Also known as a “notice of intent to levy,” an IRS garnishment letter is kind of like a final notice to warn you that they intend to collect on your outstanding tax debt.
As a reminder, an IRS levy is when the Internal Revenue Service legally seizes your property or wages to pay the balance of your tax bill.
If you’ve received a letter in the mail from the IRS warning you of unpaid taxes or an intent to levy, don’t panic. You have both time and options to determine the best approach.
This article will give you some background information so that you’ll be informed of the process. We’ll also share tips on how to handle this situation.
You’ll Get More than One Intent to Levy Letter Before an Actual IRS Levy
Typically, you’ll receive more than one letter before they begin to seize your assets, which could include property, bank accounts, and employer wages. The IRS can even attach itself to dividends, rental income, commissions, and your retirement account, so it’s wise to take the letters seriously and begin to make arrangements.
The series might include five mailed notices (four for businesses) with titles such as:
Notice of unpaid taxes
Reminder of due taxes
Second reminder of unpaid taxes
Notice of Intent to Levy
Final Notice – Notice of Intent to Levy and Notice of Your Right to a Hearing
The letters are spaced in increments of about five weeks, which gives you time to work with a financial planner, tax expert, or attorney to explore your options and put a plan together.
Pay close attention to the title of the notice because that will give you an idea of how far along in the upcoming garnishment process the IRS is.
Time is On Your Side, and You Can File an Appeal
Another positive is that the IRS is legally required under Internal Revenue Code 6330 to notify you in writing before they’re able to seize any assets, including your bank account. You’ll also have the opportunity to appeal any collection efforts before they begin.
Appealing an intent to levy can buy you time, sometimes several months. The reason is that once you file an appeal, your case moves departments. It goes from the Collections Division to the Appeals Division.
You’ve Got Options
Many people think that if they get an IRS garnishment letter, their only choice is to pay their tax bill in full. While that’s certainly one way to resolve the problem, you have other options, including:
Declaration of Economic Hardship
Offer in Compromise (OIC)
Fresh Start Program
Currently Non-Collectible (CNC) Status
For a more complete list of your options, what they mean, and how to proceed, take a look at our blog post: The 5 Best Methods to Stop IRS Levy.
Though these options won’t cancel your tax bill, they can prevent the IRS from garnishing your wages or stop a levy that’s already been implemented.
Think Twice Before Considering Extreme Measures
In the face of crippling tax debt, it’s not unusual to think in extremes, and we’ve seen it all. Sometimes people quit their job to prevent or stop wage garnishment. Though getting a new job can keep the IRS at bay for a few months or longer, they’ll eventually show up with their hand out, and they won’t be as patient this time around.
Another option is to file for bankruptcy. While this measure will typically erase tax debt, it can also wreak havoc on your long-term financial situation, and even career prospects. Before making any life-altering decisions, we recommend speaking to a professional first.
Consult a Professional
Though it can be tempting to try to dodge the IRS, especially if your tax debt is substantial, running from this burden will ultimately do more harm than good. The best course of action is to consult with a professional. At Levy & Associates, we have a full team of tax experts, including former IRS revenue officers, CPAs, accountants, and attorneys. We are all on your side, and we’re here to help. Contact us today for a free tax analysis.