When it comes to collecting unpaid debts, the Internal Revenue Service is one of the most powerful organizations in the United States. In addition, the IRS usually begins trying to collect soon after they realize the debt is unpaid, so ignoring their billing notices won’t help.
In many cases, the IRS’ aggressive collection activities lead to a tax levy, which is a process that allows the IRS to seize certain assets. The IRS usually imposes a Las Vegas Tax Levy after filing a federal tax lien against you.
Las Vegas Tax Lien versus Las Vegas Tax Levy
Each year, all taxpayers must pay the amount of income tax they owe for the previous tax year by April 15. If you owe money to the IRS and you don’t pay the full amount by this date, the IRS can begin trying to collect from you right away. The first step the IRS takes usually involves sending you a notice that explains how much you owe and demands payment in full immediately. If you don’t pay the debt after receiving this notice, the IRS will file a Notice of Federal Tax Lien. This notice tells other creditors and the general public that the IRS has a financial interest in any and all of the property you own now and acquire in the future. With this lien in place, it is more difficult to sell or refinance any of your property. The federal tax lien will also make it much more difficult to qualify for new loans, as the IRS’ lien will take priority over the claims of any new creditors.
A Las Vegas tax levy is different from a tax lien. While a tax lien only expresses the fact that the IRS has an interest in the property, the tax levy implies action. When the IRS levies your assets, it seizes them to sell. The IRS usually enacts a tax levy if you fail to pay your debt or come to any other agreement with them after the tax lien is in place.
What Can the IRS Levy?
The IRS has the power to seize almost any of your property or assets if you owe unpaid taxes. For example, the IRS may garnish your wages, seize the funds in your bank account, take your retirement income or intercept any state or federal tax refunds you receive in the future. The IRS can also seize and sell any assets you currently own or purchase in the future, including real estate and vehicles. The IRS can continue to use its power to levy until your debt is paid in full or the statute of limitations on the debt expires.
How Can I Avoid a Las Vegas Tax Levy?
There are several ways to avoid a Las Vegas tax levy. Perhaps the easiest way to avoid this problem is simply to pay your income taxes on time each year. If you never owe a debt to the IRS, you will never have to worry about the IRS imposing a federal tax lien or using their power to take your property. Unfortunately, some circumstances may make it impossible to pay all of the taxes you owe to the IRS before the due date. To avoid a tax levy in these situations:
- Pay as much as you can.
As soon as you know you won’t be able to pay the full amount you owe to the IRS, make the largest payment you can afford. The IRS is less likely to be aggressive in their collection efforts if you demonstrate that you are making an effort to pay your debt. In addition, paying as much as you can will also reduce the amount of interest that accumulates on your account.
- Work toward a resolution with the IRS.
If you can’t pay your debt in full, the IRS offers certain tax relief options that may help you avoid a tax levy. For example, you may be able to pay your debt over time under an installment agreement. If the IRS agrees to this arrangement, you will make payments each month until the debt is completely paid. As long as you continue making your payments, the IRS won’t seize any of your assets.
You may also be able to avoid a tax levy by applying for an Offer in Compromise. This solution allows you to eliminate the debt you owe to the IRS by making a lump sum payment equal to a portion of the debt. In general, the IRS will agree to this arrangement if you offer a large enough amount to cover what the IRS expected to collect on its own.
- Consult a professional.
If you owe back taxes and you aren’t sure how to proceed, consult a professional to discuss your options as soon as possible. If you contact a professional quickly, he or she will be able to help you take the right steps to avoid a levy.
In some cases, the IRS may have calculated your tax incorrectly, or you may be eligible for less common types of tax relief, such as innocent spouse relief. A tax professional will be able to help you explore these options and make the best choice for your situation.
Releasing a Las Vegas Tax Levy
If the IRS is already using a levy to seize your assets, it is possible to get the levy released. One way to get the levy released is to pay your balance. However, if paying your balance isn’t possible, you may still be able to get the levy released if you can show that any of the following are true:
- The levy is causing you significant financial hardship.
- Releasing the levy would make it easier for you to pay your taxes.
- You have entered into an agreement to repay your taxes on your own and the levy violates the terms of that agreement.
- The period in which the IRS can legally collect your unpaid taxes has passed.
At Tax Samaritan, We Rescue Troubled Taxpayers
Click the button below to request a Free Tax Debt Analysis today to get started with the resolution of your Las Vegas Tax Levy and learn about your options.
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on US tax preparation and representation. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts). If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.