how to stop an irs tax levy
How to Stop an IRS Tax Levy
A tax levy by the IRS can prove fatal to your financial health. The best way to avoid such a situation is to heed their notices and warnings, and co-operate with the IRS authorities to work out a solution. Here, Buzzle has enlisted a few ways in which you can stop an IRS tax levy.
FINAL NOTICE!
If you do not respond to the final notice sent by the IRS authorities within 30 days, a tax levy will be imposed on you. It is advisable to immediately respond after you receive the first notice.
The IRS (Internal Revenue Service)1 website defines levy as a legal seizure of your property to satisfy a tax debt. It gives them an authority to sell your property or other financial assets that you might own or have an interest in.
1 It is the agency of government, representing the revenue service of the United States.
First and foremost, I would always reiterate the age-old adage that prevention is better than cure. Thus, instead of waiting for the authorities to freeze your assets, why not act responsibly and pay your taxes in time? Nevertheless, financial burdens can erupt at any time, and it may happen that it is not possible for you to pay taxes in time. But why wait till the IRS knocks on your door? Before we tell you the ways to stop an IRS tax levy, let's get acquainted with the forms and rules relating to tax levy.
Forms Relating to IRS Tax Levy
| FORM NO. | PURPOSE |
| CP504 | Notice to indicate that you've not paid the tax liability, and your income-tax refund might be seized due to it. |
| CP504B | Similar to the above, it is a notice to indicate that you've not paid the tax liability, and your property or rights to property might be seized. |
| CP523 | In case you've not paid the installments as per the agreement with the IRS, and violated the agreement, this is a notice of their decision to cancel it. |
| CP 90 & CP 297 | Notice of levy and notice of your right to a hearing. |
| CP 91 / CP 298 | Final notice before levy on Social Security Benefits. |
| Letter 668D (LP 68) | Notice to indicate that taxpayer's levy is released. |
| Letter 1058(LT 11) | Final notice prior to levy; your right to a hearing. |
| Letter LP 59 | Please contact us about the taxpayer levy. |
The IRS department is required by statute to take the following steps before ordering a levy.
- A letter for Demand of Payment of Tax and Notice is sent to you.
- You've not replied to the notice or taken any steps to make payment.
- The 'Final Notice prior to levy; your right to a hearing.' letter is sent to you, and 30 days have elapsed after sending the aforesaid letter.
Ways to Stop an IRS Tax Levy
If you do not respond within 30 days of receiving the final notice, the IRS can order a tax levy. They have the authority to seize your assets or sell off your property, or order a bank account garnishment. It's better to escape from this juggernaut, and avoid a tax levy by adopting the following methods.
The most apparent answer
- Pay your taxes and other charges in full. Simply pay your dues to the IRS, along with penalty charges, if any. If you do not have funds, you've to use non-institutional sources of money, such as borrowing from relatives or friends. Though this is not a permanent solution as you will still have a liability to pay off. Again not a foolproof method, since you cannot be sure about the availability of such funds. Else, if you've other assets available, sell them off to pay off the liabilities. However, the problem is your asset should be readily marketable and convertible into liquid money, and due to crunch of time, you may end up selling it at lesser costs.