Understanding IRS Levies: What You Need to Know

If you’re dealing with unpaid taxes, you may have heard the term “levy” tossed around. But what does it mean, and how can it affect you? Let's take a look at what an IRS levy is, how it works, and what steps you can take to protect yourself.

What Is an IRS Levy?

An IRS levy is a legal way for the Internal Revenue Service (IRS) to collect the money you owe in unpaid taxes. Unlike a lien, which is a claim against your property to secure payment of a tax debt, a levy allows the IRS to seize your assets to satisfy your tax liability. This can include:

  • Wage Garnishment: The IRS can take a portion of your paycheck directly from your employer until your tax debt is paid off.
  • Bank Account Seizure: The IRS can freeze your bank accounts and take money directly from them.
  • Property Seizure: In extreme cases, the IRS can seize other assets, such as your car or home.

How Does a Levy Happen?

Before the IRS can levy your assets, they must follow certain steps:

  1. Tax Assessment: The IRS will assess your tax debt and send you a bill outlining how much you owe.
  2. Multiple Notices: If you don’t pay the debt, the IRS will send several notices over time, including a Final Notice of Intent to Levy.
  3. 30-Day Response Period: After the final notice, you typically have 30 days to respond before the IRS can proceed with the levy.

Why You Should Take IRS Notices Seriously

Ignoring IRS notices won’t make your tax debt disappear. In fact, it will likely make the situation worse. If you receive a notice, it’s essential to take action.

What You Can Do If You Face a Levy

If you find yourself facing an IRS levy, don’t panic! You have several options to address the situation:

  1. Request a Collection Due Process (CDP) Hearing: You have the right to appeal the levy and request a hearing. This can provide a temporary stop to the levy while you work to resolve your tax issues.
  2. Set Up a Payment Plan: The IRS offers payment plans that allow you to pay off your tax debt over time. This can prevent the levy from happening if approved.
  3. Apply for an Offer in Compromise: If you can’t pay the full amount, you may be eligible to settle your tax debt for less than what you owe. This is known as an Offer in Compromise.
  4. Prove Financial Hardship: If paying your tax debt would cause severe financial difficulty, you can request to be classified as Currently Not Collectible. This status halts collection efforts, including levies, but doesn’t erase your tax debt.

How David Rappaport Can Help

Navigating the complexities of IRS levies can be challenging. That’s where David Rappaport comes in. As a tax resolution professional, he helps individuals and businesses address tax issues and negotiate with the IRS. Here’s how he can assist you:

  • Evaluate Your Situation: David will review your tax situation to determine the best course of action.
  • Negotiate on Your Behalf: He'll work directly with the IRS to negotiate terms that work for you, whether it’s a payment plan or an Offer in Compromise.
  • Protect Your Assets: His goal is to help you keep your hard-earned assets while resolving your tax issues.

Final Thoughts

Facing an IRS levy can be stressful, but it’s essential to remember that you have options. Don’t ignore the IRS or assume that the problem will go away. The sooner you take action, the better chance you have of resolving your tax issues without losing your assets.

If you’re facing a levy or have received an IRS notice, don’t hesitate to reach out. Together, we can work on a solution that helps you regain control of your financial future. Contact David Rappaport today.

by David Rappaport

Tax Relief for House Flippers

 

House flipping—buying homes at a low price, fixing them up, and selling them quickly for a profit—can be a great way to make money. But it can also lead to big problems with the IRS if you're not careful. Many house flippers get into trouble because they don’t fully understand the tax rules. If you’re in this situation, it's important to know where things can go wrong and how to fix them.

Common Problems for House Flippers:

  1. Misclassifying Income: One of the most common mistakes is treating income from flipping houses as capital gains rather than ordinary income. The IRS often sees it as ordinary income, which is taxed at a higher rate. Mislabeling it can lead to penalties and back taxes.

  2. Not Reporting All Income: With so many transactions happening quickly, it’s easy to forget to report some income. But the IRS is strict about this, and missing even a little bit can trigger an audit.

  3. Claiming the Wrong Deductions: Many house flippers try to deduct all their expenses, but not everything is deductible the same way. Claiming the wrong deductions can draw IRS attention.

  4. Underestimating Quarterly Taxes: Flipping houses means you’re making money throughout the year, so you need to pay taxes quarterly. Many flippers underestimate how much they owe, which can lead to a big tax bill at the end of the year and penalties for underpayment.

How to Fix IRS Problems:

If you’re already facing IRS issues, or you think you’ve made mistakes, it’s important to act quickly. Here’s what you can do:

  • Talk to a Tax Professional: A tax expert like David Rappaport can help you navigate the complex tax rules related to flipping properties. With over 36 years of experience, David can help you correct mistakes and reduce penalties.

  • Amend Your Tax Returns: If you’ve made errors on past tax returns, you may need to file an amended return. A tax professional can guide you through this process.

  • Explore Your Options: Depending on your situation, you might qualify for IRS programs like an Offer in Compromise or an installment agreement to help settle your tax debt.

  • Plan for the Future: To avoid future problems, work with a tax expert to make sure you’re reporting income correctly, claiming the right deductions, and paying your quarterly taxes on time.

If you’re a house flipper dealing with IRS issues or want to prevent future problems, contact David Rappaport at Rappaport Tax Relief.

With hundreds of clients helped and nearly four decades of experience, David can guide you through the process and help you get back on track.

Call David at 917-488-8295 NOW for a free consultation, and secure a brighter financial future.

by David Rappaport