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Federal Tax Levy Collection Actions in Detail (Part IV)

Federal Tax Levy Collection Actions in Detail (Part IV)

More examples of property the IRS can seize (“levy”)

· Your federal payments. As an alternative to the levy procedure used for other payments such as dividends and promissory notes, certain federal payments may be systemically seized through the Federal Payment Levy Program in order to pay your tax debt. Under this program, the IRS can generally seize up to 15% of your federal payments (up to 100% of payments due to a vendor for property, goods or services sold or leased to the federal government). They will serve the levy once, not each time you are paid. The levy continues until your debt is fully paid, other arrangements are made, the collection period ends, or the IRS releases the levy. The federal payments that can be seized in this program include, but aren’t limited to, federal retirement annuity income from the Office of Personnel Management, Social Security benefits under Title II of the Social Security Act (OASDI), and federal contractor/vendor payments.

· Your house, car, or other property. If the IRS seizes your house or other property, they will sell your interest in the property and apply the proceeds (after the costs of the sale) to your tax debt. Prior to selling your property, they will calculate a minimum bid price. They will also provide you with a copy of the calculation and give you an opportunity to challenge the fair market value determination. The IRS will then provide you with the notice of sale and announce the pending sale to the public, usually through local newspapers or flyers posted in public places. After giving public notice, they will generally wait 10 days before selling your property. Money from the sale pays for the cost of seizing and selling the property and, finally, your tax debt. If there’s money left over from the sale after paying off your tax debt, they will tell you how to get a refund.

Next week: Property that can’t be seized (“levied”)

(IRS Publication 594 and IRS.gov) (TTT 04/14/2020)

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Federal Tax Levy Collection Actions in Detail (Part III)

Federal Tax Levy Collection Actions in Detail (Part III)

Examples of property the IRS can seize (“levy”)

· Wages, salary, or commission held by someone else. If the IRS seizes your rights to wages, salary, commissions, or similar payments that are held by someone else, they will serve a levy once, not each time you’re paid. The one levy continues until your debt is fully paid, other arrangements are made, or the collection period ends, or the levy is released. Other payments you receive, such as dividends and payments on promissory notes, are also subject to seizure. However, the seizure only reaches the payments due or the right to future payments as of the date of the levy.

· Your bank account. Seizure of the funds in your bank account will include funds available for withdrawal up to the amount of the seizure. After the levy is issued, the bank will hold the available funds and give you 21 days to resolve any disputes about who owns the account before sending us the money. After 21 days, the bank will send the IRS your money, and any interest earned on that amount, unless you have resolved the issue in another way.

· Your retirement account, including Qualified Pension, Profit Sharing, and Stock Bonus Plans under ERISA; IRAs, Retirement Plans for the Self-Employed (such as SEP-IRAs and Keogh Plans) and the Thrift Savings Plan. Depending on the terms of the plan a levy may attach to the funds in which you have a vested right.

Next week: More examples of property the IRS can seize (“levy”)

(IRS Publication 594 and IRS.gov) (TTT 04/07/2020)

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Federal Tax Levy Collection Actions in Detail (Part II)

Federal Tax Levy Collection Actions in Detail (Part II)

Reasons the IRS may seize (“levy”) your property or rights to property

If you don’t pay your taxes (or make arrangements to settle your debt), the IRS could seize and sell your property. They will not seize your property to collect an individual shared responsibility payment. They usually seize only after the following things have occurred.

The IRS assessed the tax and sent you a bill,

You neglected or refused to pay the tax, and

they sent you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before the seizure.

However, there are exceptions for when the IRS does not have to offer you a hearing at least 30 days before seizing your property. These include situations when:

The collection of the tax is in jeopardy,

A levy is served to collect tax from a state tax refund,

A levy is served to collect the tax debt of a federal contractor, or

A Disqualified Employment Tax Levy (DETL) is served. A DETL is the seizure of unpaid employment taxes and can be served when a taxpayer previously requested a Collection Due Process appeal on employment taxes for other periods within the past 2 years.

If the IRS serves a levy under one of these exceptions, they will send you a letter explaining the seizure and your appeal rights after the levy is issued.

Next week: Examples of property the IRS can seize (“levy”)

(IRS Publication 594 and IRS.gov) (TTT 03/31/2020)

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Federal Tax Levy Collection Actions in Detail (Part I)

Federal Tax Levy Collection Actions in Detail (Part I)

Levy: A seizure of property

While a federal tax lien is a legal claim against your property, a levy is a legal seizure that actually takes your property (such as your house or car) or your rights to property (such as your income, bank account, retirement account or Social Security payments) to satisfy your tax debt.

The IRS can’t seize your property if you have a current or pending Installment Agreement, Offer in Compromise, or if the they agree that you’re unable to pay due to economic hardship, meaning seizing your property would result in your inability to meet basic, reasonable living expenses.

What you should do if your property is seized (“levied”)?

If your property or federal payments are seized, call the number on your levy notice or 1-800-829-1040. If you’re already working with an IRS employee, call him or her for assistance.

Next week: Reasons the IRS may seize (“levy”) your property or rights to property

(IRS Publication 594 and IRS.gov) (TTT 03/24/2020

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Federal Tax Lien Collection Actions in Detail (Part VII)

Federal Tax Lien Collection Actions in Detail (Part VII)

How to make the Federal Tax Lien secondary to other creditors (“subordination”) ?

A “subordination” is where a creditor is allowed to move ahead of the government’s priority position. For example, if you’re trying to refinance a mortgage on your home, but aren’t able to because the federal tax lien has priority over the new mortgage, you may request that the IRS subordinate their lien to the new mortgage. For more information on whether you qualify for a subordination, see Publication 784, How to Prepare an Application for a Certificate of Subordination of Federal Tax Lien. To watch an instructional video about Publication 784, visit www. irsvideos.gov/Individual/IRSLiens.

Appeal rights for withdrawal, discharge or subordination

If your application is denied you will receive Form 9423, Collection Appeal Request and Publication 1660, Collection Appeal Rights, with an explanation of why your application was denied. If the IRS denies your request for a withdrawal, discharge, or subordination, you may appeal under the Collections Appeals Program.

Next week: Federal Tax Levy Collection Actions in Detail

(IRS Publication 594 and IRS.gov) (TTT 03/17/2020)

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Federal Tax Lien Collection Actions in Detail (Part VI)

Federal Tax Lien Collection Actions in Detail (Part VI)

How to apply for a “discharge” of a Federal Tax Lien from property?

A “discharge” removes specific property from the federal tax lien. There are several circumstances under which a discharge may be granted. For example, the IRS may issue a Certificate of Discharge if you’re selling property and the government receives its interest through the sale. For more information on whether you qualify for a discharge, see Publication 783, Instructions on How to Apply for a Certificate of Discharge of Property from Federal Tax Lien. To watch an instructional video about Publication 783, visit www.irsvideos.gov/Individual/ IRSLiens.

Next week: How to make the Federal Tax Lien secondary to other creditors (“subordination”)

(IRS Publication 594 and IRS.gov) (TTT 03/10/2020)

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Federal Tax Lien Collection Actions in Detail (Part V)

Federal Tax Lien Collection Actions in Detail (Part V)

What are reasons the IRS will “withdraw” a Federal Tax Lien?

A “withdrawal” removes the Notice of Federal Tax Lien from public record. The withdrawal tells other creditors that the IRS is abandoning their lien priority. This doesn’t mean that the federal tax lien is released or that you’re no longer liable for the amount due.

The IRS may withdraw a Notice of Federal Tax Lien if:

· You’ve entered into an Installment Agreement to satisfy the tax liability, unless the Agreement provides otherwise. For certain types of taxes, the IRS routinely grants Notice of Federal Tax Lien withdrawal requests if you’ve entered into a direct debit installment agreement and meet certain other conditions,

· It will help you pay your taxes more quickly,

· The IRS didn’t follow their procedures,

· It was filed during a bankruptcy automatic stay period, or

· It’s in your best interest and in the best interest of the government. For example, this could include when your debt has been satisfied and you request a withdrawal.

For more information, see Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien or the instructional video at www. irsvideos.gov/Individual/IRSLiens/LienNoticeWithdrawal.

Next week: How to apply for a “discharge” of a Federal Tax Lien from property

(IRS Publication 594 and IRS.gov) (TTT 03/03/2020)

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Federal Tax Lien Collection Actions in Detail (Part IV)

Federal Tax Lien Collection Actions in Detail (Part IV)

What are reasons the IRS will “release” a Federal Tax Lien?

A “release” of a Federal Tax Lien means that the IRS has cleared both the lien for your debt and the public Notice of Federal Tax Lien. The IRS does this by filing a Certificate of Release of Federal Tax Lien with the same state and local authorities with whom they filed your Notice of Federal Tax Lien. They will release your lien if:

· Your debt is fully paid,

· Payment of your debt is guaranteed by a bond, or

· You have met the payment terms of an Offer in Compromise which the IRS has accepted, or

· The period for collection has ended. (In this case, the release is automatic.)

For more information, see Publication 1450, Instructions on How to Request a Certificate of Release of Federal Tax Lien.

Next week: What are reasons the IRS will “withdraw” a Federal Tax Lien?

(IRS Publication 594 and IRS.gov) (TTT 02/25/2020)

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Federal Tax Lien Collection Actions in Detail (Part III)

Federal Tax Lien Collection Actions in Detail (Part III)

How to appeal a Notice of Federal Tax Lien?

Within five business days of the first filing of the Notice of Federal Tax Lien for a specific debt, the IRS will send you a Notice of Federal Tax Lien Filing and Your Right to a Collection Due Process Hearing. You’ll have until the date shown on the notice to request a Collection Due Process hearing with the Office of Appeals (30 days from the date on the letter). Send your Collection Due Process hearing request to the address on the notice. For more information, see Form 12153, Request for a Collection Due Process or Equivalent Hearing.

After your Collection Due Process hearing, the Office of Appeals will issue a determination on whether the Notice of Federal Tax Lien should remain filed, or whether it should be withdrawn or released. If you disagree with the determination, you have 30 days after it’s made to seek a review in the U.S. Tax Court.

In addition to any Collection Due Process rights you may have, you may also appeal a proposed or actual filing of a Notice of Federal Tax Lien under the Collection Appeals Program.

Next week: What are reasons the IRS will “release” a Federal Tax Lien?

(IRS Publication 594 and IRS.gov) (TTT 02/18/2020)

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Federal Tax Lien Collection Actions in Detail (Part II)

Federal Tax Lien Collection Actions in Detail (Part II)

What to do if a Notice of Federal Tax Lien is filed against you?

You should pay the full amount you owe immediately. The Notice of Federal Tax Lien only shows your assessed balance as of the date of the notice. It doesn’t show your payoff balance or include our charges for filing and releasing the lien. To find out the full amount you must pay to have the lien released, call 1-800-913-6050 or 859-320-3526 if you are calling from outside of the United States. If you have questions, call the number on your lien notice or 1-800-829-1040 or visit www.irs. gov/Businesses/Small-Businesses-&-Self-Employed/Understanding-a-Federal-Tax-Lien, or view instructional videos at www.irsvideos.gov/ Individual/IRSLiens.

Next week: How to appeal a Notice of Federal Tax Lien

(IRS Publication 594 and IRS.gov) (TTT 02/11/2020)