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There it is. A certified letter from the IRS, and you have a gut feeling it probably does not contain the thousands in tax refunds you’ve always imagined. Instead it’s an IRS Final Notice of Intent to Levy.
What does it mean? And why are you receiving it?
IRS Letters LT11 & LT 1058: Final Notice of Intent to Levy
A final notice of intent to levy is an urgent notice sent to inform you that the IRS has not yet received any payment on your overdue taxes and that they intend to seize your property.
Before jumping to conclusions, make sure that the notice you received is actually a final notice of intent to levy. On the upper right corner of your letter, you should see either LT11 or LT 1058. If the notice you’ve received is neither of those two, it is not an intent to levy form. In that case, our previous post: IRS Notices Decoded: What Your IRS Notice Means can help you determine which notice you received and what it means.
If you have received either of these letters, the IRS has reason to believe that you have outstanding tax debt that hasn’t been paid. You may already be aware of your situation since the IRS sends out other notices regarding unpaid balances before resorting to levying an account.
If your balance is not paid, the IRS has the power to levy your bank accounts or wages up to the amount that you owe. The IRS also has the power to levy your property, which can include assets such as your house or car.
In some cases, the IRS may also take enforced collection actions to collect your balance. This includes the filing of a Notice of Federal Tax Lien.
The law requires enforced collection actions to be taken if taxes are not paid timely, and the IRS is not notified why the taxes cannot be paid. Basically, they just refer to the various ways the government can seize your assets to redeem the value of your debt.
What is a Tax Lien?
A Federal Tax Lien is a notice sent to your creditors, banks, and other financial institutions that the government has the right to garnish your assets. In other words, it’s a legal claim against your property and assets when you fail to pay an outstanding tax debt.
And in case you are already wondering, yes, a tax lien can affect your ability to get credit. But that’s another subject.
What Assets can the IRS Seize?
The IRS can garnish your wages, take money from your bank or financial accounts, seize and sell any vehicles you own, and even claim real estate or any other personal property.
Essentially, an ‘asset’ can be anything you own that the IRS believes they can use to satisfy your tax debt.
What to do if you get an Intent to Levy Notice?
A Final Notice of Intent to Levy is the last warning you will receive before the IRS takes action. If there is one IRS notice that you should never ignore, it is this one.
Attempting to resolve this issue on your own can be dangerous, very stressful, and costly. Often times the most responsible thing to do is hire a tax attorney or licensed professional to defend your case. They will be able to ensure you get the best possible settlement, and that your rights are protected.
How to stop an IRS levy
First of all, don’t panic. You have rights. Keep in mind this letter is a ‘notice’. The IRS can’t and won’t take anything from you yet. Moreover, like in the judicial system, there is an appeal process.
After receiving either notice LT 11 or LT 504 you have the right to appeal it, but you only have 30 days to file your appeal. This is crucial because it buys you time, as the IRS cannot levy you until the appeal is fulfilled. After receiving your appeal, it will take anywhere from 3 to 5 months for the IRS to process it.
Once the appeal is processed, the IRS will send your appeal to a settlement officer. Their job is very simple: resolve your case.
They are not debt collectors and they will not do any of the levyings. Quite the opposite actually, they want to come to a settlement. Once a settlement is reached, the IRS will no longer have an intent to levy your assets.
Alternatively, you can also prevent collection action by simply replying to the notice immediately and make a lump sum payment of the amount you owe. If you do not pay it off right away, or have an agreement, you may be open to enforced collections. If your account has been levied, you have 21 days to seek a release.
Any notice from the IRS is intimidating for many. The jargon alone sends most people’s heads spinning. If you can, speak with a tax professional as soon as possible after getting an IRS notice and take the proper steps quickly.
As always, Boxelder Consulting is here to help you with any tax or IRS related problems you may have. Feel free to contact us today and schedule a time to sit down and discuss your situation with one of our experienced tax attorneys.