The Internal Revenue Service (IRS) has the authority to impose a levy on an individual’s property or income to collect unpaid taxes. However, there are certain circumstances under which a levy can be reversed or released.
Grounds for Levy Reversal
According to the IRS, a levy may be released if the taxpayer:
- Pays the amount owed in full.
- Demonstrates that the collection period has expired before the levy was issued.
- Proves that releasing the levy will facilitate tax payment.
- Enters into an installment agreement that does not allow for continued levy.
- Establishes that the levy is causing an economic hardship, preventing them from meeting basic living expenses.
- Shows that the value of the levied property exceeds the amount owed and that releasing the levy will not hinder the IRS’s ability to collect the debt.
Process for Reversing a Levy
To request a levy reversal, taxpayers should contact the IRS immediately and explain their financial situation. The IRS will review the request and determine if the levy meets the criteria for release. If the IRS denies the request, taxpayers may appeal the decision.
Consequences of a Levy Reversal
A levy reversal does not absolve the taxpayer from their obligation to pay the outstanding tax debt. The IRS will continue to work with the taxpayer to establish payment plans or take other steps to help them fulfill their tax obligations.
Preventing a Levy
To avoid the imposition of a levy, taxpayers should take proactive steps to address their tax liabilities. This includes:
- Filing tax returns on time.
- Paying taxes in full and on time.
- Contacting the IRS if unable to pay taxes in full.
- Exploring installment agreements or other payment options.
While the IRS has the authority to impose levies to collect unpaid taxes, there are mechanisms in place to reverse or release levies under certain circumstances. Taxpayers facing financial hardship or other extenuating circumstances should contact the IRS promptly to discuss their options. By understanding the grounds for levy reversal and the process for requesting a release, taxpayers can navigate this complex process and protect their financial interests.
What happens when the IRS levies your bank account?
FAQ
How do I stop the IRS tax levy?
Can you stop a garnishment once it starts from IRS?
Will payment plan stop IRS levy?
Will an Offer in Compromise stop a levy?
Can a tax levy be removed?
Removing a Levy or Wage Garnishment When the IRS takes money out of your bank account (levy) or your paycheck (wage garnishment), you have options. You can get the IRS to remove the levy, but only after you pay off all the back taxes you owe, or set up a payment agreement with the IRS.
Can the IRS release a tax levy?
The IRS can also release a levy if it determines that the levy is causing an immediate economic hardship. If the IRS denies your request to release the levy, you may appeal this decision. You may appeal before or after the IRS places a levy on your wages, bank account, or other property.
What should I do if I owe a tax levy?
If the levy is from the IRS, and your property or federal payments are seized, call the number on your levy notice or 1-800-829-1040. If you’re already working with and IRS employee, call him or her for assistance. Be prepared to propose an alternative way to pay your taxes , if you owe the tax debt.
Can the IRS levy my property if I don’t pay taxes?
If you do not respond to IRS billing notices and work with the IRS to resolve your tax debt, the IRS may levy your property. Even if you think you do not owe the tax bill, you should contact the IRS. If you receive an IRS bill titled Final Notice, Notice of Intent to Levy and Your Right to A Hearing, contact the IRS right away.