Stopping an IRS Levy in Virginia: How a Tax Defense Attorney Can Help
Facing an IRS levy can be an alarming experience. For many, it marks a moment of financial crisis where the federal government has initiated steps to seize assets such as bank accounts, wages, or other property to satisfy a tax debt. In Virginia, as in other states, stopping an IRS levy is a matter of urgency, and a tax defense attorney can be your most valuable ally in this situation. This article will walk you through what an IRS levy is, the potential consequences, and how a tax defense attorney can assist in stopping the levy and protecting your financial stability.
What is an IRS Levy?
An IRS levy is a legal seizure of your property to satisfy a tax debt. It is one of the most severe actions the IRS can take and can affect various aspects of your financial life. Unlike a lien, which is a legal claim against your property, a levy actually takes the property to pay off the debt.
Types of Property Subject to an IRS Levy:
- Bank Accounts: The IRS can freeze and take money from your bank accounts.
- Wages: The IRS can levy (garnish) all of your paycheck.
- Independent Contractor Income – The IRS can levy (garnish) all of your compensation from the people who are paying you.
- Real Estate: The IRS may seize and sell real estate you own.
- Personal Property: Cars, boats, and other valuable items can be seized.
- Social Security Benefits: The IRS can take a portion of your Social Security payments.
The IRS typically resorts to a levy after repeated attempts to collect the owed taxes have failed. It’s crucial to act quickly if you’ve received a notice of intent to levy, as ignoring it can lead to severe financial distress.
The Process Leading to an IRS Levy
Before the IRS can levy your assets, they must follow a specific process:
- Assessment of the Tax Debt: The IRS will first determine that you owe taxes and send you a bill. This bill is known as a Notice and Demand for Payment.
- Failure to Pay: If you do not pay the tax debt or arrange to settle it, the IRS will send you a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing. This notice typically arrives at least 30 days before the levy action begins.
- Notice of Intent to Levy: This notice informs you that the IRS intends to levy your assets if the debt is not settled or a hearing is not requested within the given timeframe.
- Levy Action: If you do not respond within 30 days, the IRS will proceed with the levy, seizing the identified assets.
How a Tax Defense Attorney Can Help Stop an IRS Levy
Stopping an IRS levy is possible, but it requires prompt action and a thorough understanding of tax law. This is where a tax defense attorney comes into play. Below are the key ways a tax defense attorney can help you navigate this challenging situation.
- Requesting a Collection Due Process (CDP) Hearing
One of the first steps your attorney may take is to request a Collection Due Process (CDP) hearing. This hearing is your right under the law and must be requested within 30 days of receiving the Final Notice of Intent to Levy.
During the CDP hearing, you and your attorney will have the opportunity to present your case to an impartial officer. This can include proposing alternatives to the levy, such as an installment agreement, an Offer in Compromise, or proving that the levy would cause undue hardship.
- Negotiating an Installment Agreement
If you cannot pay your tax debt in full, your attorney can negotiate an installment agreement with the IRS. This arrangement allows you to pay off your debt in smaller, manageable amounts over time. Once an installment agreement is in place, the IRS is generally required to stop the levy.
Your attorney will work to secure the most favorable terms possible, ensuring that the payments are affordable based on your financial situation.
- Submitting an Offer in Compromise
An Offer in Compromise (OIC) is a potential option if you cannot pay your full tax debt. This program allows you to settle your tax liability for less than the amount owed. However, qualifying for an OIC can be complex, and the IRS only accepts offers that they believe represent the most they can reasonably collect from you within a certain timeframe.
A tax defense attorney will evaluate your financial situation, help you determine if you qualify for an OIC, and prepare a compelling offer for submission. The attorney’s goal is to convince the IRS that accepting the offer is in their best interest, which can result in the release of the levy.
- Proving Financial Hardship
If the levy would cause significant financial hardship, your attorney can argue for its release on those grounds. Financial hardship occurs when the levy prevents you from meeting basic living expenses, such as housing, utilities, food, and medical care.
A tax defense attorney will gather and present evidence to the IRS demonstrating that the levy would create undue hardship, potentially leading to its release.
- Challenging the Validity of the Tax Debt
In some cases, the underlying tax debt may be incorrect or unenforceable. For example, the debt may have been assessed incorrectly, or the statute of limitations for collection may have expired.
A tax defense attorney will thoroughly review your tax records, identify any errors or issues, and challenge the validity of the debt if appropriate. If successful, this can lead to the reduction or elimination of the debt and the release of the levy.
- Filing for Bankruptcy
In certain situations, filing for bankruptcy can halt an IRS levy. The automatic stay that goes into effect when you file for bankruptcy temporarily prevents the IRS from collecting on your debt, including stopping any active levies.
However, bankruptcy has long-term consequences, and not all tax debts are dischargeable. A tax defense attorney can advise you on whether bankruptcy is a viable option and help you navigate the complex process if it is.
The Importance of Immediate Action
An IRS levy can have devastating consequences on your financial well-being. However, it’s important to remember that you have rights and options to stop the levy. The key to successfully stopping an IRS levy lies in prompt and informed action, and a tax defense attorney can provide the legal expertise and advocacy you need.
Speak With Experienced Virginia IRS Attorney at the Sodowsky Law Firm
By understanding the levy process, exploring alternatives, and effectively communicating with the IRS, a tax defense attorney in Virginia can help you protect your assets, resolve your tax issues, and regain financial stability. Don’t wait until the levy is already in place—seek our professional help as soon as you receive notice to ensure the best possible outcome.