A tax levy is a legal seizure of your property in order to satisfy a tax debt. While liens are claims used as security for a tax debt, levies involve the actual physical seizure of assets and properties. Failure to pay taxes or arrangements to settle a debt that you owe can result in the seizure of your car, boat, house, bank accounts, rental income, and related assets.
If you receive a final notice of intent to levy, you should act quickly to protect your legal rights and your property. Contacting a professional tax service should be your first step. Waiting and pretending this is not a problem is no longer an option.
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.
The first step towards solving your tax problems is to be aware of all of your options. Contacting a tax professional is the best way to do this. Start taking action now to get your problem resolved.