As we saw in our previous post, the IRS is willing to make a deal when it comes to collecting its debts. The IRS gives taxpayers multiple ways to take care of their tax debt and rebuild their financial lives. Unfortunately, not every taxpayer takes the initiative to contact the IRS and deal with their back taxes or un-filed returns. The IRS may move slowly, but eventually it comes knocking. If you let the debt pile up year after year without resolution, you can expect to receive an IRS notice of its intent to seize your property.
The IRS does not need a court order to seize your property; they have their own collections machinery, and it works well. The IRS is the world’s most effective collection agency, but don’t let fear and doubt paralyze you. You have options if you decide to act.
The Consequences of Inaction
If you don’t act, the IRS will act for you. In these situations, it’s really their only choice. When taxpayers don’t come forward, the IRS has to step in. If you don’t file your tax return, they file one for you. If you don’t want to pay, or can’t pay, they’ll levy your bank account or garnish your wages. Worse, if you own a business, they can send Accounts Receivable levies to everyone you do business with.
The process is part of the punishment, but also holds keys to help you avoid a levy. To start, the IRS will issue something called a Notice of Intent to Levy, also known as Letter 1058 or LT-11. If you’re ever unsure if what you received is actually a Notice of Intent to Levy, a handy tip is to check the bottom right hand corner of the front page of the letter and look for the numbers “1058” or “LT-11”.
In this post, we will go over IRS notices of intent to levy in detail. We will cover what these notices mean, the different types of notices which can be issued, and the types of property which can be seized. Just as with IRS tax settlements, IRS notices of intent to levy can get a bit complex. If the IRS sends a certified letter to you, it’s strongly recommended that you reach out to a qualified tax professional for advice.
Boxelder Consulting has licensed, experienced professionals that will pick up the phone right away when you call us at 303-317-6111. We can assist you in preventing the seizure of your assets, buying you time or putting together a game plan to fix your tax problems permanently. We believe in second chances. Start your comeback story today.
What Do These Notices Mean?
Simply put, a Notice of Intent to Levy means that the IRS is letting you know that you have tax debt and that the IRS will begin seizing your assets if this debt is left unpaid. The IRS cannot take your property to satisfy your past due taxes unless it gives you prior notice. One word of caution on this point – the IRS is not responsible for tracking you down. They will mail this notice to the last address you provided, either through a tax return or a change of address form. If you haven’t filed in a few years and have moved around, be careful, what you don’t know can hurt you.
Q: When can the IRS seize my property?
A: The IRS needs to do these 3 things at least 30 days prior to seizing your property:
- Give you written notice of the intent to levy with an explanation of the appeal process
- Give an explanation detailing the reason for the levy, how your property may be seized, and your options to deal with the levy
- Deliver the notice and additional information to you directly or through the mail
In very rare cases, the IRS can begin the seizure of property process without completing these 3 steps. But those cases make up only a small minority. We won’t go into detail on that in this post, but may cover it later. If the IRS already seized your property, or if you think this applies to you, call Boxelder Consulting right away at 303-317-6111 because you have limited time to act.
Types of Notices
There are many types of IRS notices. The type of notice usually reflects the type of property which the IRS will attempt to seize. Here are a few of the most common types of IRS notices:
- CP Notices: CP 504, CP 90, CP 297
- LT Notices: LT 1058, LT 11
Again, certain notices are used for certain types of property. For example, under notice CP 504, (the standard IRS “nasty gram”) the IRS notifies you that it can seize your state tax refund to satisfy back tax debt. This notice also lets you know that, if your state tax refund doesn’t cover your IRS debt, the IRS may take further action and seize additional assets to settle the balance.
You can usually find the type of noticed listed in the top right-hand corner of the first page of the letter. (If you’re curious, CP stands for “computer paragraph” which refers to an automatically generated notice from the IRS main frames; as opposed to correspondence generated from IRS personnel such as a letter from a Revenue Officer.)
Property Subject to Seizure
If you do happen to be served with an IRS intent to levy notice, you will probably wonder: what types of property may be seized by the IRS? Can the IRS seize my home? Seeing those three little letters in the top left-hand corner of the envelope is enough to send anyone into a tailspin. If they’re accompanied by giant, threatening font – even worse. The bad news is that the IRS can take many, many different kinds of property from you to satisfy your debt. Here’s a quick (but incomplete) list to give you a sense of what property may be subject to seizure:
- Money in your personal bank account
- Money in your business bank account
- Social security benefits
- Wages (your employer will get a notice)
- Retirement benefits
- Payments due to you from vendors you do business with
Again, to give you an idea of the power of the federal government to collect taxes, this is an incomplete list. The IRS can seize other types of property if they need to. Unfortunately for taxpayers, the IRS is only required to leave taxpayers with very little in their pockets when they attempt to settle debts. Details on this topic an be found in IRS Publication 1494. The IRS is required to leave taxpayers with the bare necessities to maintain themselves, but almost nothing beyond this.
What You Should Do
If you receive a Notice of Intent to Levy, you have a few options to choose from to take care of this problem. One thing you can do is pay your balance in full. In almost ten years of specializing in IRS Collections defense, I’ve never seen the IRS turn down a check. If you pay in full, the IRS will cease any efforts to seize property from you. Of course, this option may not be available to all taxpayers.
If you’re not able to pay in full, you can still take action to avoid any property seizures. There are a host of resolution options available to you, but if there is one piece of advice you take from this post, it’s that you have a limited time frame with which to act decisively. The IRS has to give you 30 days from the date of the notice, but whether or not you’re inside or outside of that 30 day time frame, contact Boxelder Consulting right away so we can talk about your options.
Be Sure to Contact Us
No matter what route you choose to take, make sure you do not ignore the notice. Ignoring or avoiding the notice will always lead to negative consequences. See my “#1 Mistake” video on our YouTube channel for more details. You may have had the means the stop the levy, but the IRS can still take your property if you don’t move quickly. If you take action, you can remove the levy, deal with your debt and then begin to rebuild your financial future. If you receive this kind of notice, an easy step is to contact an experienced tax professional. We eat, sleep and breathe IRS Collections or any other tax related issue.
The licensed professionals at Boxelder Consulting have a great amount of experience dealing with IRS notices and would be happy to assist you if you need help. Our tax specialists can help you navigate the process of removing the levy and setting terms straight with the IRS. Call us at 303-317-6111. We believe in second chances. Start your comeback story today.