There are a number of ways to release an Internal Revenue Service (IRS) tax levy, the most obvious being to simply pay off the outstanding tax obligation. Of course, that option remains unavailable to many people, but there are a number of other ways to release a levy that many tax debtors might find advantageous. See Internal Revenue Service, “Levy,” available at https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Levy.
How to Get a Tax Levy Released
One way to avoid a tax levy is to allow the ten-year statute of limitations to expire. Once the statute of limitations expires, the IRS will no longer be able to enforce a tax lien. Alternatively, there are a number of payment options that will extinguish a tax levy as well. For example, the IRS will typically agree to installment agreements or partial payment agreements feasible for the tax debtor in light of their specific financial situation, especially if the IRS believes these options to be the most practical means for collecting outstanding tax debts.
Another option to consider is an Offer in Compromise. Although there are stringent qualifications associated with this option, once they are met the IRS will release a tax levy. A related option would be to prove that you, the tax debtor, are currently experiencing financial hardship, and that the levy itself creates a hardship that affects your earning ability; in such cases, the IRS will typically release the levy. If a tax debtor can prove that his or her assets have no equity that may also be grounds to release the levy as the IRS has nothing to gain from the levy, and no likelihood of reducing the outstanding tax liability.
For those that qualify, it is possible to post a bond in lieu of paying taxes in full, and this will release an IRS levy. An appeal of the levy order is also possible, though there must also be a basis for this appeal, and that basis may very well be financial hardship as mentioned above. That said, the levy may have been obtained prematurely or without appropriate procedures being followed, and in such cases an appeal may be successful. Finally, there is the option to file for bankruptcy; settlement with the IRS in bankruptcy can release a tax levy by order of the bankruptcy court. Nevertheless, bankruptcy should always be considered a last resort.
If you are seeking to release a tax levy, you should contact an attorney experienced with federal tax law, and discuss the options mentioned above.
Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS LAW at (619) 595-1655.