The IRS Tax Levy is a legal way of repossessing property and other financial assets you may have to cover your tax debts. After taking control of your assets, the IRS sells them to recover the money owed or satisfy the debt. If the property is not enough to fully repay the debt, this organization will still go after your salary and any other asset that may have a financial benefit to them.
The IRS will first calculate the value of your property to establish the minimum bid. Before the actual sale date, they will give you a grace period of 10 days for you to raise the money you owe.
Does an IRS Lien Automatically Lead to the Seizure of My Property?
IRS issues both liens and levies. A lien is a claim that can be used as security for tax debt. On the other hand, a levy entails actual seizure of property to cover or satisfy the tax debt. Also, a lien is a formal declaration that a person owes money to a debtor and that the debtor has identified specific properties to compensate for the debt owed.
If the property is sold, the money is first given to the party that claims the property, followed by the second lien holder. In case any amount of money remains, you will be given the balance.
IRS Requirements for Releasing a Levy
The first step for the IRS to issuing a levy is by notifying the person whose property is to be seized. Afterward, the IRS is required to contact the person to assess various payment options. If they determine you are unable to pay your debt within a stipulated time, they will move to seize your property and any other assets that may be of value to them.
How Can I Appeal the Seizure of My Property?
After your property has been seized, you can contact the IRS and request a seizure release. In case they deny your request, you can file an official appeal. The appeal may happen before or after the seizure. Certain conditions compel the IRS to return the property. These include:
- If you pay the money owed to them on time.
- If the period for collecting the property ends before the actual seizure happens.
- If the seizure creates an economic hardship on your part.
- If the property value is more than what you owe the IRS.
Receiving an IRS Tax Levy is not necessarily the end of your assets or finances. There are various legal actions you can take to repossess your property or have the IRS postpone the seizure.
Some of the ways to stop an IRS Levy include requesting a collection due process hearing and making a deal with the IRS that will have you pay up the debt in installments.