You might not have paid your taxes, as you are busy or you forgot or you avoided payment due to financial reasons. Whatever maybe the reason, you can face the IRS wage levy. It is a hold on property you owned. IRS can confiscate and sell such property. IRS can also levy your property which is held by somebody else like retirement accounts, and dividends, bank accounts, rental income or even cash value of your Life Insurance. If you’re married, IRS can issue wage levy against you and your spouse. This can create problems in the relationship, especially when one spouse is unaware of the tax problems.
A Wage Levy is usually difficult to stop, however, with some quick actions it is possible to stop such levy and get your assets released. Here are three important strategies to deal with IRS wage levy –
- Time factor is very important – The most important factor in the release of the Levy is timing. The taxpayer has at his disposal only 21 days to get IRS wage levy released. If you are late, then the funds attached will be sent to IRS. So in order to take care of the living expenses, it is necessary to negotiate with the IRS. IRS is a large organization and it doesn’t work very fast. Sometimes it is difficult to locate the correct IRS representative who can release the Levy. So it is necessary to act fast. You should better contact a tax professional who can do this for you in a short period. Things can go out of hand if you try to ignore IRS notices.
- Try to collect supporting documentation to avoid hardships – In order to resolve the problem with IRS, you should make a strong representation claiming financial hardships. If due to such wage levy you are unable to pay for your food, mortgage, rent, electricity etc., you should make a proper representation before the revenue officer. If you are not successful at that level, you need to file an appeal. In order to present your case effectively, try to collect as much documentation as possible. You may be required to complete a statement on your financial information in the form 423A or 423F. IRS usually takes a softer view if you make an effective representation showing your sincere intentions to settle the issue with the IRS.
- Try to make a settlement with the IRS – You can make an agreement acceptable to IRS for settlement of your dues. It is possible that you may furnish a bond if acceptable to IRS. You may execute an agreement for payment of tax in a manner acceptable to IRS. You can also think of executing an escrow agreement. These are all the ways of getting the release of your property and stopping IRS for the time being.
IRS wage levy is a very unfortunate thing to happen, however there is nothing to be afraid of it. There are ways to shorten and end the process soon. However, the best way of avoiding it is to pay taxes on time!