Levy Release

We get so many questions about IRS levy release . First of all, let’s be clear what we’re talking about.
Just what is an IRS Levy?
What are your rights if the IRS has levied your wage/salary or bank account?
And how do you  go about getting an IRS levy release?

The IRS(Internal Revenue Service) is authorised to issue a levy on the wages or salary, or bank account or property, of any US federal taxpayer who has failed to file the appropriate tax return, or to pay due taxes on time. The threat of this IRS levy acts as sufficient incentive to encourage the majority of tax-payers to fill their returns in a timely manner.
It is not an experience anyone would want to undergo on a regular basis, nor is trying to get a levy release.
The most frequent levies are on wages or bank accounts, and many taxpayers are seeking levy release from these situations.
So an IRS tax levy is a perfectly legal seizure of your property(which could be real property, personal property, bank accounts, accounts receivable and wages) to satisfy an IRS tax debt.

Levy Release – IRS Notices

Prior to issuing a levy on your property, the IRS will have served you notice about your non-compliance, so the levy should come as an unwelcome surprise only if you have ignored their correspondence.
You will normally then receive a document called a Notice and Demand for Payment. If you fail to act on this, the IRS will send you a Final Notice of Intent to Levy and Notice of your Rights to a Hearing. This must be sent at least 30 days before they issue a tax levy. Failure to act quickly means you are now nearing the territory where a levy release is your last resort
You would be well advised to respond to these notices, or else the IRS could issue a bank levy, whereby they effectively seize your bank account, the funds are frozen and placed beyond your reach in escrow for 21 days. If you manage to get your levy release within that period, the bank will return the money back to your account. Otherwise all the monies owing to the government will be diverted by the bank to the IRS.

Levy Release – How Much?

The IRS could alternatively send a notice to your employer demanding that they levy your wages, and the employer is obliged to act upon these instructions, which could mean that a sizeable chunk of your next payslip is missing, and will continue to be missing until you gain that levy release .
Check all your financial records to see if all your taxes have been filed properly – even the IRS can make mistakes.
You will usually obtain from the IRS a levy release from a wage levy if you are in current tax compliance, with at least the last 7 years tax returns filed (assuming you had income or were self-employed), and provide them with the financial information they require to make a collection determination, and agree to a payment plan or prove financial hardship.
If you have failed to complete tax returns for some years, you should consider hiring an Attorney, CPA or Tax Representation Firm that is willing to prepare your taxes for the missing years.
There are special circumstances in which you might qualify for an IRS Debt Settlement program, such as Offer In Compromise, an Instalment Agreement, an Innocent Spouse or Currently Not Collectible Status. It is a straightforward task to see if you qualify under any of these conditions.

Many people are under the mistaken impression that if, say, in the case of a married or co-habiting couple, the main funds are held in a joint account, then only part of the funds would be subject to the levy, and so they put off the attempt to obtain a levy release. If the IRS – or state government – places a levy on a bank or other financial account, the account is immediately frozen for 21 days during which ownership of the funds in the account is sorted out. Any of the joint owners of the account have these 21 days to furnish proof that any of the funds in the account are theirs exclusively, and not subject to the levy. If, at the end of the 21 day freeze period, you have not provided such proof, then the entire balance of the account will be subject to seizure. Remember that throughout the 21 day freeze period, none of the account holders can access any of the funds in the account. But you could, and you should, use this time to try and win a levy release.

It would be foolish to attempt to remove names from accounts, deeds, titles, and so on. Deliberately hiding ownership of assets in order to avoid a lawful levy is a felony, so don’t even be tempted.

So if you fail to obtain a levy release, just how much of a wage is likely to be deducted as a result of a wage garnishment? In practice, it could be around one third of the wage, but every situation is different.

The normal wage exemption on an IRS levy is the pro-rated amount equal to the standard deduction and number of exemptions the taxpayer is entitled to.  So, for example, a single person with only their personal exemption, would “take home” $179.81(Note- These figures are accurate at the time of writing, and are subject to change) per week regardless of what their actual earnings might be. For a married person with four exemptions (for a mom, dad, two kids) would take home $500 per week regardless of what their actual earnings was.

So you see that each case is unique, which accentuates the need for facing up to the problem and contacting  the IRS to  obtain a levy release and to negotiate payment arrangements  based on your particular circumstances once you have your levy release.

It is quite easy to get a levy release and it can be done very quickly, especially if you use the services of a professional IRS Representation Firm, but it might only be a temporary measure. But devising and agreeing the actual tax settlement to resolve your entire debt can often be a lengthy and painful process. It is not impossible for the layman to win for himself levy release , but it will demand time and energy, patience and hard negotiation.