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How To Obtain Release Of IRS Levy (cont.)
However, once the tax payer learns of the levy action he needs to act immediately to get the levy released. Following are some of the situations which will lead to immediate release of levy.
The first situation is if the tax payer pays the entire tax dues immediately. The dues include accrued interest and penalty. This is of course the easiest solution but many tax payers may not be in a position to do so immediately.
The second situation arises if the mandatory notices are not served on the tax payer or the time given in the notices is not over and the levy action is done. It may be noted that time allowed for payment of tax as per law is ten days from the date of service of demand notice. The IRS is also required to serve a notice on the taxpayer intimating their intent to levy before taking any levy action. This notice has to be served at least thirty days before actual levy. They also have to give a notice informing the tax payer of his right of hearing before the levy action. This hearing is done by the appeal office. This is the opportunity to point out any procedural errors and also dispute the correctness of demand apart from discussing payment options. The hearing results in a determination which decides whether levy will be done or not and how the taxes will be collected. If the above procedure is not complied with by the IRS, the levy will have to be released immediately.
The levy cannot also be done while the request for installment agreement or offer in compromise is under the consideration of the IRS. The levy also cannot be done during the period the appeal office is considering appeal against any rejection of the request for installments or an offer in compromise. Sometimes, it is possible to seek innocent spouse relief against the tax demand which may also be under the consideration of the tax office. You may refer to Tax Topic 205 ‘Innocent Spouse relief’ to know more on this tax relief. Any levy done while these processes are alive will be illegal and released immediately.
If there is no illegality in the action of the IRS and the tax payer also does not have the means to pay the entire dues immediately, it is still possible to negotiate release of levy. The IRS can release a levy on the grounds of economic hardship to the tax payer. However, the case has to be exceptional. The levy can also be released if it helps the IRS to collect the tax as for instance in a case where the tax payer makes some reliable arrangement for paying tax such as through an installment agreement. The release can also take place if an escrow arrangement is made or a bond is furnished. A good reference material on the subject is Publication 594 on ‘The IRS Collection Process’ at www.irs.gov
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