Having a tax levy placed against your personal income or bank account by the IRS or the state, FTB may present issues that your finances cannot handle. Keep in mind that while the IRS or the state may know about your income sources and bank accounts, they do not know all the payment obligations that you have to make to maintain a mortgage, loan payment, food, clothing, car and other necessary living expenses.
When the IRS or state places a levy (garnishment, attachment), it means that it can pull money from your paycheck, bank account, or acquire other property you own in order to settle your tax debt. The larger the amount owed, the more time and money the garnishment will cost. It is because of this that you have the right to file for a levy removal or release.
Get a free case evaluation by calling us at 1-877-788-2937.What is a Levy Removal?
This is a means by which you can file to have a tax levy removed and released. When the IRS or the state, FTB imposes a levy (garnishment, attachment), it is generally for the amount that is due, and penalties are often added depending on the circumstances. When a levy is placed, there is a process within the IRS or FTB to have it removed. This starts with an initial filing that seeks to remove and release the levy right away, but that is the beginning of the process.How a Levy (garnishment, attachment) is Removed?
There are different means by which a tax levy may be removed by the FTB or IRS. Such a removal or release may happen after you file for a release or if an appeal is made if your original filing was rejected. The reasons for the IRS or State FTB removing a levy are as follows.
- Causes economic hardship
- You have already paid the amount in full
- The collected period ended before the levy was filed by the IRS, FTB state
- You have entered an Installment Agreement with the IRS and or the state FTB
- The property that is levied is more valuable than the amount owed, and the FTB or IRS may collect by other means
- If the levy is released, you can then pay the full amount
Keep in mind that just because a levy is removed does not mean you no longer owe any taxes. It only means that their method of collection will change. It is possible that a new garnishment, attachment that pulls less money and lasts longer will have to be imposed. Or, that some other arrangement will be made so the IRS or FTB state collects what they deem is due.
Another option is reaching an agreement where you pay less. This is often possible if you can pay the agreed amount quickly and that much of the additional expense comes from imposed penalties and the like. However, all agreements vary in terms of what may be paid.
By filing for a bank levy release or removal, you have the chance to have the hardship lifted from your finances as caused by the IRS or state FTB. You should consult with an experienced tax attorney-in-fact, EA, CPA firm that can provide you with the proper representation to make the best-informed decision about what to do next. If you decide to file for a levy removal or release, your power of attorney can be by your side protecting your rights during the entire process.
One way to appeal an IRS levy is by using the Collection Appeals Program (CAP). Under the CAP, a taxpayer may appeal liens, levies, seizures, and proposed denials or terminations of installment agreements. When the taxpayer appeals their case, the IRS will normally stop collection action until the appeal is settled, unless it has reason to believe the collection of the tax is in jeopardy or the taxpayer is a business that meets the criteria for a “disqualified employment tax levy.” Once a decision is made in the case, the decision is binding on both the taxpayer and IRS.
A second method of administrative appeal is by use of the Collection Due Process (CDP) program. A CDP hearing before levy is available in levy cases where the taxpayer has received a final notice of intent to levy. A final notice of intent to levy is accompanied by a notification in writing of the taxpayer's right to a hearing or equivalent before levy. If the taxpayer requests a hearing, the hearing will be conducted by an appeals / settlement officer or employee in the Office of Independent Appeals who did not previously participate in matters involving the taxpayer and the unpaid tax at issue. IRS doesn't have to send a notice of intent to levy (1) if it finds that collection of tax is in jeopardy, (2) before levying on a state to collect a federal tax liability from a state tax refund, (3) for “disqualified employment tax levies,” or (4) for certain “federal contractor levies.” However, in such cases a post-levy CDP hearing is available. Like CAP hearings, CDP hearings are informal. A CDP hearing doesn't require a face-to-face meeting, but a taxpayer can ordinarily get a face-to-face meeting if they want one, except where they make only irrelevant or frivolous arguments.
Get a free case evaluation by calling us at 1-877-788-2937.