Receiving a letter from the IRS threatening to levy your wages or bank accounts can be very frightening, especially if you do not have the means to pay the taxes due. You may feel powerless and like there is nothing you can do to prevent the levy. However, there are some steps you can take to help prevent a levy from taking place.
Here are four steps to avoid IRS Tax Levy:
- Talk to the IRS.
- File any missing tax returns for the past 6 years.
- Make your current tax payments.
- Make payment arrangements with the IRS.
Talk to the IRS
One of the most important things you can do is speak to the IRS (or have someone call them on your behalf). The IRS needs to know that you want to resolve the tax debt and that you will work with them. If you call the IRS, they will generally grant you some time to work on a resolution.
File Missing Returns & Making Current Tax Payments
In order to work out a deal with the IRS, you are required to be in tax compliance. In order to be in compliance you must have filed the last 6 years of tax returns and be making current tax payments either through withholdings (if you are wage earner), or through the payment of quarterly estimated tax payments (if you are self employed).
Once you are in "tax compliance" the IRS will be willing to entertain a proposal to resolve your tax debt through an installment agreement or an offer-in-compromise.
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