When a taxpayer is behind on their tax payments, the IRS may try to collect the debt through different methods. One of the most common ways is by seizing assets, including cash and property. This process is called a tax levy, and it can be very stressful to deal with. Hiring a good Tax Levy Lawyer in Tennessee will help you to protect your assets and settle your debts without going to court.
The tax levy process begins with the IRS sending a notice of assessment to the taxpayer. This includes the amount and due date of the tax debt, and gives the taxpayer 30 days to pay it or request a hearing. If the taxpayer doesn’t respond, they will receive a final warning letter titled “Final Notice of Intent to Levy and Your Right to a Hearing.” This can be delivered in person, dropped off at the tax debtor’s home or business, sent by certified mail, or faxed to their last known address.
Once a person has received the notice of intent to levy, they have 21 days to contact their bank and notify them that the IRS is seeking to levy their accounts. The bank will then temporarily hold the funds in the account for 21 days, preventing them from being withdrawn. In some cases, the levy can be extended to other accounts owned by the individual. A levy can also be applied to a taxpayer’s wages, pension plans, dividends, business accounts receivable, rental income, commissions, or the cash loan value of life insurance policies.
A tax levy can be reversed or released once the IRS determines that the seized property is not needed to satisfy the debt. However, the IRS will still be owed money. Reversing a tax levy or releasing the asset does not mean that the IRS will forgive the debt, but it may agree to a repayment plan.
The best way to avoid a tax levy is to file returns on time and pay taxes when they are due. If you are unable to pay what you owe, a Memphis tax attorney can help negotiate a tax settlement. Depending on the circumstances, this could include filing for bankruptcy or proving that you are financially incapable of paying your tax debt and seeking currently not collectible status. A professional can also help you to prepare for an audit or deal with a disputed tax matter.