Receiving a notice of levy on property from the IRS can be alarming and overwhelming. If you’ve received one, you’re likely wondering how to stop a property levy and what steps you need to take before your home, vehicle, or other valuable assets are seized.
An IRS levy on property is a serious action that comes after the government has exhausted other attempts to collect unpaid taxes. However, just because you’ve received a notice doesn’t mean you’re out of options. Understanding how these levies work (and how to act quickly) can make all the difference in protecting your property and your financial future.
What Does an IRS Levy on Property Mean?
When the IRS issues a levy, it is exercising its legal authority to seize your assets in order to satisfy a tax debt. Unlike a lien, which is a legal claim against your property, a levy is the actual taking of that property. This can include wages, bank accounts, and physical property such as real estate, vehicles, or valuable personal items.
A notice of levy on property means the IRS has moved into the final stages of collection. Before this point, you would have received multiple letters, including a tax bill and a Notice of Intent to Levy. Once the levy is initiated, the IRS has the power to forcibly take possession of your property, sell it, and apply the proceeds to your outstanding tax liability.
The good news is that the IRS does not take this step lightly, and they provide several opportunities for taxpayers to avoid it. Knowing your rights and acting swiftly are crucial if you hope to stop a levy on property before it happens, or reverse one that has already begun.
Immediate Steps to Take When You Receive a Notice
The moment you receive a notice of levy on property, it’s essential to act without delay. The IRS typically gives you 30 days from the date of the notice to respond before taking action. This period is known as the Collection Due Process window, during which you have the right to challenge the levy or propose alternative solutions.
First, review the notice carefully to ensure all the information is correct. Ensure that you actually owe the claimed amount and that your tax records are accurate. If you believe the levy is in error, you may request a Collection Due Process hearing, during which you can present your case and potentially stop the levy altogether.
Even if the debt is valid, you may still avoid the levy by entering into a payment agreement, submitting an Offer in Compromise (OIC), or demonstrating financial hardship. But once the 30 days pass without any communication, the IRS can proceed with the levy, and stopping it becomes far more complicated.
Ways to Prevent or Stop a Property Levy
One of the most effective ways to halt an impending property levy is by entering into an Installment Agreement with the IRS. This agreement allows you to pay your tax debt in manageable monthly installments. Once the IRS accepts your proposal, they will generally suspend levy activity as long as you stay current on your payments and future filings.
In cases where full payment is not realistic, another option is to apply for Currently Not Collectible (CNC) status. If you can prove that paying your tax debt would leave you unable to meet basic living expenses, the IRS may temporarily halt all collection actions, including levies.
Some taxpayers may also qualify for an Offer in Compromise, where you settle your debt for less than the full amount owed. While the application process can be lengthy and demanding, an accepted OIC will eliminate the threat of the levy entirely.
Bankruptcy is another avenue, although it should be considered a last resort. Filing for bankruptcy may trigger an automatic stay on IRS collections, including levies, but it does not necessarily discharge all tax debts. Consulting a professional is crucial before choosing this route.
What Happens If a Levy Has Already Been Issued?
If the IRS has already levied your property, the situation becomes more urgent, but it’s not necessarily hopeless. In some cases, you may be able to reverse the levy and reclaim your assets, especially if you act quickly.
Start by contacting the IRS to explain your circumstances. If you can show that the levy is causing undue financial hardship, for example, if the sale of your property would leave you homeless or without transportation, they may agree to release it. Documentation is key, and you should be prepared to provide evidence of your income, expenses, and financial obligations.
If you never received proper notice of the levy or were denied your right to a Collection Due Process hearing, you may have grounds to challenge the levy through legal means. This could involve appealing directly to the IRS or filing a petition in Tax Court.
Another option is to pay the debt in full or obtain financing to cover the balance. Once the debt is resolved, the IRS is obligated to release the levy. This isn’t always feasible, but it can be a solution in cases where significant assets are at risk.
Protecting Your Property in the Future
Once you’ve stopped or resolved a property levy, your next step is to ensure that you don’t face the same situation again. The IRS is more likely to work with taxpayers who remain compliant. That means filing all future returns on time, paying current taxes, and communicating proactively if issues arise.
If you’ve entered into an installment plan or other agreement, adhere strictly to its terms. Even one missed payment can put you at risk of further enforcement. If your financial situation changes, contact the IRS or your tax advisor immediately to discuss modifying the agreement.
Taking control of your taxes not only prevents future levies but also helps rebuild your financial stability and creditworthiness. Don’t view a levy release as the end of the journey; it’s a fresh start that requires vigilance.
We Can Help You Take Back Control
At Rush Tax Resolution, we understand that dealing with an IRS levy on property is one of the most difficult financial situations you can face. If you’ve received a notice or are worried about losing your home, vehicle, or other property, we can help you take swift and effective action.
We’ll guide you through the process of negotiating with the IRS, identifying your options, and preventing a levy from disrupting your life. Our goal is to protect your assets and give you the breathing room you need to move forward with confidence. Contact us today to begin your path to resolution.