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Federal Tax Levies and Liens

Zaher Fallahi, Attorney At Law and Certified Public Accountant (CPA), is a Law and CPA firm with emphasis on US tax, tax controversy, un-disclosed offshore accounts, international tax, foreign gifts, out-side general counsel services, and Office of Foreign Assets Control (OFAC) Regulations. We are licensed in California and Washington D. C., and represent tax and OFAC clients throughout the United States and overseas. Depending on the case, telephone appointments are available for long-distance clients.

 

Harvard Law School

Zaher Fallahi has completed “Negotiation and Leadership” and “Leveraging the Power of Emotions as You Negotiate” Certificate Programs at Harvard Law School.

 

Federal Tax Levy

An IRS tax levy is a legal seizure of your assets to satisfy the IRS taxes you owe. If you owe IRS and do not pay your tax debt, or do not arrange an installment plan, or do not make an offer-in-compromise to settle your tax debt, the IRS may seize and sell your assets to collect the taxes you owe.

To satisfy the Federal taxes you owe, the IRS may levy by garnishing your salaries and taking money from your financial accounts. If you are an employer and receive an IRS notice of levy against your employee, customer or other third parties, you should comply with the levy order.

As an employer, you have at least one full pay period after receiving an IRS “Notice of Levy” on Wages and Other Income before being required to send the funds from your employee’s wages to the IRS. Advise your employees with tax levies on their wages to contact the IRS as soon as possible to release the levies and resolve their Federal tax debt.

The IRS will usually levy after the following requirements are met:

1- The IRS assessed the tax and you received a “Notice and Demand for Payment”;

2- You ignored the notice or refused to pay the tax; and,

3- The IRS sent you a “Final Notice of Intent to Levy and Notice of Your Right to A Hearing” at least 30 days before the levy.

The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address on file by certified or registered US mail, return receipt requested.

 

Releasing a tax levy

To get an IRS tax levy released, contact the IRS immediately to resolve your tax debt and request a levy release. Or prove to the IRS that the levy is causing you an immediate economic hardship. If the IRS refuses to release the levy, you may appeal this decision.

You may appeal before or after the IRS places a levy on your wages, bank account, or other assets. After the levy proceeds have been sent to the IRS, you may still file a claim to have funds returned to you. You may also appeal the denial by the IRS of your request to have levied assets returned to you.

 

The IRS must release a Federal tax levy if it determines that:

1- You paid your tax debt;

2- The period for tax collection ended prior to the levy being issued;

3- Releasing the levy will help you pay your tax debt;

4- You arrange “Installment Plan” and its terms do not allow for the levy to continue;

5- The levy creates an economic hardship so that the tax levy prevents you from meeting your basic reasonable living expenses; or,

6- The value of the seized asset is more than your tax debt and releasing the levy will not prejudice the IRS’s ability to collect the tax debt.

Please note: The release of a levy does not mean that you do not have to pay the balance due. You must still arrange for an installment plan or make an offer-in-compromise with the IRS to resolve your tax debt or a levy may be reissued at a later time.

Tax Planning Tip. New 20% tax deduction. There is a new 2018 deduction of 20% for pass-throughs; New 20% Deduction

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Fedearl Tax Liens

Background

An IRS tax lien is the federal government’s legal claim against your property when you fail to pay your tax debt. A federal tax lien protects the IRS’s interest in your assets; real estate, personal property, financial assets, etc.

A federal tax lien is placed on your assets after the IRS:

  1.  Assesses your tax debt;
  2.  Sends you a tax bill called “Notice and Demand for Payment”; and,
  3.  You fail to timely pay your tax debt

 

Federal tax affects your:

Assets. An IRS tax lien attaches to your assets such as real property, personal properly, securities, vehicles, and to future assets acquired during the lien;

Credit. Once the IRS files a “Notice of Federal Tax Lien”, it may negatively affect your ability to take a loan; and,

Business. A federal tax lien attaches to all assets your business owns.

Bankruptcy.  If you file for bankruptcy, your tax debt, federal tax lien, and “Notice of Federal Tax Lien” may continue after the bankruptcy.

 

Avoiding a Tax Lien

You can avoid a federal tax lien by filing all your non-filed tax reruns and paying all your tax debt.  If you cannot file or pay on time, don’t ignore the IRS letters. If you can’t pay your full tax debts, consider “installment plan”, or “offer-in-compromise” to settle your tax debt over time.

 

Lien vs. Levy

A tax lien is not a tax levy. An IRS lien secures the federal government’s interest in your property when you fail to pay your tax debt. A tax levy takes your property to pay the tax debt. If you ignore to pay or make arrangements to settle your tax debt, the IRS is authorized to levy, seize and sell all your assets to satisfy the IRS tax debt.

 

Getting rid of an IRS Tax Lien

Of course, paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after your tax debt is paid in full.

Options: When conditions are in the best interest of both the IRS and you, other options for reducing the impact of a lien exist;

Discharge of property removes the federal tax lien from your property. Refer to Internal Revenue Code provisions in the IRS Publication 783 for more information and eligibility for a discharge;

Subordination does not remove the IRS lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage; and,

Withdrawal removes the public notice and assures that the IRS is not competing with other creditors for your property.

 

Tax Planning Tip. New 20% tax deduction. There is a new 2018 deduction of 20% for pass-throughs; New 20% Deduction

 

Outside General Counsel Services 

 

We Can Help Release Fedral Tax Levies