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What You Should Do When You Receive an IRS Notice of Intent to Levy

Jan 5, 2008
If you have ignored earlier notices from the IRS urging you to pay your unpaid taxes or informing you about some errors in the calculation of your taxes, then the IRS will start using their heavy weapons. They will send you a Notice of Intent to Levy. This notice simply means that they are tired of talking to you and now are ready to take serious action against you by choking your financial blood flow.

This basically means that they can snatch away your bank balance, your wages, your assets such as your car, your boat or your home and also bonds, stocks or life insurance policies which you might have. For example, if a wage levy or wage garnishment as it is called is levied, your employer will then have to withhold a large portion of your paycheck, which will be transferred to the IRS in case you are unable to solve your IRS problems within 21 days.

In case of a bank levy, your bank manager will be instructed by the IRS to freeze the amount in your bank account, which the IRS feels, you owe to them. You can still use your bank account to deposit or withdraw money, but the amount, which you supposedly owe to the IRS will remain frozen till you can sort out the matter. If you do not sort out your problem within 30 days, then that amount will get transferred to the IRS, which will make it more difficult to get back.

So, the first thing to do, once you do get a Notice of Intent to Levy is to contact your tax attorney or if you are able to handle it yourself, then directly contact the IRS. The intent is to make it clear to the IRS that you are serious about resolving the problem as soon as possible. In case you cannot pay your taxes due to an extreme reason such as bankruptcy or a serious illness in your immediate family, then those relevant documents have to be submitted to the IRS. Your Tax Attorney will be able to show you the correct way out once he knows the details of your case. There are many attorneys who are willing to do a free assessment of your case. You could try contacting a few to take their opinion. But since time is of the essence, it is imperative that you contact them immediately.

You could also go to the official site of the IRS, to check out the meaning and derivatives of all the forms and documents related to your case. Your Tax Attorney could also help you to fill out a form known as the request for collection due process form, which entitles you to a meeting with the IRS officer before any actual action against you is taken. If you do not submit this form with 30 days, you can still arrange a meeting, but your bank account or wage will be frozen.

The form contains a section, which may allow you to pay your back dated taxes in installments in case you are unable to pay your tax at one go. However, this is subject to your discussions with your Tax Attorney and the IRS officer. These installments will also include your penalty and interest amounts. There is also one more section called the 'Offer In Compromise', where you can offer to pay the IRS and amount, which is less that the amount that they are demanding from you. One more section is the innocent spouse relief, where, if you feel that you are being penalized by the IRS because of actions take by your spouse or ex-spouse, then that too can be explained to the IRS in this section.

In case you feel that the IRS has made an error in sending you the Notice of Intent to Levy and that you do not owe them any money, then you will have to contact your Tax Attorney and he can direct you to take the matter to court, depending on your case. This can mean a long drawn battle and should be considered only as a last step.

So, whatever your strategy, it is very important to get into action the minute you receive the Notice of Intent to Levy from the IRS. Going slow is going to only harm you and make the case of the IRS even stronger.
About the Author
Sacramento CPA Firm Murray and Young can help you with Tax Planning and IRS Representation services. You do not have to be afraid anymore. For 2008 Tax tips visit our website: http://www.april15.com.
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