Jun 3, 2009

IRS Levy, Certified Letters, Wage Garnishment...Don't wait

It's that time of the year for the IRS to being stepping up their enforcement. So, what does that mean? It means liens and levies...lots of them.

So what do you do if you receive a notice of intent to levy?
Well, first don't wait and do nothing, because they are coming and they are not going to wait on you. You need to be proactive and do several things.

1. Make sure all of your tax returns are filed, at least for the past 6 years. Why, you ask? Because the IRS is going to require them before they stop any enforced collection or release any type of levy.

If all of your returns are not filed, then find a tax preparer who can file outstanding returns and one who will verify your income against IRS records to ensure they are properly prepared. Make sure that they also date stamp your returns to ensure IRS compliance is met.

2. Determine the total amount that you owe for all years, not just the years that are listed on the levy notice if you know you owe for more years. This will be important to getting your levy released or to prevent the levy before it happens.

Why is this important? Because the IRS is going to require that you resolve all of your outstanding tax issues at once before they are going to release or stop any levies.

The total amount of taxes owed for all years combined will help determine what options are available to you to resolve your tax debts. The rest is determined by your current financial situation.

If your liability is less then $25,000 in total for all years, then the simplest and easiest resolution to obtain to prevent or release any levies is what is know as a "Streamlined Installment Agreement".

This will allow you to pay of your entire liability at a set payment per month over a 60 month period. As long as you make that payment then the IRS will simply leave you alone.

If you owe over $25,000 or if you cannot afford to make the streamlined payment amount then be prepared to go through a full financial investigation. This investigation will compare your current household income and expenses to what the IRS will allow as necessary living expenses for the area in which you live in. There are expenses that the IRS allows and there are expenses that the IRS does not allow, such as credit card payments.

So if you owe less than $25,000 and the only reason you cannot afford the streamlined amount is due to a monthly credit card payment, do yourself a favor, save yourself some time and headaches by forgetting about the credit card payment and agree to the streamlined payment, because the IRS isn't going to allow the payment anyway if you decide to go through the full financial disclosure, and they will then want at least the amount of that payment as a monthly payment to them and potentially more.

If you don't feel you understand the information that the IRS is requesting from you or you don't understand the documents and forms they are sending to you, then seek professional help.

In General, you should seek help anytime you owe in excess of $25,000, as it substantially more difficult to get into resolution with the IRS when you are in excess of $25,000.

Don't seek someone who is going to promise you a "settlement" as there is a 99% change that it will never happen. They know it, and you shouldn't fall for it. Find someone that will be brutally honest with you and tell you exactly what can be done, rather than giving you false promises that will never come true.

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