Levies and Garnishments

If you owe past-due taxes, whether to the IRS, the Colorado Department of Revenue, or any other state, county or city government, you may find yourself having to deal with a tax levy, garnishment, asset seizure, or other kind of enforced collection activity by the government.

A tax levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money our of your bank account or other financial account, seize and sell your car, or impact your real estate and other personal property.

If you are a business owner, the government can seize money that is owed to you by your customers, clients or vendors, or seize the vehicles, tools and equipment that is vital to earning your living. In other words, you can quickly be put out of business.

How Do I Avoid a Tax Levy?

You can avoid a levy by filing returns on time and paying your taxes when due. If you can’t pay what you owe, you should pay as much as you can and work with the government to resolve the remaining balance.

The key is to be proactive. Although we understand the instinct, it is never a good idea to ignore those notices and letters from the taxing authority, or hide from the tax revenue officer. Very rarely does a tax problem disappear on its own!

How Do I Get a Levy Released?

You may have options if you are facing a levy, and an attorney experienced in negotiating with the taxing authorities can help you determine what these are.

If you are dealing with a levy by the IRS, the IRS is subject to many procedural due process requirements and internal rules before it can legally levy your property. For example, the IRS must file a “Notice of Intent to Levy”, after which you are afforded a certain period of time to file an appeal. Sometimes, if it has been a very long time since the Notice of Intent to Levy, internal IRS rules require a “refresher notice” to issue.

An attorney can help you determine if the IRS has followed the law when it comes to enforced collections. It is not uncommon for the IRS to have made a mistake, and if so, the levy can be immediately reversed! But you can imagine the IRS does not readily admit to making a mistake on its own.

If it is determined that the IRS is indeed within its rights to levy, you should still contact them immediately and formally request a release of the levy. If the request is denied, you may appeal this decision. The notice and timing requirements for any IRS appeal can be fairly strict, so it is often crucial to have a knowledgeable tax resolution expert representing you in the process.

Whether you a facing a levy by the IRS or another state, county or local taxing authority, you may be able to set up a payment plan, settle your tax debt for less than the full amount you owe, or pursue other options that will convince the government to “release” the levy or garnishment and let you resolve the tax balance voluntarily.

Immediate Economic Hardship

There are rules requiring a taxing authority to release a levy if the levy is causing severe financial hardship. This hardship may be experienced by the delinquent taxpayer herself, or by an entirely innocent party (not the taxpayer who owes the debt).

For a business, this is a common scenario if the taxing authority has frozen funds that were going to be used to pay employee paychecks.

For an individual, an economic hardship occurs when it is proven the levy prevents you from meeting basic, reasonable living expenses. In order for the IRS to determine if a levy is causing hardship, the IRS will usually need you to provide financial information so be prepared to provide it when you call.

At the Law Offices of Daniel T. Goodwin, our tax resolution team has handled a wide range of cases involving bank levies, wage garnishments, asset seizures, and other kinds of enforced collection activity caused by tax debt. Do not hesitate to contact us if you have a question about taxes or need help resolving your tax levy problem.