What are Bank Levies and Liens?

Every year, millions of people experience a bank levy or tax liens from the IRS. These situations can usually be easily avoided by getting reliable tax relief assistance.

What is a Tax Levy?

A tax levy is what usually follows a lien particularly when a taxpayer has an outstanding amount of unpaid taxes. The IRS always issues warnings through phone calls, letters of notification and messages before issuing a tax levy. If the balance is still unpaid, the IRS will give a 30-day notice of a levy as a last chance for you to pay the balance. After thirty days, the IRS will impose a levy, the most common being a bank levy. They will monitor your bank accounts and withdraw money in order to compensate your unpaid balance. This is preferred by the IRS, as it is quick and requires little effort on their part.

How to Handle an IRS Bank Levy

There are various methods to address your bank levy depending on your financial and tax situation. A tax relief expert can really help you to choose the best method for you since you will need to act swiftly in order to deal with the IRS bank levy effectively. The first method is removing or stopping the IRS bank levy. By contacting a tax professional, you can come into an agreement with the IRS on how to pay the taxes without necessarily issuing a tax levy.

Another method is appealing the IRS bank tax levy where you feel it is unfairly issued. You can appeal even if the 30-day notice period has passed. The appeal is reviewed by an unbiased third party. To increase your chances of winning the appeal, seek the help of a tax relief professional who has more experience in handling such situations. You can also seek an extension where the IRS will add you 120 more days to repay the outstanding balance

What is a Tax Lien?

A tax lien is basically a document filed by the IRS with a county government to notify the public that a taxpayer has not paid a federal tax debt. It is attached to the taxpayer’s property and the property can be sold while the lien is in effect to compensate the IRS on the unpaid taxes.

A tax lien can be removed through withdrawal where the IRS had filed the lien in error. A lien can also be removed by releasing the lien where the taxpayer pays any outstanding debts owed to the IRS. A taxpayer is eligible for release when the outstanding balance is less than $25000.

Tax liens adversely affect the credit of the taxpayers. Your credit score is highly probable to be affected negatively and this will make it very hard for you to obtain a credit or even refinancing an existing credit.

How to Deal With Tax Liens

The best way to address the issue of liens is avoiding them in the first place. The law basically clarifies that the IRS cannot file a levy if you owe the IRS less than $10000. However, the IRS can still file a levy in a case where it has interests to be protected such as pending bankruptcy.

If in case you owe the IRS more than $10,000, you can still avoid the lien. You can enter into a streamlined installment agreement to completely pay the entire balance with the help of a tax relief expert. This agreement stipulates that you will have to pay the unsettled balance within a certain period, usually six years.

You can avoid filing a lien if your unpaid balance is less than 50,000 or if you can repay the balance below $50,000. For an individual with a balance of between $25,000 and 50,000, you can avoid a lien filing by allowing the IRS to procure payments directly from the salary or a bank account.

You can also avoid a lien filing by proving that filing of the lien will hinder the IRS from collecting the tax, which is tough. However, if you are in reality actively applying for a loan to reimburse the balance, the IRS can defer the filing of the lien to enable collection of the unpaid taxes.

You can avoid and effectively deal with both IRS levies and liens with a good understanding of IRS rules.

To learn more about how to have your tax lien or bank levy removed please contact us to get started today!