10 Ways to get a Tax Levy Released
Tax levies are the dominant collection form for the IRS. It is the IRS's forced collection mechanism where they can take your assets and sell them in order to fulfill your unpaid back tax debt.
To get a IRS tax levy released, you will typically need to come to some king of an agreement with the IRS where they will agree to stop taking collection actions against you while you perform on a payment agreement. Here are several ways you can negotiate a release on your tax levy with the IRS.
- The obvious easiest way is to pay the tax amount in full - As the most common sense way of settling back taxes to get a levy released, this is a no brainer if you have the cash on hand. When you pay the tax amount owed in full, the IRS will halt collection all actions against you and you and the levy will be released.
- Set up an installment payment agreement - An installment payment agreement is a payment plan with the IRS. An installment payment plan will allow you to pay off the tax amount owed over time in scheduled payments. You must make timely payments on the payment plan or the IRS will re-enforce the tax levy.
- Offer in Compromise - If can not afford your tax debt and you meet the strict requirements for this type of relief, the IRS may release the levy once an offer in compromise has been satisfied. This is one of the hardest types of relief to receive from the IRS due to the fact that it allows you to settle for pennies on the dollar, much less than you owe.
- Partial Payment Agreement - A partial payment agreement is similar to an installment agreement, although if you can show that you can not legitimately afford to make the payments required for an installment agreement, the IRS may allow for smaller payments that equal less than the original amount of the tax amount owed.
- Prove that all your assets have no equity - If the assets the IRS is trying to levy have no equity in them, you may prove that there would be no point for the levy since there will be no gain from their sale and it will not pay anything towards your back tax debt.
- Prove Financial Hardship - If the levy will create economic hardship and you can prove that it will greatly affects your ability to maintain a roof over your head, or to maintain your families financial stability, it is likely the IRS may remove the levy.
- Posting a Bond - If you post a bond to the IRS, the levy may no longer be in effect. If there is a levy is in place and you can not financially pay your taxes, it is highly unlikely you will qualify for a bond. If you do qualify for a bond, you may be better off paying the full tax amount owed.
- Appeal the Levy - You can appeal an IRS levy for a review to determine if the collectors followed the correct procedures. If they did not, you may be able to get the levy removed.
- File Bankruptcy - If you successfully file for bankruptcy the settlement may qualify to release your tax levy by court order and return seized assets to you.
- Let the Statute of Limitations Expire - The IRS has just 10 years to collect any taxes from the initial date of assessment. Once the 10 year period has passed, the IRS may no longer collect from you. However, the IRS may try to extend this the statute of limitations on your case, so be aware of any papers they ask you to sign. If you have not paid in the first 9 years, it's highly unlikely they will be able to collect from you over the last year.
Getting a levy lifted can be very difficult, so it is suggested that you use a tax professional to help with the process. Depending on your unique financial tax situation, a tax professional can find the best option for you to use to limit any assets seized by the IRS.