When a taxpayer has a tax debt that they are not working to pay off, the IRS will resort to anything to get what is owed to them. The most common tactic the IRS uses is to levy taxes from sources of income and financial accounts. If you believe the IRS may levy taxes from you, you need to understand what money is in danger of getting lost and what your options are. This page will help you get started.
Where Can the IRS Levy Taxes From You?There are many places you may be surprised the IRS can levy taxes from you. If you think that the IRS will not touch an account because it is shared with someone who does not have a tax liability, you are wrong. A good rule of thumb is that the IRS can and will levy taxes from any account that you can touch. They will also come after a wide variety of income sources. The IRS often will levy taxes from Social Security benefits. The two most common ways the IRS chooses to levy taxes are by cleaning out bank accounts and garnishing wages.
The IRS can levy taxes from your bank accounts, once they have sent notices to the last known address it has on file for you. If you do not make arrangements with the IRS to pay your debt, the IRS will look into what money you have in any account that the IRS knows of. It will inform your bank that it needs to set aside either the full amount of your debt or everything in your account for 21 days. During those 21 days, you will have to prove considerable financial hardship to get any of that money back. After that, you will have no chance to see any of that money again.
The IRS can also levy taxes from your wages. The same kind of protocol is used to perform this levy. Your employer is notified that he or she will need to levy taxes from your wages, and only leave you with a set amount based on a table of guidelines. Depending on your filing status and allowable W4 exemptions, you could be left with as little as $791 a month.
What Should You Do When They Levy Taxes From You?One option is to declare hardship. However, this is more difficult than people think. You cannot simply show that you are falling behind on your bills. You must show something as drastic as being in danger of eviction or losing electricity. It is also only a band-aid solution. The IRS may easily levy taxes from you again within a month.
Filing for an Offer in Compromise may seem like a good idea. Temporarily, the IRS cannot levy taxes from you while it is reviewing an offer. Unfortunately, if you are rejected, an Offer in Compromise gives the IRS the information it needs to levy taxes from even your entire life savings.
An installment agreement works out best for most situations. Not only can the IRS not levy taxes from someone in an agreement, but there are also a number of other problems a payment plan can fix. Many of them can remove or prevent liens. Many people do not consider an installment agreement because they fear it will be unaffordable and endless. However, if you work with a tax debt professional, you can wind up with an installment agreement that works incredibly well for you.
Are you concerned that the IRS may want to levy taxes from you? Consult a professional. Call now or fill out the form below for a free tax debt consultation to find agreements that will take away the IRS' ability to levy taxes from you! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.