Tax Lawyer's Blog

The IRS has broad powers to collect a delinquent tax debt. Typically, it collects taxes through the lien and levy process. Here are the general rules regarding the release of liens and levies.

The IRS is required to release a levy if any of the following occur:

1. You pay the tax, penalty, and interest you owe.
2. It discovers that the time for collection (the statute of limitations) ended before the levy was served.
3. You provide documentation proving that releasing the levy will help the IRS collect the tax.
4. You have an installment agreement, or enter into one, unless the agreement says the levy does not have to be released.
5. It determines that the levy is creating a significant economic hardship for you.
6. The fair market value of the property exceeds the liabiilty and release of the levy on a part of such property could be made without hindering the collection of such liability.

Before a sale of liened property, the IRS may release the property if:

1. You pay the amount of the government’s interest in the property,
2. You enter into an escrow arrangement,
3. You furnish an acceptable bond,
4. You make an acceptable agreement for paying the tax, or the expense of selling your property would be greater than the fair market value of the property.

The IRS will consider returning levied property if:

1. It levied before it sent you the two required notices, or before your time for responding to them has passed (10 days for the Notice and Demand; 30 days for the Notice of Intent to Levy and the Notice of Right to a Hearing).
2. It did not follow its own procedures.
3. It has agreed to let you pay in installments and the agreement forbids the IRS from levying.
4. Returning the property will help you pay your taxes.
5. Returning the property is in your and the government’s best interest.

The IRS frequently fails to follow its own procedures in seizing taxpayers’ property. If any of your assets have been levied or if you have received a notice of intent to levy, contact Pappas & Associates immediately.

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