Apr 22

How to handle IRS notice of bank levy or wage garnishment

If you are being threatened by a bank levy or wage garnishment there are a number of things that you can do to solve your problems.

File a Request for a Collection Due Process Hearing.

In the request, explain that you need an installment agreement, noncollectable status or some other collection alternative. Collection of delinquent tax begins with a series of notices asking for payment. If payment is not made, the IRS eventually mails a final notice, notice of intent to levy, IRS Letter 1058. This notice provides thirty days to pay, after which time the IRS may begin enforcement action. It explains that you have the right to file a Request for Collection Due Process Hearing within that thirty-day period. Use the IRS form 12153 to submit the request. But you should never wait for the final notice to take action.

Ask for an installment agreement as soon as you receive the first notice.

However, if you are facing a final notice, the Request for Collection Due Process Hearing is the way to head off the attack. If the request is filed on time, the IRS cannot take any collection action until after you've had your hearing. The hearing is held by the Appeals Office. The appeal also gives you the right to challenge any collection action on any appropriate ground, including challenging the underlying tax debt.

Write a letter in response to the initial collection notice to the service center that issued it.

Explain that you do not have the money to be able to pay in full and ask for an installment agreement. If you cannot afford to make a payment, ask for noncollectable status. Include Form 9465, Installment Agreement Request, with your letter. Your letter should also explain that a wage or bank levy will cause serious economic hardship by making it impossible to pay your living expenses. Include a short worksheet showing your net take-home pay and monthly living expenses. Send the letter via certified mail and get it off immediately. If you do not hear a favorable word from the service center within a brief period of time, say two weeks, contact your local Taxpayer Advocate.

Your Goal?

Your goal is to get an installment agreement or noncollectable status established based upon your ability (or lack of ability) to pay. Once the installment agreement or noncollectable status is in place, the IRS cannot pursue levy or seizure of assets, including wages and bank accounts.

Overwhelmed? Tax Champions has certified Enrolled Agents to help you.

If you want representation you should look for either a CPA that is an enrolled agent or an attorney that specializes in taxation. According to the National Association of Enrolled Agents, an Enrolled Agent is:

"...a federally authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals."

Make sure that you don't talk to just any tax professional. If you want someone that can work on your behalf legally then you need an Enrolled Agent with the IRS. If you would like to speak to an Enrolled Agent free of charge before making any decisions about your tax related issues, then please call the Tax Champions main line and ask for tax help. We can be reached Monday through Friday from 9:00 a.m. to 6:00 p.m. PST at 800.518.8964.

Alternatively, reach us by filling out the contact form on this page. One of our customer service representatives will refer you to an Enrolled Agent for counseling completely free of charge.

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