How Long Does IRS Levy Last?
An IRS levy is a legal action taken by the Internal Revenue Service (IRS) to seize property or assets to satisfy a tax debt. When the IRS levies, it can have a significant impact on an individual or business. One common question that arises is how long an IRS levy lasts. The duration of an IRS levy depends on several factors, including the type of levy and the actions taken by the taxpayer to resolve the tax debt.
There are two main types of IRS levies: bank levies and wage garnishments. A bank levy allows the IRS to seize funds from a taxpayer’s bank account, while a wage garnishment allows the IRS to collect a portion of a taxpayer’s wages directly from their employer.
In general, an IRS levy can last until the tax debt is paid in full or until the statute of limitations for collection expires. The statute of limitations for collection is generally ten years from the date the tax liability was assessed. However, there are several circumstances that can extend the duration of an IRS levy:
1. Installment Agreement: If a taxpayer enters into an installment agreement with the IRS to pay off their tax debt over time, the levy will be released as long as the taxpayer is making timely payments.
2. Offer in Compromise: An offer in compromise is an agreement between the taxpayer and the IRS to settle the tax debt for less than the full amount owed. If the IRS accepts the offer, the levy will be released.
3. Currently Not Collectible: If a taxpayer is facing financial hardship and is unable to pay their tax debt, they may be deemed currently not collectible. In this case, the IRS will temporarily suspend collection actions, including levies.
4. Bankruptcy: Filing for bankruptcy can temporarily stop an IRS levy. However, it’s important to note that certain taxes may not be dischargeable in bankruptcy, and the IRS can resume collection activities once the bankruptcy proceedings are completed.
Frequently Asked Questions (FAQs):
1. Can the IRS levy my bank account without warning?
No, the IRS is required to provide notice before levying a bank account. They will typically send a series of letters, including a Final Notice of Intent to Levy, giving the taxpayer an opportunity to resolve the tax debt.
2. How much of my wages can the IRS levy?
The IRS can levy a significant portion of a taxpayer’s wages, up to 25% of their disposable income. The exact amount depends on various factors such as the taxpayer’s filing status and number of dependents.
3. Can the IRS levy my retirement account?
While the IRS generally cannot levy retirement accounts such as 401(k) plans and IRAs, they may be able to seize funds once withdrawn or distributed.
4. Can I negotiate with the IRS to release a levy?
Yes, it is possible to negotiate with the IRS to release a levy. This can be done by entering into an installment agreement, submitting an offer in compromise, or proving financial hardship.
5. Will the IRS levy my assets if I owe a small tax debt?
The IRS typically reserves levies for cases where the taxpayer owes a significant amount of money and other collection methods have been unsuccessful. However, smaller tax debts can still result in a levy if the taxpayer fails to address the issue.
6. Can the IRS levy my spouse’s assets if I owe the tax debt?
If the tax liability is solely in your name, the IRS cannot levy your spouse’s assets. However, if you have joint accounts or jointly owned property, those assets may be subject to levy.
7. Can I stop an IRS levy once it has been issued?
While it can be challenging to stop an IRS levy once it has been issued, there are options available to resolve the tax debt and have the levy released. Contacting the IRS and exploring payment plans or other resolution options is crucial.
8. Can a tax professional help me deal with an IRS levy?
Yes, working with a tax professional, such as a certified public accountant or enrolled agent, can be highly beneficial when dealing with an IRS levy. They can help negotiate with the IRS, explore resolution options, and ensure your rights are protected.
In conclusion, the duration of an IRS levy depends on various factors, including the type of levy and the actions taken by the taxpayer to resolve the tax debt. It is important to understand your rights and options when facing an IRS levy and seek professional advice if needed.