If you owe money to the IRS, you should do whatever you can to avoid a tax levy. Sometimes, however, circumstances prevent individuals from being able to pay their tax debt or make sufficient payment arrangements. When this happens, the IRS will levy or seize assets that may include real estate, automobiles, boats, bank accounts and more.
A levy is typically the last step in the IRS debt collection process. If you receive a notice to levy, it is important to take the necessary steps to protect your property and your assets. This is typically the step that you can no longer ignore.
Even if you cant repay the debt that you owe, you may still have options. Depending on your circumstances, you may be eligible for a type of settlement known as an offer in compromise. This type of settlement may be approved by the IRS provided that it meets certain conditions which include severe economic hardship, disputed tax liability, and taxpayers inability to pay off the debt in full.
There are both advantages and disadvantages to an offer in compromise. The IRS holds collections while considering an OIC, and releases liens and levies once an OIC is accepted and completed. OICs also allow taxpayers to avoid having to declare bankruptcy. An OIC does require taxpayers to make full financial disclosures to the government however, and if it is accepted, rights to certain tax benefits will be waived. If the IRS accepts an offer in compromise, the taxpayer is required to remain current on all tax obligations for five years, and other conditions are applicable as well.
Tax levies are serious and can carry severe penalties and consequences. If you are experiencing tax problems, dont wait until it is too late. Contact a tax professional today. You do have options and the longer you wait the less they are.
Tags: accounting, Finance, financial planning, IRS, levies, liens, real estate, taxes