Darrin Mish: IRS levy. What is it? Well, an IRS levy is a wage garnishment. It’s also a taking. So those are a couple of terms that are very simple to understand. A lot of times people get the terms lien and levy confused, and they use them interchangeably. They are really quite different. A levy, like I said, is a taking by the IRS of some property that you own, either real property which is real estate or personal property.
The IRS can only levy if they’ve prior or previously given you a Final Notice of Intent to Levy. Now, the Final Notice of Intent to Levy is also known as Letter 1058. It has to come to your last known address, which is normally the last address where you filed a tax return, or last address used on the last filed tax return. But not always; you can actually file a change of address using a Form 8832. Send that certified mail to the IRS as well.
The IRS has to send you a Final Notice of Intent to Levy via certified mail to your last known address. Then they have to wait at least 30 days. The 30 days is to give you time to file an appeal which is known as a Request for a Collection Due Process Hearing. If you choose to file a Request for a Collection Due Process Hearing, you will use Form 12153, and you will mail it to the address on the levy notice.
The 12153 Form has actually been simplified recently, and it’s fairly easy for a lay person to fill out. They have check the box alternatives to levy, for example an offer in compromise (OIC), an installment agreement, a lien subordination or… I guess there’s not a box for hardship, but that can certainly be an outcome of a Request for a Collection Due Process Hearing. One of the reasons that you might want to go ahead and request a collection due process hearing or that IRS appeal, is because you get to deal with IRS Appeals, whose main function is to settle cases. That’s unlike the main line IRS employee, whose job is to basically squeeze you until you pop like a turnip.
If you have an IRS levy, if it’s on your wages, it’s a continuous levy. That means it will continue until the debt is paid, or until you can convince them successfully that they should release the levy. You can call the toll free number on the levy notice, which is different than the Final Notice of Intent to Levy that I was just referencing. If you call the phone number on the levy notice, you can talk to the IRS and you can request that they release the levy. Now, in my opinion, this is usually not a great idea because you’re not as well versed in dealing with the IRS as a tax practitioner is, or an IRS problem solver like myself is. But you can do it. They’re going to ask you a number of financial questions, and they’re essentially going to be asking you for all of the information and documentation requested on a Form 433F.
Now, back to the Final Notice of Intent to Levy. If you get a Final Notice of Intent to Levy by certified mail, your first instinct is, well, you’re going to be scared. Your first instinct is going to be, “I should just call them, and I can work this out.” In my experience, what’s going to happen if you call the toll free number on the Final Notice of Intent to Levy is that they’re going to give you happily an extension just beyond the 30 days. That’s because they’re like, “Here, kitty kitty kitty.” They’re trying to lure you into the trap so that they can go ahead and lower the boom on you, and go ahead and file that levy against you and squeeze you until you’re yelping for surrender.
Now it’s not a great idea to do that, obviously, but if you do do that you need to have something in mind or some way in mind to resolve your IRS problem. They will often lead you into that trap because, again, the last thing they want is for you to file an appeal with IRS Appeals. Because they know that IRS Appeals is much more reasonable and willing to work with you than they are.
So that’s the difference, or that’s actually what an IRS tax levy is. I just wanted to make sure that you knew that, and I would also encourage you to go to our website at getirshelp.com, and download our free special report. It might just solve your IRS problem for good.
Thanks for watching.