Tax Levy Relief
A tax levy allows the Internal Revenue Service (IRS) or the South Carolina Department of Revenue (SCDOR) to seize assets and personal and/or real property from the taxpayer to satisfy a tax debt. The IRS has the authority to levy income or assets if the taxpayer has been assessed a tax liability and the IRS has demanded payment. An IRS levy may result in the garnishment of wages, bank assets, etc. The IRS may issue a continuous levy against your personal and business income, which attaches to future paychecks until the levy is released.
The IRS may levy only after three requirements are met:
- The IRS assessed the tax and sent a Notice and Demand for Payment
- The taxpayer neglected and/or refused to pay the tax; and
- The IRS sends a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days prior to the execution of the levy
The taxpayer may request that an IRS representative review its case, or the taxpayer may request a Collection Due Process hearing with the Office of Appeals by filing a request for a hearing within 30 days of the date of the notice. The taxpayer may explain that:
- The taxpayer paid the taxes owed before the IRS sent the notice
- The IRS assessed the tax and sent the notice while the taxpayer was in bankruptcy and subject to the automatic stay during bankruptcy
- The IRS made a procedural error
- The statute of limitations on collection expired before the IRS sent the levy notice
- The taxpayer was not afforded an opportunity to dispute the assessed liability
- The taxpayer wishes to discuss collection options
- The levy will create an economic hardship for the taxpayer
- The taxpayer wishes to assert a spousal defense
The IRS Office of Appeals will issue a determination at the conclusion of the taxpayer’s Collection Due Process hearing. The taxpayer has 30 days after the determination date to bring suit to contest the determination.
The IRS is allowed to issue a release of levy on income or assets under certain circumstances, such as if a release of the levy will facilitate collection by the IRS, or if the levy has created an economic hardship due to the taxpayer’s financial condition.
Levies can be released via Full Payment, an Installment Agreement, an Offer in Compromise, acquiring Currently Not Collectible status, and through a showing of economic hardship.