectible” and agree that their tax liability will be waived for the time being. Although this is not a permanent solution it will alleviate immediate stress, as well as give the taxpayer some breathing room to plan a long term solution.
Conclusion
This article does not offer all possible solutions to help pay back past due taxes to the government. Each case is different and should be discussed in detail with a tax professional. The burden of owing taxes can be unbearable at times. If you take a proactive approach, you will do yourself an immense favor by taking back your finances and moving toward financial freedom.
Trapped By Taxes? Getting Back On Track
by: John L. Rzepka
A Primer 101 Guide to paying back taxes
It is nerve wracking trying to go about your daily life knowing that you owe back taxes. You may feel scared, confused, and ashamed. YOU ARE NOT ALONE. Many people and businesses are in the same situation. We are all human and make mistakes. It is not hard to fall prey to debt during troubled economic times. A tax problem should not impede your ability to live your life to the fullest; however, the debt will not just go away on its own either. There are options for you to consider.
Where do I start?
This may be the hardest part of the process of becoming, and staying, debt free. Chances are the back taxes owed are accruing interest or other monetary penalties. The quicker you become proactive, the less overall you will end up paying. The first thing you should do is get educated. The more knowledge you acquire in turn will help you feel more in control of your situation. Talking to an expert in the tax field is highly recommended. Find a professional tax expert to sit down with you and discuss your specific concerns, payment options, and possible programs available to your case.
Don’t fall for the scams!!
It seems that everywhere you look businesses are offering to get people out of debt for “pennies on the dollar”. BE VERY WARY of these agencies. These agencies tend to prey upon businesses and people that are already scared and confused as discussed earlier. There is no magic plan to erase your debt! There are, however, some government programs available if specific qualifications are met. This article will discuss those options in further detail.
Bankruptcy: The “easy way out”?
Some people believe that bankruptcy is the only solution to their back tax problems. Although it may be the right solution for your specific circumstances—everyone’s states of affairs is different—do not believe in any way, shape, or form that this is an easy way out of debt. Filing for bankruptcy can have adverse impact on your credit scores, ratings, and if you are filing a business bankruptcy, ramifications can include damaging your community reputation. A professional tax expert can discuss in detail the bankruptcy pros and cons for your set of circumstances. As with most of life’s larger transitions—and bankruptcy is—it can take its toll emotionally, physically, and can create friction with family relationships. Having a cast of strong and supportive individuals in your life is highly recommended when considering this avenue. Bankruptcy does not always discharge back taxes. There are several factors that play into this. A tax expert should carefully explain these factors with you.
Other Tax Relief Options
- Offer in Compromise
The Offer in Compromise (OIC) is a program offered by the Internal Revenue Service. Not a lot of people are aware of this program, and the IRS doesn’t routinely publicize it. It allows individual and business taxpayers with an unmanageable tax debt to negotiate the payment amount with the IRS – not just negotiate a payment schedule, but the amount to be paid. The name of the program says it all: the taxpayer offers a compromise to the IRS and negotiations begin.
It’s not as easy as pulling a number out of a hat, however. There are regulations that must be followed, detailed financial paperwork to fill out, and needs-based calculations to undertake. Navigating through the IRS and negotiating with them can be difficult for taxpayers who go it alone. An experienced professional consultation is recommended before filing for this program.
- Installment Payment Agreement
A monthly payment plan can be set up to pay back the taxpayer's tax liability. The IRS has guidelines as to what amount they will accept and the timeframe they will accept it in. A financial profile is required from the taxpayer before the tax resolution professional can negotiate an installment agreement.
- Currently Not Collectible
When economic hardships arise, a taxpayer may not be able to afford to pay the IRS due to a lack of assets and low income or no income at all due to a layoff or downsizing. The IRS can deem the taxpayer “Currently Not Collectible” and agree that their tax liability will be waived for the time being. Although this is not a permanent solution it will alleviate immediate stress, as well as give the taxpayer some breathing room to plan a long term solution.
Conclusion
This article does not offer all possible solutions to help pay back past due taxes to the government. Each case is different and should be discussed in detail with a tax professional. The burden of owing taxes can be unbearable at times. If you take a proactive approach, you will do yourself an immense favor by taking back your finances and moving toward financial freedom.
