Receiving a notice from the IRS is rarely a pleasant experience, but few situations are more stressful than learning that you’re at risk of a tax levy. Unlike a simple reminder letter or a notice of tax due, a levy means the IRS is taking steps to seize your property or assets. That’s right—if you owe back taxes and don’t resolve the debt, the IRS can legally claim a portion of your wages, funds in your bank account, or even real property you own.

But there’s good news: A levy doesn’t happen overnight, and if you know your rights, understand how the levy process works, and take prompt action, you can prevent or stop a levy before it wreaks havoc on your finances. And in many cases, seeking professional guidance can make all the difference. Tax Law Advocates (855-612-7777, taxlawadvocates.com) stands ready to help you navigate complex tax issues and protect what’s rightfully yours.

IRS Liens vs. Levies: Understanding the Difference

Before diving into the details of a levy, it’s crucial to distinguish between two common IRS enforcement actions: liens and levies.

  • Lien: A federal tax lien is essentially a legal claim against your property when you fail to pay a tax debt. This claim attaches to all your current and future assets until the debt is resolved. While a lien can damage your credit and make it challenging to sell or refinance property, it doesn’t directly seize your assets. Think of a lien as a red flag that alerts creditors the IRS has a stake in your property.
  • Levy: An IRS levy takes the process further. Rather than simply noting a claim, the levy action allows the IRS to actually take your property to satisfy a tax debt. This can include garnishing your wages, withdrawing funds from your bank account, or even seizing your car, boat, or real estate. A levy is the IRS’s way of forcing payment when other attempts at collection haven’t been successful.

Common Triggers for IRS Levies

The IRS typically issues several notices before initiating a levy, giving you opportunities to address the issue. Some common triggers for a levy include:

  1. Unpaid Tax Debts: If you owe back taxes that remain unpaid for a significant period, the IRS may start with a lien and, if still unresolved, move to a levy.
  2. Ignored IRS Notices: Ignoring letters and notices from the IRS, particularly a Final Notice of Intent to Levy, is a surefire way to end up in a levy situation. The IRS usually sends multiple notices, so heed these warnings and respond promptly.
  3. Repeated Noncompliance: If you’ve previously set up payment arrangements but didn’t stick to them, or if you’ve repeatedly missed deadlines and requests for information, the IRS is more likely to consider more drastic measures.

Assets at Risk

IRS levies aren’t limited to just one category of property. They can reach a wide range of assets, including:

  • Bank Accounts: The IRS can issue a levy to your bank, freezing your account and applying the available funds to your tax debt.
  • Wages and Salaries: Wage garnishment is a common form of levy, meaning a portion of your paycheck is sent directly to the IRS each pay period.
  • Retirement Accounts: In some cases, the IRS can even reach into certain types of retirement accounts, although they typically approach this with caution.
  • Business Assets: Machinery, accounts receivable, and other business property can be levied if you’re a business owner.
  • Real Estate: In severe cases, the IRS may seize and sell real estate to recover unpaid taxes.

Preventing or Stopping a Levy

Prevention is always better than dealing with the aftermath. The good news is that you have several options to head off a levy before it severely impacts your life.

  1. Open Communication: Don’t ignore IRS notices. As soon as you receive a letter indicating that you owe money, respond. By communicating and showing a willingness to resolve the issue, you can often reach an agreement that satisfies both you and the IRS.
  2. Set Up an IRS Payment Plan: The IRS offers various payment arrangements, including short-term payment plans and long-term installment agreements. If you qualify, setting up a payment plan can stop a levy from being implemented and give you breathing room to pay down the debt gradually.
  3. Offer in Compromise (OIC): In some cases, you may settle your tax debt for less than the full amount owed by applying for an OIC. While not everyone qualifies, if you can demonstrate financial hardship, the IRS might accept a reduced payment and remove the threat of a levy.
  4. Request a Hearing: If you’ve received a Final Notice of Intent to Levy, you have the right to request a Collection Due Process (CDP) hearing. A CDP hearing can stall the levy process while you present your case and explore resolution options.
  5. File an Appeal: If you disagree with the IRS’s decision, you can appeal. The appeals process is designed to ensure fairness and consider any extenuating circumstances you may have.

How Tax Law Advocates Can Help

While understanding your options is crucial, the complexities of dealing with the IRS are not something you need to face alone. At Tax Law Advocates, our team is comprised of federally-licensed enrolled agents, tax attorneys, and accountants who work with both the IRS and state authorities. Their in-depth knowledge of the tax code, IRS procedures, and negotiation tactics can be invaluable in preventing or halting a levy.

Here’s how Tax Law Advocates can assist:

  • Personalized Strategies: Every tax situation is unique. Tax Law Advocates will review your case and develop a tailored plan that might include applying for an installment agreement, exploring an Offer in Compromise, or appealing a levy notice.
  • Professional Representation: Facing the IRS can be intimidating. With Tax Law Advocates by your side, you’ll have seasoned professionals who can communicate directly with the IRS on your behalf, ensuring that your rights are protected and that you don’t accidentally say something that harms your case.
  • Expedited Resolution: Time is of the essence when a levy is imminent. The experience and established contacts that Tax Law Advocates have can help speed up negotiations and put a stop to the levy process sooner, protecting your assets from seizure.
  • Comprehensive Support: Beyond just levy issues, Tax Law Advocates can assist with a range of tax problems—ensuring that once your immediate crisis is resolved, you’re set on a path toward long-term compliance and financial stability.

The Cost of Inaction

Letting the situation evolve without intervention can be disastrous. Once a levy is in place, it can empty your bank account, garnish a sizable chunk of your paycheck, or even force the sale of property you depend on. Plus, penalties and interest continue to accumulate, increasing your total debt. The strain on personal and family life, as well as your credit and financial future, can be significant.

However, by acting quickly, you can mitigate these risks. If you know a levy is on the horizon—or if you’re already facing one—immediate action can safeguard your finances and give you back control over your assets.

Take the Next Step

If you’re concerned about an IRS tax levy or you’ve recently received threatening notices, don’t wait for the IRS to take your property. Now is the time to be proactive. Consider reaching out to professionals who can help guide you through the process, negotiate on your behalf, and ensure that you fully understand your rights and options.

Protect your hard-earned assets and regain peace of mind by consulting with Tax Law Advocates today. Our experienced team is ready to fight for your interests, work out payment arrangements, or seek other forms of relief. Don’t face the IRS alone—call Tax Law Advocates at 855-612-7777 or visit our website at taxlawadvocates.com to schedule a consultation and take the first step toward preventing or stopping an IRS levy. Your financial future may depend on timely and informed action.