Not sure how to handle your IRS or OTC Tax Liability Problem? Get the answers you need to protect your rights!
Attorney Travis Watkins has compiled a list of the most frequently asked questions in response to the overwhelming number of people who are facing tax liens, wage garnishment and other penalties for unpaid taxes. If you are dealing with an insurmountable tax debt, read on to learn how to protect your legal rights.
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Can the IRS force a sale of a house my husband and I own, to satisfy my husband's separate tax debt?
A recent 6th Circuit case may hold that this is possible. Historically, state law has strongly discouraged forced sales in this manner for obvious reasons. However, the IRS has been pushing the outer limits of homestead exemptions and some courts are going along with it.
Don't take chances with your home and property. If you or your spouse have tax problems, you need a collection alternative that will keep the IRS from forcing a sale of your property to collect on your tax debt.
The IRS tells me that my tax lien is released by operation of law, but real estate brokers won't close on my house without a paper release. I'm frustrated. What can I do, and where do I go to get one?
This is a fun little game the IRS plays occasionally. Technically, they are right. If your taxes are paid, discharged or have timed out by the statute of limitations, there is no lien by operation of law. However, no title company or real estate broker in their right mind is going to close on a property without seeing a filed paper release in a search of county records. The service is not always diligent in issuing timely paper releases. However, the law states that they must do so within 30 days of events rendering the tax liability unenforceable (paraphrase mine).
If you are scurrying about trying to close on a house when an old lien pops up, your sale could be in jeopardy if you have not gotten the release. If you call the IRS, they may send you to the court house or the county clerk or any one of a number of rabbit holes to get this coveted document. However, IRS releases are issued by...the IRS! There are a couple tricks to getting a paper release, and the IRS must issue a paper one if you know the trick.
If the IRS does not release an unenforceable lien within 30 days, they must pay actual damages and penalties in Federal court, did you know that? The best person to file a lawsuit such as that is a local lawyer licensed to practice in Federal court in your jurisdiction. I'm licensed in all 3 Oklahoma Federal Courts. Save your time and sanity in this process and call me today at 405-607-1192.
Can the IRS levy my Social Security benefits or other retirement accounts, such as an IRA?
Yes. Regardless of the protections that these types of funds enjoy from collection under state law, the IRS unapologetically can and will levy these accounts to satisfy your tax debt.
Now, the IRS cannot get to these accounts until they vest, i.e. until you have identifiable, enforceable rights in them. The IRS cannot reach them until you legally can, but vested accounts are sitting ducks for a levy, once the IRS jumps through a couple simple procedural hoops to get at them. These types of levies are continuing. In other words, the IRS does not have to give notice over and over once they hit.
If you are on a fixed income and these retirement funds provide your only source of livelihood, you can see how devastating these levies can be. Time is of the essence in asserting your rights. Find out what these rights are and how to assert them from a local, licensed lawyer here in Oklahoma City. Call Travis Watkins today at 405-607-1192 for more information.
When is it safe to make deposits into my account again after a levy?
This one is a matter of personal concern. Technically, an IRS bank levy is like a snapshot freezing your account only up to the amount of funds in the account for 21 days from the date the bank receives notice of the levy. Funds deposited after the notice hits are free from the levy (i.e. you can use those funds). By way of example, say a levy hits your account on the 1st of the month. Your money will be tied up until the 22nd, when the bank must send the money in your account (up to the amount of the levy of course), unless the IRS releases the levy. You may still deposit money on the 2nd that you are free to use.
The IRS can issue levies on the account over and over again, and they must do so to reach bank funds. In other words, bank levies are non-continuing (as opposed to wage levies, for instance). Good news is that the IRS will rarely re-visit the account immediately following a fruitless levy, unless there is a revenue officer assigned to the case who has information that there are funds available for levy in the taxpayer's account.
As you can see, bank levies are a serious matter. Don't leave these deadlines and your financial well-being to chance. Call an Oklahoma tax lawyer today. Call Travis Watkins at 1-800-721-7054.
When will the IRS levy?
The IRS must jump through 3 procedural hoops before a levy may lawfully issue.
1. The IRS must first assess the tax and issue a tax bill and "Notice and Demand for Payment;"
2. The IRS must will issue a "Notice of Intent to Levy" (this is not to be confused with the 3rd document, below);
3. The IRS must issue a "Final Notice of Intent to Levy." This document is the one to really pay attention to. It defines certain procedural rights the taxpayer has before a levy will issue, including the right to a Collection Due Process Hearing (or CDP). A taxpayer must request a CDP within 30 days of the notice to stop a levy from issuing.
If you have received any of the above notices, time is of the essence. You need to talk to a licensed lawyer in your area who deals with the IRS every day. Call OKC lawyer for taxes, Travis Watkins, at 405-607-1192, before it's too late!
Can I go to court to stop a levy?
Probably not. Traditionally, the IRS' appeals process has been the exclusive remedy to assert a taxpayer's rights concerning a levy. Several U.S. Supreme Court cases have confirmed this. There are exceptions to this general rule that are too narrow to mention, but they include situations where the IRS has clearly violated a tax provision.
If you have been wrongfully levied, you need a strong advocate to assert your rights at the appeals level. Remember, lawyers have appeal. Call Oklahoma Tax Lawyer Travis Watkins at 405-607-1192 today to learn your rights.
Is a tax levy different from a taxy lien?
Yes. A lien is a charge on your property, as security for a tax debt. Your home mortgage and the lien on your car are examples. Historically, the IRS would not release a lien until your tax liability was paid in full. There is a program now that allows the IRS to release the lien without full payment of the tax. This program won't be around forever, so you need to act fast!
A levy, on the other hand, is the IRS' actual seizure of assets. The IRS can levy your wages, your bank account and virtually any third party that owes you money or holds funds for your benefit, e.g. your accounts receivable.
If you have a lien or levy, there are certain deadlines that may prevent you from enforcing your rights. Call Travis Watkins today at 1-800-721-7054 to find out more.
Will a bank levy
No. A bank levy is a ONE-time levy that can be issued many times. The IRS recovers the sum of the account on the day it hits your bank, limited only to the amount owed to the IRS. The bank must hold the funds for 21 days before they remit the funds to the IRS. This does not freeze the account, as many banks falsely advise their customers. It only captures the amount in the account on that day, up to the amount of what you owe. So, it is possible to still do business in the account after the levy.
As you might guess, the 21 day safe-harbor is an excellent time to explore a collection alternative with the IRS in order to prevent a future bank levy.
What do I do when I receive notice of a wage levy from my employer?
As we previously covered in another FAQ, the wage levy is one of the most powerful collection tools in the IRS' arsenal. Unlike a bank levy, which is a one time hit on whatever is in your account, the wage levy stays in place until your debt is satisfied or you quit.
For many folks the wage levy presents a vicious cycle. You work as hard as you did before the levy hit, but now you are only taking home a fraction of what you worked for. Many taxpayers up and quit their jobs, only to find that the IRS has caught up with them again when a new employer files a W-2 on them.
You must take immediate action. If you have unfiled returns, you must get them on file, or the IRS will not consider any alternative to the powerful wage levy. Regardless of whether or not you are completely filed up, you (or a local licensed tax professional) need to call the number for the IRS listed on the levy notice. Note, tax professionals have a priority number for calls such as these, since time is almost always of the essence. You need to have a plan of action in place when you call them.
For instance, if you have unfiled returns, you need to give them a date when you can have the returns filed. You can also request hardship status or suggest an installment agreement, which are covered in more depth on my site. You may also advise them that you are filing an Offer in Compromise. If the IRS representative deems your requests to be in good faith, the wage levy will stop, pending the outcome of the collection alternative you seek.
You will also be asked to fill out a 433-A (if a Revenue Officer is involved) or a 433-F, if you are dealing with the IRS' Automated Collection Service. This document determines your eligibility for nearly every collection alternative program the IRS offers. I don't recommend that any taxpayer draft this document alone. There are many subtle nuances to these forms, and you should hire a qualified tax professional to navigate you through this process.
How much of my paycheck can the IRS take?
Tables for figuring the amount exempt from an IRS levy (like garnishment) on wages, salary and other income are located in Publication 1494 at www.irs.gov. Simply put, the amount of money exempt from the levy, i.e. the amount you get to take home from your paycheck, is determined by your filing status (single, head of household, married filing jointly or separately) and the number of exemptions (dependents, e.g.) you can claim.
When your employer recieves a notice of the levy, your human resources person will give you a form to fill out. There you will mark your exemptions and filing status. From there, the tables in Publication 1494 take over. For example, a single taxpayer paid weekly with 3 exemptions (including one for the taxpayer) has $325.00 exempt from the levy. In other words, not much.
The wage levy will remain in place until the debt is extinguished, or you work out payment arrangements with the IRS, or you quit your job. See our other FAQ's for what to do when a wage levy occurs.
What is a tax lien?
A tax lien is the IRS' claim to your property, so should you ever try to sell your house, for example, they can obtain any equity you have in it. The IRS routinely enforces liens when people owe back taxes, and sometimes, they file liens on top of liens. Due to a new law that was passed, the IRS' threshold amount to file a lien has increased.
Can you stop my levy?
Yes. If you have received a "Final Notice of Intent to Levy" from the IRS in the last 30 days, we can temporarily stop collection efforts by the IRS (assuming your returns are filed and up to date). If 30 days have passed (or you have un-filed returns), it is still possible to stop IRS collection activity. Call a tax professional immediately upon Notice of a Levy. Time is of the essence.
My bank account got levied...can you stop it?
Yes. Here is how a bank levy works: Bank levies are one time levies. If the IRS wants to garnish your account a second time, they have to send the bank another Notice of Levy, and chances of that are slim. A bank has to hold any and all funds in the account at the time the Notice of Levy is received for 21 days. We can negotiate a resolution that would stop the funds from being turned over to the IRS at the end of the 21 day period...but time is of the essence. You need a local, licensed, lawyer to help you. Call me today: 405-607-1192.