Stop IRS Levy: Guide to Release a Tax Levy & Stop Collections

If you owe tax debt, the IRS can legally take over your property to satisfy what you owe them. The IRS can take over and sell physical items like your car, house, boat or camper in order to recover money for tax debts you owe. With a tax levy, the IRS can also levy for your wages, bank accounts, retirement accounts, dividends owed to you, rental income, cash value of life insurance, commissions, bonuses, and accounts receivables owed to you. In short, the IRS is one bill collector you don't want to ignore because they have the power to take pretty much anything you have to satisfy debts owed to them!

When Will the IRS Levy?

Three requirements must be met before the IRS will begin a tax levy – you must have received a Notice and Demand for Payment; you must have neglected to pay; and you must have received a Final Notice of Intent to Levy and Notice of Your Right to a Hearing at least 30 days before a tax levy begins.

How to Stop a Tax Levy

If you've received an Intent to Levy Notification – you need to take action to prevent the IRS from seizing your assets. If you receive the final notice, they will take action in 30 days. The IRS does not actually want to use a tax levy to recover debts – it's an expensive and last resort debt collection method the IRS uses, in hopes that the notice will scare taxpayers into paying or making arrangements to pay their tax debts.

Here are your options for stopping a tax levy from happening:

Appeal the Intent to Levy as Mistake

If you're certain you do not owe taxes to the IRS, there is a chance that the notice was sent to you in error. Contact the IRS immediately to have it straightened out. If you ignore it, they will start the impending levy. There is a phone number on the bottom of the levy notice, so you can start by calling for advice (but keep in mind a phone call is not counted as an official appeal to the levy). You need to file for the appeal and have a hearing if the levy is a mistake.

Pay What You Owe

You can stop a tax levy simply by paying what you owe in full. If you can't afford to pay the tax debt, and have no other way to come up with the money (credit cards, borrowing from friends or family, selling things you no longer need, etc) then you will need to consider other options for paying your tax debt and stopping the levy.

Settle Debt with Installment Agreement

The installment agreement is the most common method individuals use to satisfy their tax debts when they can't make the payment in full. Just like it sounds, the installment agreement allows you to pay your debt in monthly installments – and as long as you make your payments on time, the IRS will not levy your belongings. Penalties and interest will continue to accrue until the total debt is paid in full, but it's better than losing your personal property or having your paycheck garnished.

Offer in Compromise

For individuals who meet certain requirements, there is a settlement method which allows the taxpayer to settle the debt for less than the total amount owed (called an Offer in Compromise).

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