An IRS levy is a powerful tool the government uses to collect unpaid taxes. It can have severe consequences on your financial well-being. When the IRS places a levy on your property or income, it essentially seizes your assets or a portion of your earnings to satisfy the outstanding tax debt. This action can significantly disrupt your financial stability and make it challenging to meet your daily expenses. The impact of an IRS levy can be far-reaching, affecting not only your bank accounts and wages but also your retirement accounts, investments, and even your Social Security benefits. Under certain circumstances, however, it may be possible to secure an IRS levy release.
What is an IRS Levy Release?
An IRS levy release is a legal process that allows you to regain control over your assets and income that have been seized by the IRS due to unpaid tax liabilities. When the IRS grants a levy release, it essentially lifts the levy and returns your property or income to your possession. This relief can provide much-needed financial breathing room and help you get back on track with your tax obligations.
A levy release is not automatic and requires specific steps and qualifications. The IRS may consider granting a levy release if you can demonstrate financial hardship, establish a payment plan, or provide evidence that the levy was placed in error. It’s important to understand the reasons and requirements for obtaining a levy release to increase your chances of success.
Reasons Why a Levy Release May Be Granted
The quickest way to get a levy released is to pay your tax debt in full. If that is not possible, there are several other reasons why the IRS may grant a levy release.
- Financial Hardship. If the levy is causing significant financial hardship, making it impossible for you to meet basic living expenses, the IRS may consider releasing the levy. You will need to provide documentation and evidence of your financial situation. You may also get a levy released if you are placed in Currently Not Collectible (CNC) status.
- Payment Plan Arrangement. If you can establish a viable payment plan with the IRS to pay off your tax debt over time, the agency may release the levy to allow you to meet your obligations through the agreed-upon installment plan.
- Offer in Compromise (OIC). The IRS will release a levy upon approval of an OIC. There is no requirement, however, for them to release it while your OIC is being considered.
- Incorrect or Improper Levy. In some cases, the IRS may have placed the levy in error or without following proper procedures. If you can prove that the levy was incorrect or improper, the IRS may release it.
- Bankruptcy Filing. If you have filed for bankruptcy, the IRS may be required to release the levy due to the automatic stay provisions of bankruptcy laws.
- Statute of Limitations. If the statute of limitations for collecting the tax debt has expired, the IRS may be obligated to release the levy.
The release of a tax levy does not absolve you from having to pay the balance due. You must still make arrangements with the IRS to resolve your tax debt, or they may reissue the levy.
How to Request an IRS Levy Release
To request an IRS levy release, you need to follow specific steps and provide the necessary documentation. Here’s a general overview of the process.
- Gather Documentation. Collect all relevant documents, including tax returns, bank statements, pay stubs, and any other financial records that support your case for a levy release.
- Complete Form 12153. Form 12153, Request for a Collection Due Process or Equivalent Hearing, is the primary form used to request a levy release. This form allows you to explain your situation and provide supporting documentation.
- Submit The Request. Submit your completed Form 12153, along with all supporting documentation, to the IRS office handling your case. You can mail or fax your form.
- Keep a Copy For Your Records. Make sure to keep a copy of your hearing request and proof of the date it was sent.
- Attend a Hearing (if applicable). Depending on your circumstances, the IRS may schedule a hearing to review your request for a levy release. This may take place in person, over the phone, or through the mail.
- Await The IRS Decision. After reviewing your request and supporting documentation, the IRS will decide on whether to grant or deny the levy release. This process can take several weeks or months, so patience is essential.
It’s important to note that your request for a Collection Due Process (CDP) hearing will generally prohibit any levy action. It will also suspend the statute of limitations for collecting your taxes. It does not, however, prevent the IRS from filing a Notice of Federal Tax Lien.
If you fail to submit your request within the required deadline for a CDP hearing, you have one (1) year from the date of your CDP levy notice to request an equivalent hearing. Although this is the same as a CDP hearing, it does not prohibit levy action, nor does it suspend the statute of limitations. Additionally, you cannot appeal the decision made at an equivalent hearing.
Mistakes to Avoid When Seeking a Levy Release
Several things can derail your chances of successfully getting an IRS levy release. Here are some of the most common mistakes to avoid.
- Ignoring IRS Notices. Failing to respond to IRS notices can lead to further complications and make it more difficult to obtain a levy release.
- Providing Incomplete or Inaccurate Information. Submitting incomplete or inaccurate information to the IRS can undermine your credibility. This can lead to a denial of your levy release request.
- Missing Deadlines. The IRS levy release process involves strict deadlines for submitting documentation. Missing these deadlines can result in delays or the denial of your request.
- Failing to Maintain Records. Neglecting to keep detailed records of your communications and interactions with the IRS can make it challenging to support your case for a levy release.
- Attempting to Handle the Process Alone. Although it’s possible to navigate the levy release process on your own, seeking professional assistance from a qualified tax professional can increase your chances of success and minimize potential mistakes.
Get Professional Help For an IRS Levy Release
Navigating the IRS levy release process can be complex and overwhelming, especially if you are unfamiliar with tax laws and regulations. Seeking professional assistance can significantly increase your chances of success and provide valuable guidance throughout the process. Here are some options to consider:
- Certified Public Accountant (CPA). A CPA with experience in tax matters can review your financial situation, prepare the necessary documentation, and represent you before the IRS. They can also provide advice on tax planning and strategies to avoid future issues with the IRS.
- Tax Attorney. An experienced tax attorney can provide legal representation and advocacy during the levy release process. They can help you understand your rights, negotiate with the IRS, and ensure that all procedures are followed correctly.
- Enrolled Agent (EA). EAs are tax professionals licensed by the IRS to represent taxpayers in various tax matters, including levy releases. They have extensive knowledge of tax laws and can guide you through the process effectively.
- Low-Income Taxpayer Clinics (LITCs): If you meet certain income requirements, you may be eligible for assistance from an LITC. These clinics provide free or low-cost representation to taxpayers in disputes with the IRS, including levy release cases.
- Tax Relief Company. Most tax relief companies employ CPAs, enrolled agents, tax lawyers, and other tax professionals. Fees will vary depending on the complexity of your case, but many offer free consultations.
Although seeking professional help may involve additional costs, the potential benefits of successfully obtaining a levy release and regaining control over your finances can outweigh the expenses in the long run.
If you are facing an IRS levy and need assistance with obtaining a levy release, reach out to our team of experienced tax professionals. We offer personalized guidance and representation to help you navigate the process effectively and protect your financial well-being. Contact us at 855-476-6920 for a free consultation and take the first step towards regaining control over your assets and income.