IRS Tax Levies
A levy is a legal seizure of your property by the IRS to satisfy a tax debt. Levies are not the same as liens, a lien is a legal claim against the property to secure the debt. A levy is the actual seizure of property to satisfy the debt. The Internal Revenue Code (IRC) section 6331 authorizes the IRS to levy any property or right to property that belongs to the taxpayer subject to limitations as laid out in the IRC. The IRS will impose a levy after 3 conditions are met:
- The IRS assessed a tax and sent you a notice and demand for payment;
- You did not pay said tax bill;
- The IRS sent you a Final Notice of Intent to Levy and notice of a right to a hearing at least 30 days prior to the levy being imposed
IRS Tax Liens
A lien is the federal governments legal claim against your property when you do not pay a legitimate tax bill imposed by the IRS. The lien protects the governments interest in the property essentially ensuring that if you attempt to transfer the property or sell it the Government is first in line to receive any funds from the property. The lien affects you by limiting your ability to get more credit, attaches to all property and even if you file for bankruptcy may continue even after the bankruptcy has been completed.
Unfiled tax returns
For various reasons taxpayers sometimes fail to file a tax return on time, in some cases this failure to file can extend into many years of tax returns. The US tax code relies on people voluntarily filing tax returns so the IRS takes a very hard line on people who fail to file. The penalty you pay will be very steep if you owe the IRS any taxes. Should the IRS owe you a refund they will only allow you to claim the refund going back 3 years. Additionally, if you don’t file a tax return your passport can be revoked, you could become for you and your dependents to claim federal aid for college and at some point, the IRS will find you and levy your income, accounts or social security benefits to satisfy the debt. When tax payers do not file a tax return the IRS will generate what is called a “Substitute for Return” and essentially complete a tax return for you using the least favorable status. Generally, the IRS only requires up to 6 years of back tax returns to be filed before considering you current. It is wise to file taxes every year even if you can’t afford the tax bill, this will save you a lot in penalties and allow you to take advantage of IRS payment programs.
An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct. Being selected for an audit does not automatically mean that the IRS thinks you are misreporting your taxes. Selections for audits are based on many factors and some are just selected randomly. The IRS does the audit either through the mail or in-person. Generally, the IRS can go back three years for an audit, but if a substantial error or fraud is suspected they can go back much more. You have rights during an audit as laid out in Publication 1, Your Rights as a Taxpayer. After the IRS completes the auditor will determine 1 of 3 results;
- No change: an audit where you have substantiated all items and the IRS recommends no change
- Agreed: an audit where the IRS proposed changes and to which you agree with the changes
- Disagree: an audit where proposed changes by the IRS are not agreed to by you
Large tax bill
If after filing your taxes you find that you have an unexpected tax bill you have a couple of methods to proceed after verifying that the return is correct;
- Pay the bill
- Set up an installment plan with the IRS
- Complete an offer in compromise
- Apply to have the debt delayed due to extreme financial hardship paying may have on you
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Taxvanta Website Disclaimer – As of August 26, 2017
*Estimates based on prior results; individual results will vary based on circumstances, including your ability to provide Taxvanta with information that is accurate and timely. We do not guarantee that your tax debts will be lowered by a specific amount or percentage, that your tax debt will be paid off within a specific period of time or guarantee you will qualify for any IRS programs. Penalties and interest will continue to accrue until your tax liability is paid in full to the IRS. Taxvanta is a tax resolution firm independent from the IRS. We do not assume tax debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice. By providing your contact information, you expressly consent to receiving calls at the number you provided as part of our service offerings, including but not limited to advertisements, solicitations, and service updates. The phone number belonging to the called person(s) could incur charges for such contact. Read and understand all program materials prior to enrollment. Not available in all states.