What is an IRS Levy Release?

If a person owes back taxes, the IRS may levy that person's wages, bank accounts, and other assets to recover what is owed. If this happens, the taxpayer will need to seek an IRS levy release in order to regain control over her money. An IRS levy release withdraws the levy from the taxpayer's accounts, wages, or assets. Obtaining an IRS levy release is usually a matter of either paying the taxes owed or convincing the IRS that there are grounds for the release to be issued.

The IRS has numerous collection methods as its disposal that include legal garnishment of wages, bank account seizure, and the ability to intercept tax refunds and other federal payments. In general, the IRS seeks to levy a taxpayer's assets when the taxpayer has not demonstrated an inclination to settle the taxes due. The taxpayer will usually receive a notice of intent to levy in the mail that offers alternatives to an IRS levy. If the taxpayer does not take action, the IRS can take steps to garnish the taxpayer's wages and seize his accounts. If the taxpayer has not paid attention to the communications from the IRS, he may be unpleasantly surprised by a frozen account when he visits his bank.

To secure an IRS levy release, the taxpayer must either pay her taxes, enter into a payment arrangement, or show that the value of the property levied by the IRS is worth more than the amount owed and that he intends to repay the taxes. The IRS may also grant a levy release if the taxpayer can show that the levy is causing a significant financial hardship or that the taxpayer can more easily pay her tax bill if the levy is released. For example, if the IRS garnishes the wages and levies the bank account of a taxpayer who can then no longer afford his car payments so as to get to work, the taxpayer could argue that the levy inhibits his ability to earn enough money to pay the taxes.

Many tax experts advise seeking professional help when trying to obtain an IRS levy release. This is because the legal and financial issues involved can be complex, particularly if a person owes more money than she can afford to pay. Of course, the best way to avoid an IRS levy is to keep careful track of personal finances, file tax returns on time, and be proactive in communicating with the IRS about difficulties of payment.