What is a Tax Levy?

tax returns

Individuals with tax debts and/or significant debts to multiple creditors may run the risk of their assets being seized through a tax levy. What is a tax levy? The IRS and local governments may use this procedure to collect money that is owed by an individual. An IRS tax levy is usually a last resort option, and you will receive several letters of warning before it actually happens. However, if it does happen, know that your assets can be seized without ever having to take you to court.

If you find yourself in this situation, your first instinct may be to panic. Instead, take a moment to think things through. Once you’re notified of an IRS tax levy, there are ways to prevent it from happening. Learn about your options with the professionals from Xpress Cash, below.

What Causes an IRS Tax Levy?

As we briefly noted above, a tax levy is caused by the individual incurring tax debt with the IRS or debts across multiple lenders. If you owe money to the IRS and to multiple creditors (like a credit card company and a mortgage lender), it’s more likely that the IRS will want to collect.

How to Release an IRS Tax Levy: Appeal

Of course, one way to have a tax levy released is to pay off your tax debt. But if this is just not an option right now, you may be able to appeal to have the IRS release the levy. Say you would experience an extreme financial hardship as a result of the levy – this may be cause for a levy release. It is recommended that you contact the IRS for guidance if you plan to complete an appeal. 

Other Ways to Prevent a Levy

If you cannot prove that a levy would be unfair, there are a few other ways you may be able to prevent an IRS tax levy from being placed on your assets.

  • Pay Your Taxes On Time and in Full – The most promising way to avoid a tax levy being placed on your assets is to pay your taxes on time and in full. Of course, this isn’t always an option. If you’re struggling with your taxes, it’s worth reaching out to the IRS to inquire about your options. You could also seek the advice of a nonprofit credit counselor or a local attorney.
  • Make Payments Over Time – If you’re experiencing financial hardship, you may be able to arrange a payment plan that allows you to pay your taxes over time rather than paying the bill in full in April. There could still be interest and penalties that you will owe, but if you formalize a payment plan with the IRS they will at least know that you are not avoiding the payment altogether.
  • Negotiate – Some individuals might choose to make an offer to settle their debts with the IRS. You would need to show that you are unable to pay what you owe with your expenses, income, and assets as proof. If your offer is accepted, the IRS would allow you to pay a lower amount than what your full tax bill really is.

Visit Xpress Cash for Additional Help

The team at Xpress Cash is here to help when you need information on tax levies. If you’re searching for a short-term financial solution to help get you through a difficult time, consider our loan options and contact our team if you have any questions. Or, stop by one of our Michigan locations if you’re in the area.