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Understanding Levy Fines in Taxation
When it comes to handling taxes, the process can often feel overwhelming and complex. One aspect that often introduces confusion and stress is the application of levy fines. At Brightside Tax Relief, we aim to alleviate this burden by providing valuable insights and professional guidance to help you understand and navigate these intricacies more confidently.
A levy fine, in the simplest of terms, is a legal seizure of your property to satisfy a tax debt. It is imperative to know that this is different from a lien. A lien is a mere claim used as security for the tax debt, while a levy actually takes the property to satisfy the said debt. The understanding of levy fines is particularly crucial since it levies not only affect your property but also your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, and even the available cash value in your life insurance.
To gain a more distinct idea, let us delve into specific areas related to levy fines.
When Do Levy Fines Come into Play?
An Important section of this discussion pertains to the situations that may lead to levy fines. Before the Internal Revenue Service (IRS) issues a levy, they will normally have assessed the tax and sent a Notice and Demand for Payment. If you refuse to pay or fail to respond, the IRS will then send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing approximately 30 days before the levy. If the tax continues to be unpaid after that period, the IRS can then proceed with the levy.
Levy Process and Potential Consequences
Upon receipt of the Final Notice, you can either pay in full, set up an installment agreement, or submit an Offer in Compromise (OIC) to resolve your debt. If you don’t take any of these steps, the IRS can then officially assess a levy fine.
Once the IRS carries out a levy, it can have far-reaching consequences on your financial stability. Besides seizing your assets, the imposition of levy fines negatively impacts your credit score, creates potential issues with your bank, and may potentially lead to criminal charges if the IRS believes the act of evasion was intentional.
Rights and Options
The IRS abides by protocols and offers taxpayers certain rights and options. For instance, you reserve rights to be informed about the levy process, to be heard before an independent Office of Appeals, and to receive professional tax help.
Moreover, there are numerous options available to alleviate through the Offer in Compromise (OIC), payment plans, Currently not Collectible (CNC) status, penalty abatement, and via the Innocent Spouse Relief laws if the tax debt was from a joint return.
If you find yourself unable to pay your tax debt, the IRS offers alternatives to halt collection activities. For instance, if you can prove financial hardship, the IRS may categorize your account as Currently Not Collectible(CNC) or accept less than the full amount via an Offer in Compromise (OIC).
Getting Professional Guidance
The IRS offers a wealth of information on its website, and for the more specific details about levies, you can visit their detailed website section here. However, when dealing with large tax debts and potential levy fines, professional help can be invaluable.
At Brightside Tax Relief, we assist our clients through the complicated process of managing tax burdens and levy fines. Our team of experienced tax professionals can provide guidance, help negotiate with the IRS, and work to make the process as painless and stress-free as possible.
Final Thoughts on Levy Fines
It is vital to keep in mind that levy fines stem from unpaid taxes – something that can also attract penalties and interest. Understanding levy fines undoubtedly help you prevent needless stress, protects your personal and business assets, and especially empowers you to know your rights and options available to you.
As Benjamin Franklin famously noted, “in this world nothing can be said to be certain, except death and taxes.” We can’t do much about the first, but through expert advice and professional guidance on levy fines, taxes can become a lot less daunting.
