There are certain situations when the Internal Revenue Service (IRS) can use a levy to collect tax debt. A levy is, essentially, a legal tool that allows the IRS to seize the owing taxpayer’s property or assets. The IRS can move forward with this tactic whether the taxpayer is an individual or business and can seize any state tax refund as well as real estate and funds held in bank or other financial accounts. They can also garnish wages and seize other forms of personal property.
How does this process work?
When the taxpayer receives a Notice of Intent to Levy, a CP504 Notice, the IRS expects the taxpayer to take prompt action. The taxpayer can either pay the tax debt or face additional penalties. It is important to note that these penalties can extend beyond monetary repercussions and have additional impacts. A common example is the denial or revocation of a taxpayer’s United States Passport.
Can I fight back?
The Final Notice of Intent to Levy comes with a Notice of Your Right to A Hearing. As the name of this final notice implies, which includes the option of requesting a hearing, yes, you can fight back. However, it is important to do so wisely. The IRS is a zealous advocate for their own interests and will work hard to gather tax payments. This means that those who challenge a levy or other collection efforts will need to have a plan.
The taxpayer has multiple opportunities to challenge this process. They can challenge the notice, request a levy release, or challenge an IRS denial to release the levy. Each process comes with its own hurdles, but you do not need to go through it alone. You have the right to legal counsel to help navigate this situation and better ensure the best outcome.