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IRS Levies When You Have a Financial Hardship

IRS Levies When You Have a Financial Hardship

An IRS levy of your bank account or other assets can put you in a dire financial situation. In some cases, you may be able to avoid the levy or have it released if it will cause an immediate financial hardship.

You can also tell the IRS about your financial hardship earlier in the collection process to put a halt to any enforced collection actions. In either case, you’ll generally need to provide proof of your financial situation.

Stop IRS Collection Actions

The IRS will place accounts into Currently Not Collectible (CNC) status if the taxpayer is experiencing an economic hardship. Accounts in CNC status are temporarily protected from enforced collection actions such as bank levies or wage garnishments.

You’ll still owe the full tax debt, and interest and penalties will continue to accrue. However, you won’t have to worry about IRS levies while your account is classified as CNC.

If your financial situation changes, the IRS may decide that you can now afford to make monthly payments towards your debt. Your CNC status may be rescinded, and you’ll have to work with the IRS to pay off your tax debt.

Impending IRS Levies

If you receive a Notice of Intent to Levy, then the IRS is getting ready to seize your assets. You have 30 days to negotiate a payment plan or avoid the levy using some other strategy.

The IRS will stop a levy if it is causing an immediate financial hardship. This means that the levy would prevent you from meeting your basic, reasonable living expenses.

You’ll need to show proof of how the levy will cause economic harm, which could involve eviction notices, utility shut-off notices, or other supporting documentation.

Impact of Avoiding the Levy

If you are able to successfully stop the IRS levy, you should understand that you are still responsible for paying off your tax debt. The IRS may still have a tax lien against your property and could tell the State Department to deny your passport if you have seriously delinquent tax debt.

Stopping the IRS levy is only the first step you’ll need to take. You should then contact a tax resolution attorney and find a more long-term solution to your tax debt problems.

The Gartzman Law Firm can help you with levies and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.