The IRS is widely recognized as a very aggressive and powerful creditor. The Internal Revenue Code grants the IRS the authority to levy to collect delinquent taxes. A tax levy is the forced collection or seizure of any property or right to property that belongs to the taxpayer. Generally speaking, the IRS has 10 years to collect taxes. The IRS needs to take several procedural steps before issuing a levy. The IRS needs to assess the tax and send the taxpayer written notice of the taxes due. If the taxes are still not paid the IRS will mail the taxpayer a Final Notice of Intent to Levy and Notice of Your Rights to a Hearing. Requesting a Collection Due Process Hearing will place a collection hold on the taxpayer’s account until the Hearing has been conducted. If the taxpayer does not request a Hearing or make arrangements to pay the tax bill, the IRS may levy any property or right to property of the taxpayer. For example, the IRS could levy a taxpayer’s wages or bank accounts as well as seize and sell an individual’s car or house.
There are several ways to release a levy:
- Full pay the tax debt.
- Request an installment agreement with a completed Form 433, Collection Information Statement.
- File an Offer in Compromise (OIC). An OIC is a settlement in which the taxpayer pays the IRS less than the full amount due.
- The IRS may reduce or release the levy if the taxpayer can show it is causing an economic hardship.
- If the taxpayer cannot make any payment to the IRS, he or she could request Currently Not Collective status. In that situation, the IRS will release the levy for one to two years. At that point, the IRS will reevaluate the taxpayer’s ability to pay the IRS.