A letter from Uncle Sam usually isn’t good. And when it’s in relation to levying an individual’s property due to unpaid taxes, it’s definitely an eye opener.
Fortunately, individuals who owe back taxes and are facing an IRS levy have options.
Pay in full
This may sound like an obvious answer, but for taxpayers who believe they can come up with the full amount, including interest and penalties assessed, may be able to get an extension. In some cases, this is necessary if the money will be obtained via a home refinance or personal loan because of the paperwork and processing time involved.
If an IRS collector believes a taxpayer in good faith will come up with the money, he or she may delay the levy process.
Set up an installment agreement
Similar to paying off a car or any other loan, a taxpayer can make arrangements with the IRS to set up an installment agreement to pay off the debt owed to Uncle Sam.
There are different types of installment agreements that offer different benefits for different situations. However, it’s important to note that interest and penalties will continue to be added on to the principal amount until the amount is paid in full.
Suggest an offer in compromise
A taxpayer can also ask for what’s known as an offer in compromise. In basic terms, the taxpayer is asking to pay a fractional part of the entire tax obligation. In some cases, the IRS denies such applications. However, if the IRS does accept the offer, the levy action is immediately halted.
The above options are just a few available to taxpayers facing an IRS levy. There may, however, be additional avenues available that could prove more beneficial for a particular circumstance. Consulting with a tax lawyer knowledgeable in this area of law is essential to making an informed decision.
It’s also important to note that time is of the essence when it comes to stopping an IRS levy. A taxpayer has only 30 days from the date the notice is received before the levy will take place. Reaching out to a tax professional who can offer guidance cannot be stressed enough.