Can tax relief Stop an IRS Bank Account Levy?

Dealing with an IRS bank account levy can be a daunting experience. Taxpayers often find themselves in a predicament when they face potential seizure of their assets. Fortunately, there are avenues available to mitigate or completely stop a levy, with tax relief being one effective strategy. This article explores how tax relief can halt an IRS bank account levy, along with the necessary steps involved.

Understanding IRS Bank Account Levies

When the IRS issues a levy, it legally seizes property to satisfy a tax debt. In the case of a bank account levy, the IRS will freeze the taxpayer's account, withdraw funds, and apply them toward the owed taxes. According to IRS guidelines, the agency will generally issue a levy after multiple attempts to contact the taxpayer and failure to resolve the debt voluntarily.

The Process of a Bank Account Levy

The IRS follows a stringent process before levying a bank account:

• Notice and Demand for Payment: The taxpayer receives a notice demanding payment of owed taxes.
• Final Notice of Intent to Levy: If the taxpayer does not respond, the IRS issues a final notice, known as Notice CP90 or CP297.
• Waiting Period: There's a mandatory 30-day waiting period during which taxpayers can seek alternatives.
• Levy Execution: Without any resolution, the IRS may proceed to levy the bank account.

Can tax relief Stop a Levy?

tax relief, through various methods, can indeed prevent the execution of a bank account levy. tax relief refers to strategies or services that provide a taxpayer with means to reduce their tax liability or make it more manageable. Effective tax relief options include installment agreements, offers in compromise, and more.

Installment Agreements

An Installment Agreement allows taxpayers to pay their debts over time. By agreeing to a feasible payment plan, taxpayers can avert a levy, as the IRS will typically cease collection actions upon acceptance of the agreement.

Offer in Compromise

An Offer in Compromise (OIC) permits taxpayers to settle their tax debt for less than the full amount owed. The IRS considers factors such as ability to pay, income, and asset equity. If an OIC is accepted, it halts the levy process.

Currently Not Collectible Status

If taxpayers can prove financial hardship, they may qualify for Currently Not Collectible (CNC) status. This doesn't eliminate the debt but temporarily suspends collection activities, including levies.

Appeals

Taxpayers have the right to appeal a levy through a Collection Due Process (CDP) hearing. Filing for a CDP can pause the levy until the appeal is processed, providing additional time to seek tax relief solutions.

Actionable Steps

1. Assess Financial Situation: Determine your financial standing and capability to pay the owed taxes.
2. Contact the IRS: Communicate with the IRS immediately upon receiving a notice. Open lines of communication can prevent drastic measures.
3. Explore tax relief Options: Consider hiring a tax professional to explore options such as installment agreements, offers in compromise, or CNC status.
4. Prepare Necessary Documentation: Gather all relevant financial documents to support your case for tax relief.
5. File Appeals if Necessary: Act fast within the 30-day window to appeal the levy.

Conclusion

An IRS bank account levy is a serious matter, but it's not insurmountable. Understanding your options and acting swiftly can help you avert financial distress. If you find yourself in this situation, exploring tax relief options with professional assistance can be invaluable.

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