Understanding IRS Liens and Levies
There are many misunderstandings about IRS liens and levies. It is important to understand the differences between the various actions the IRS can take, and what they mean for a taxpayer.
Tax Liens - Filing liens are a normal course of business for the IRS when you owe taxes for an extended period of time. Liens are filed to protect the interest of the government. They are reflected on your credit report, and negatively affect your credit score. A tax lien is filed with your local clerk of court, and is a matter of public record. Unlike a collateral lien which entitles a lender to reposes a vehicle if you do not pay your liability, a tax lien is not against any particular piece of property that you own. A tax lien is filed against you as an individual, and "attaches" to your property. It entitles the IRS to any proceeds from the sale of attached assets such as real-estate.
Bank Levies - A bank levy is a one time action that seizes the balance of your bank account on a specific date. You only have 21 days from the date the letter was issued, or about two weeks from when you realize that your funds are missing, after considering the time it takes for mailing the levy notice and the time required by the bank to process it. It is important to contact the IRS as soon as possible and resolve your account if you wish to get the funds released. During this 21 day period, you can deposit additional funds without them being seized. The levy only freezes the balance as of the date the notice was received as well as the interest accrued on that balance during the 21 day holding period. After this period, the bank sends the funds to the IRS.
Wage Garnishments - A wage garnishment is a continuous action. It will continue to take up to 100% of your net income until it is released. Once they start taking the money, those funds are not recoverable under most circumstances, so it is important to act quickly to get them released. The Internal Revenue Manual (IRM) provides a minimum necessary amount be paid to a wage earner to afford basic living expenses. A subcontractor is treated as a business and does not hold that requirement.
Asset Seizures - In rare circumstances the IRS will seize assets such as vehicles, real-estate, or other personal property. This only happens in complex and high dollar cases. Only a Revenue Officer (collections field agent) can perform an asset seizure, not the general collection department (ACS). The IRS will only do this in rare circumstances because they are not in the business of selling property, they are much more interested in collecting cash to pay tax liabilities.
It is important to hire a competent representative to help fight for you if you owe back taxes to the IRS. Some local CPAs, EAs, and tax professionals deal with representation, however many are not very experienced in doing so. To get the best result possible, it is best to trust a company that specializes in tax negotiations and knows the rules of engagement. It is important to know that there are many bad companies in the industry that only want to take your money based on empty promises.
Kenneth L. Bailey is an Enrolled Agent and has been working in the tax industry for over 7 years. He has previously managed a Liberty Tax Service franchise for two years, and has spent the last three years working exclusively in tax representation. He deals with clients that have IRS debt of anywhere from ten thousand to several million dollars, as well as represents clients through the audit or exam process. He knows the IRS rules and regulations, as well as how to represent clients to the highest standards in the industry. He is a member of the National Association of Enrolled Agents (NAEA), Florida Society of Enrolled Agents (FSEA), California Society of Enrolled Agents (CSEA), and National Association of Tax Professionals (NATP).
How can I contact Mr. Bailey?
If you are in a predicament with the IRS or state tax departments, contact Mr. Bailey at the National Tax Support by visiting www.Pay0Tax.com today.
National Tax Support, LLC
P.O. Box 6074
Vero Beach, FL 32961
Toll-free: 855-PAY-0-TAX (855-729-0829)
Local: (772) 242-9034
Fax: (772) 242-9033