An IRS levy is a wage garnishment on your salary that authorizes the IRS to deduct a substantial percentage of your wages to pay your tax debt. This happens as a last resort where the IRS will attempt to recoup the tax you owe them by taking upwards of 70-80 percent of what you make every month. Needless to say, this amount of garnishment leaves you hardly enough to survive.
But the purpose of such a move by the IRS is not to impoverish you; it is to get you to call them so that a more practical solution can be worked out. Most of the time, those who get subjected to IRS levies are recalcitrant taxpayers who have ignored attempts by the IRS to contact them whether by phone, letter or email. Since this is the primary purpose of a tax levy, you need to know how to deal with it.
One way to resolve a tax levy problem is called an Offer in Compromise. However, few people will be granted an Offer in Compromise because in order to qualify, you have to be quite poor and have hardly any assets that can be sold to clear your tax debt. There are, however, a few exceptions. If the tax levy disrupts your ability to provide basic needs of your family such as your mortgage or food, you can get it reduced. The IRS must leave you enough to pay for food and shelter, although that is about it. Other valid expenses that may reduce the tax levy would be essential medicines and child support.
The final type of Offer in Compromise is where your tax debt has been calculated wrongly by the IRS. This might be highly unlikely because the IRS personnel are well trained to determine your exact quantum of tax. Nevertheless, even the IRS makes mistakes once in a while and if you can prove that they did and that the tax burden you have is not really yours, your tax levy can be reduced by the amount of tax that you are not liable for.
In conclusion, IRS levies are designed to get your attention so that you will contact the IRS in hopes of resolving your debt. Your response should be to agree to a payment plan with the IRS. The payment plan will replace the levy and even if you may not be able to keep to the plan, at least it will buy you some time to work out a more permanent solution.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.