Welcome to First Response Resolution, LLC’s official blog! We are a specialty tax firm practicing right here near Medford in Southern Oregon. The focus of my practice is solving tax problems for individuals and businesses, IRS Representation of taxpayers, and representing taxpayers before their individual State Departments of Revenue. These services are referred to in many ways such as Tax Problem Resolution, Tax Relief Services, Tax Resolution, IRS Resolution, Tax Controversy, etc. Think of our firm as your Financial First Responders who specialize in saving troubled taxpayers. We help people who are struggling with tax problems get their lives back on track so they can focus on what matters most to them.
In this series of blog posts, we will be covering the topic of Tax Levies! We will look at the various types of Tax Levies, how they work, and how to deal with their impact and even prevent them. There are a wide variety of different types of Tax Levies, but the general concept remains the same. When Back Taxes are owed, Tax Levies are issued to seize the taxpayer’s assets to satisfy the unpaid taxes. There are many steps in the collection process and several collection notices that must be sent to the taxpayer prior to a Tax Levy being issued, we have covered the general collection process in prior blog posts if you are interested. If a Tax Levy is issued, it is due to a taxpayer not responding to a series of IRS Notices and attempts to collect the tax owed. It is imperative that IRS Notices be timely opened, reviewed, and appropriately responded to. Even if a taxpayer does not have the funds to satisfy the tax liability, there are typically actions that can be taken to avoid or prevent a pending Tax Levy from taking effect.
Let’s take a look at some of the types of Tax Levies and Correlating IRS Notices:
Social Security Levy: Can be done via the automated Federal Payment Levy Program (FPLP) up to 15% of your SSA benefits each month, or manually through which there is no restriction on the amount the IRS can receive. Notices CP91, CP298 pertain to the IRS Intent to Levy SSA benefits.
Wage Levies or Garnishments: A levy through which part of your wages are sent to the IRS by your employer that is continuous and remains until arrangements to pay are made, the tax is paid in full, or administrative requests are made to release the Levy. The employer receives Publication 1494 and is instructed to determine the amount of pay that should be exempt from Levy, based upon the taxpayer’s filing status, standard deduction, and number of dependents claimed. The employee has 3 days to return to their employer a “Statement of Dependents and Filing Status” to help them determine the amounts exempt from Levy. If you don’t return the statement in 3 days, the exempt amount will be based on Married Filing Separate with no dependents. The IRS may allocate exemptions to other sources of income and potentially levy 100% of income from a particular employer. If you are entitled to receive a bonus payment, the IRS can take the entire bonus. Notices include CP504, notice of intent to levy, as well as LT11 and Letter 1058 which disclose the IRS Intent to seize assets and CDP rights. The IRS uses Form 668-W(ICS) or 668-W(C)DO to levy wages.
Bank Levies: The IRS can order your bank to send them money from your accounts. The Internal Revenue Code provides a 21-day waiting period that is intended to allow the taxpayer time to contact the IRS and either dispute the Levy or arrange to pay the tax liability. Bank Levies are generally sent to the bank in the mail and the date of delivery starts the timeline. Funds in the account levied are frozen as of the date the levy is received and normally does not affect funds that are added after the date of levy. Bank Levies are typically a one-time seizure. In the case of an error by the IRS, you may be eligible to be reimbursed for any bank charges that result.
The IRS can also Levy other personal property, or rights to property, including retirement accounts, vehicles, real estate such as the taxpayer’s home, or other personal assets that can be seized and sold to satisfy the taxes owed. If the IRS still has possession of the property, the taxpayer can file a wrongful levy claim at any time. If the IRS has already sold the assets, the Tax Cuts and Jobs Act extended the amount of time a taxpayer can file a wrongful levy claim from 9 months to 2 full years. We will continue to cover additional types of levies, how they work, and how to deal with them in upcoming posts. Stay tuned!
The IRS and taxes in general can be complicated and intimidating. If you have received IRS Notices regarding back taxes owed and are facing potential Tax Liens and Levies, it is well advised to seek competent representation when dealing with the IRS. Most people would not go to court and face litigation without an attorney, and it is in your best interest to engage a qualified representative to deal with the IRS on your behalf. If you or someone you know is in the midst of an IRS issue, contact me at either 541-293-8449, by email at zach@firstresponseirs.com, or through our website. We specialize in solving tax problems! We know how to defend taxpayer rights and will thoroughly investigate and evaluate your specific situation and consider ALL OPTIONS available to you. All discussions are kept strictly confidential, and we offer no obligation initial consultations of up to one hour.
Is your agency interested in having me speak to your team of realtors in person or over Zoom at one of your weekly sales meetings free of charge? I have a presentation developed to address the following:
- Taxation and your clients,
- Tax tips for saving on your own tax returns, and
- Tax Problem Solutions.
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