Preventing IRS Tax Levy on Your Assets

Tax levy is one of the toughest collection methods used by the IRS. This collection method is used to forcibly take a taxpayers assets in order to cover for the tax debt owed. The good news is, there are ways to protect your assets and prevent them to be placed under a levy. Usually, it involves coming to an agreement with the IRS. Some of the most common ways to settle tax debt and protect your assets from a tax levy include:

Pay In Full. If you owe less than $10,000 to the IRS, find ways to repay the money in full. This is the fastest and most effective way to get the IRS off your back. Some ways to obtain money include refinancing your home, sell some of your belongings like your car, motor boat, etc., or any other assets you have.

If you have no assets, you can wait until the statute of limitations expires. By law, the IRS has ten years to collect tax debt from the day it was first evaluated. When the ten-year period expires, the IRS will no longer collect from you and the levy will be released as well. Note that if the IRS has not successfully collected from you after 9 years, they will possibly attempt to extend the statute of limitations.

For this reason, be mindful of documents you will sign if a significant amount of time has passed after the IRS started collecting from you. If the agency was unable to collect from you during the last 9 years, they are likely to use extreme measures to extract money from you.

Try Various IRS Tax Debt Relief Program. The government understands that not all people can afford to pay their debts to the IRS in one single payment. Therefore, the government created several programs to settle tax debts and prevent tax levies.

One of the most common types of tax debt relief program is installment agreement. The total amount of the money owed is broken down into monthly increments. The taxpayer will pay his or her tax debt periodically until the debt is paid off completely. Payments must be made regularly or the IRS will resume collection actions.

If one cannot afford the minimum payment for installment agreement, they can apply for partial payment installment agreement. The payment method is similar with installment agreement; the total amount of money is broken down and paid on a per monthly basis.

However, the minimum amount of payment is much cheaper than regular installment agreement. If you apply for this program to settle tax debt, the IRS will temporarily stop all collection actions to assess your financial situation and consider your application.

Do not apply for this type of tax debt relief program if you do not think you will qualify for it. Doing so will result in harsh punishment due to tax fraud. While this type of IRS tax debt relief is one of the hardest to qualify for, the levy will be lifted if you are accepted for it.

Prove That IRS Collection is Futile In Your Case. One of the simplest ways to prevent tax levies and settle tax debts is to prove that you are not worth the collection efforts exhausted by the agency because you have poor financial standing. For instance, you can show that your house is worth $200,000 and has a $190,000 mortgage still on it in addition to the $10,000 repairs required to sell the house.

If the agency sees that they will not gain anything from seizing your house, they might lift the tax levy. If you can prove to the IRS that the levy will prevent you from meeting basic minimum expenses and could possibly hurt your future ability to earn money to fund basic necessities of life, the levy will be lifted.

File A Levy Appeal. A delinquent taxpayer has the right to appeal the levy and have it lifted if he or she can prove that the IRS applied wrong procedures that resulted in the levy. Note that this method cannot be done alone. It is best to hire a tax attorney to get all documents filed correctly.

A tax levy can cause devastation on ones financial standing. Therefore, it is important for one to settle tax debts right away. Do not wait until the IRS come knocking on your door, demanding for repayments. You need to have the initiative to resolve your tax issues to avoid tax levies. The first step towards settling tax issues is to be informed...

About the Author:
Lane Craft is a researcher and correspondent for an online-based site created to help delinquent taxpayers settle tax debt by free case consultations.

No. of Times this article has been viewed : 309
Date Published : Feb 26 2011

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