The Internal Revenue Service (IRS) may levy a business’s property, assets, and/or wages if they do not pay their taxes. During a levy, the IRS seizes the property of the person or business that has not paid their taxes; the seized property or money will used to satisfy the debt that is owed. If you receive notice that the IRS is levying your business’s property, you should respond immediately to reduce the risk of losing it forever.
Businesses whose property or money has been seized in a levy or is at risk or being levied should use the help of an experienced Roseville IRS business levy accountant from Cook CPA Group. The accountants that work with Cook CPA Group are prepared to aid clients with levy notices by helping them with paying their taxes and corresponding with the IRS.
How the IRS Places Levies on Businesses
The IRS is able to levy the property you own for your business if you do not pay business taxes. The IRS is also able to levy property you have an interest in but which is owned by someone else, such as bank accounts, wages, accounts receivable, commissions, licenses, rental income, the value of your life insurance, and retirement accounts. Your assets, including your house and car, may also be levied by the IRS.
The IRS takes certain actions to warn people about their susceptibility to being levied. After assessing the amount of tax debt that a business has, the IRS will send the business a Notice for Demand of Payment, which is, essentially, a tax bill. If your business does not pay the tax listed on a Notice for Demand of Payment, then you will be sent a Final Notice of Intent to Levy and a Notice of Your Right to a Hearing. These notices will either be issued to you in person, mailed to your business at least 30 days prior to the levy, or left at your home or place of business.
Levies are often confused with liens, so it’s important to note the differences. A lien is a legal claim that is made against your property. A levy, on the other hand, entails the seizure of property. The process of liens begins when the IRS files a public document called the Notice of Federal Tax Lien. This notice alerts creditors to the fact that the IRS has a right to your business’s property. Failing to respond to the notice (and failing to pay the debt that your business owes) will result in the issuance of a lien.
Avoiding an IRS Levy on Your Business
To avoid being issued a levy, businesses can file their tax returns on time and pay the amount of taxes that they owe in full. Businesses are advised to file for extensions if needed. If a business cannot afford to pay the full amount of taxes that they owe, then they should work with the IRS to arrange for a payment plan. All businesses are advised to immediately respond to all notices that the IRS sends them to avoid being issued a levy.
If a business owes a tax debt that is large enough, they may be able to enter into an “offer in compromise.” When a business enters into an offer in compromise, they agree to only pay a portion of the total amount that they owe to the IRS. Offers in compromise are considered to be the last option for businesses that have given consideration to other payment options, including installment agreements. After they have entered into an offer in compromise, a business will make monthly tax payments until they have paid off the balance that they have arranged to pay with the IRS.
What to Do If You Are Issued a Levy
If the IRS has issued a levy to your business, you should take action immediately so that it can be released. When your business receives notice of the levy, you should contact the IRS immediately to request a release of the levy. The IRS must release your business’s levy if they determine that you have already paid the amount that your business owes, that the period for tax collection ended before the levy was issued, that a release of the levy will help you pay a business tax debt you owe, that you have entered your business into an installment agreement, or that the levy creates an economic hardship for your business that prevents you from paying for your basic living expenses.
It should be noted that being released from a levy does not mean that the business will be cleared of the tax debt that they owe. Businesses are able to file an appeal if the IRS denies their request for a levy release.
Work with Our Roseville IRS Business Levy Accountant
An IRS levy has the power to affect your life in various ways. If you have been issued a levy by the IRS or believe that you are at risk of being issued a levy, you should use the help of a Roseville IRS business levy accountant from Cook CPA Group. Cook CPA Group’s accountants have experience helping clients face IRS levies.