From the Practice Corner: HOW TO AVOID AND RELEASE LEVIES
After a four-year break, ACS (Automated Collection Systems) is preparing to resume sending automatic levies, which means a wave of anxious taxpayers will be looking for your services. The fastest way to retain a client is if they have a levy on their account. Here is what you need to know about how to avoid and release levies: If a client is in collection and at risk of a levy, it is possible to prevent the levy. Avoiding the levy requires minimal resources, whereas releasing requires significantly more effort and resources. It is essential that you determine whether a Final Notice of Intent to Levy (either an LT11 or Letter 1058) has been issued. Be aware that many notices now labeled as “final reminder” may appear to be final notices but are not. Reviewing transcripts is the most reliable method to confirm if a final notice has been issued. The first way to avoid levies is to obtain a 30- day collection hold. During this period, no levies, garnishments, or liens can be placed on your client’s account, giving you time to file returns and gather financial information. You can also file a CAP Collection Appeal Request using Form 9423. This process prevents the IRS from taking any levy action and does not toll the Collection Statute Expiration Date (CSED). However, it does not get any levies released. Your third option is to request a Collection Due Process (CDP) hearing within 30 days of receiving the notice or an equivalency hearing within one year of the final notice which stops collections and ensures that the IRS will not levy, lien, or garnish anything with the client.
fully pay the owed amount. This strategy is particularly effective if your client’s CSEDs are set to expire in the next five months or less or if the client is in escrow and cannot afford any liens or levies during this period. However, this option can only be used once. Another way to avoid a levy is to file an Offer in Compromise. The OIC unit places a code on the account preventing any levies or garnishments. However, an OIC will not release an existing levy. Lastly, filing for bankruptcy can stop a levy, but this is a drastic option reserved for limited situations. If avoiding a levy is unsuccessful, there are several methods to release it. The first approach is straightforward: Ask a revenue agent to release it. This interaction can reveal the agent’s mindset — some may be more inclined to blame your client, while others might be willing to assist. If the first agent you speak to is unhelpful, you can always hang up and call back to speak with another agent. Another method to release a levy is by entering into a payment plan, which works especially well for wage garnishments. Once a payment plan has been established, it automatically releases the levy. A third option is to prove hardship. It’s crucial to exercise caution when submitting the financials prematurely, as it could lead to a partial release or a modified bank levy release. For instance, they may release a limited amount, such as $1,000 for rent or $300 to cover a utility that has been shut off. Knowing how to protect your clients’ money is part of your job. Employing these strategies when appropriate will help you avoid or release levies and be a hero to your clients. –Michael Rozbruch
Fourth, you can request a 180-day extension to full pay, which puts a hold on the account with a commitment to
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