If your business fails to pay its taxes, the IRS may levy your property, assets, or wages. A levy is a legal seizure of your property by the IRS that will be used to satisfy the debt you owe them. If you receive notice of a levy on your property, it is important to respond to the notice as soon as possible.
If your business has had property seized in a levy or is at risk for having property levied, you can use the help of the accountants from Cook CPA Group. The Sacramento accountants with Cook CPA Group are prepared to help clients deal with levies by assisting them in paying their taxes and communicating with the IRS.
Understanding IRS Levies on Your Business
If you avoid paying your taxes and fail to set up a payment arrangement with the IRS, the IRS may levy property you own and property you have an interest in, such as your wages, bank accounts, accounts receivable, retirement accounts, commissions, licenses, rental income, or the value of your life insurance. The IRS may also levy your assets, such as your house or car.
Before they issue a levy, the IRS will take certain actions to warn you about your susceptibility to a levy. After assessing the tax debt that you owe, the IRS will send you a Notice and Demand for Payment, essentially a tax bill. If you neglect or refuse to pay the tax, then the IRS will send you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. These will be given to you in person, left at your home or place of business, or sent to you in the mail at least 30 days before the levy is issued.
It should be noted that a levy is similar to, but distinct from, a lien. A lien is a legal claim against your property that tells other creditors that the IRS’s debt is the most important, while a levy is the actual seizure of property. A lien comes into being when the IRS files a public document known as a Notice of Federal Tax Lien, which alerts creditors about the IRS’s legal right to your property. If you fail to respond or pay the debt that you owe, a lien may be issued.
How to Avoid IRS Levies on Your Sacramento Business
The easiest way to avoid being issued a tax levy is to file your tax returns on time and pay your taxes in full when they are due. File for extensions if needed. If you cannot afford to pay the full amount that is owed, you can work with the IRS to arrange a payment plan. Even if you can’t pay the full amount, it is important for you to respond to all notices sent to you by the IRS.
If the debt you owe is large enough, you may be able to enter into an offer in compromise. With an offer in compromise, the taxpayer and the IRS agree that the taxpayer will only pay a portion of the amount that they owe. These are considered to be a last resort for taxpayers that have already considered other payment methods, such as installment agreements. Taxpayers will make monthly payments to settle the remaining balance of the agreed-upon tax debt that they owe.
What to Do If You Are Issued a Levy
If you have been issued a levy, it is imperative that you act immediately to get it released. As soon as you receive notice of your levy, contact the IRS and request a levy release. The IRS is required to release a levy if it determines that you paid the amount that you owe, that the period for tax collection ended prior to the levy being issued, that releasing the levy will help you pay the debt you owe, that you entered into an installment agreement, or that the levy creates an economic hardship that prevents you from meeting the basic cost of living.
If the IRS denies your levy release request, you are able to appeal the decision. You can appeal the decision either before or after the levy is placed on your property, wages, or bank account. It is important to note that being released from a levy does not mean that you will no longer have to pay the tax debt that you owe; it simply means that you will have to make arrangements with the IRS to find a way to pay your debt. Another levy may be issued if you fail to make arrangements.
If your property (such as your house or car) is seized by the IRS, they will sell your interest in it, then apply the proceeds of the sale to the debt you owe. Before the IRS sells your property, they will give you an opportunity to challenge the market value determination and will then give you a notice of the sale.
The IRS will wait at least 10 days before selling seized property. If there is money left over from the sale of the property (after applying the proceeds to your debt), you will be issued a refund. Also, you may be able to file a claim to have your property returned to you after the proceeds from the seizure have been sent to the IRS.
Work with Our Sacramento IRS Business Levy Accountant
Don’t allow a levy to make your life harder. With the help of Sacramento IRS business levy accountants from Cook CPA Group, you can avoid levies on your property or address a levy you already have. The Sacramento accountants at Cook CPA Group are experienced with helping clients deal with levies. Contact them today to learn more about how they can assist you.
