What happens when the IRS levies your property?
This is a really long story, but I'll try to keep it short. My father had a business, and in the year of 2004 he owed $25,000 in taxes, which he never paid. My mom has always worked as a nurse, and didn't have any say over my dad's finances. They divorced in 2005, so legally my mom is responsible for this debt too. This year the IRS has started sending her notices for the money due. My dad has ignored all of his mail from the IRS because he's a loser. My mom wrote them a long letter explaining her situation a couple of months ago and never got a response. Well, this week she got a Final Notice of Intent to Levy and Notice of Right to a Hearing. It doesn't say what property they want to levy.
My questions to you are: What would they levy from her? $25,000 is a relatively small debt, especially split between two people. Is it possible they would take our house? With this economy, my mom owes more than it's worth. In the (hopefully unlikely) event that they would take our house, what happens then? Do they come while you're at work and empty the house, and basically throw you out on the street? We have two dogs that are our babies, so I'm stressed that they'd take them away to a holding area or something.
Sorry for the long post, but if you could kindly let me know what we are up against. This is really stressing me out because it effects me too, not just my parents. By the way, my mom is going to file for Inncocent Spouse Relief this week. I'm hoping she has a case.
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Comments on What happens when the IRS levies your property?
1. Your mom is ignoring her mail too.
2. For $25000, she can set up a payment plan. If the total, including interest and penalties is less than $25000 and she can offer to pay $500 a month, she gets the payment plan. (Future refunds are also applied.) If it's more, she has to submit financial statements to show how much she can afford to pay.
3. While you call this your dad's debt, your mother signed a joint return with your dad, making her liable for the debt. The problem is, she could see the debt when she filed and the innocent spouse form asks why she signed.
4. Houses and cars get liens. This means if they are sold, the money goes to the government.
5. Wages and Bank accounts get levied. The IRS can tell her bank to send them the account balances. The IRS can tell her job to send them $500 a month from her pay.
hayley.randall,
If the business was set up as self employed, and they filed as married filing jointly, then she could be held equally liable for the unpaid debt.
If he has a corporation and this amount owed had to do with payroll taxes not being paid, then they can hold the owners personally liable.
Other then that, they can only hold the corporation responsible, unless they find that amounts were compensation to the officers of the
corporation.
1)What would they levy from her? $25,000 is a relatively small debt, especially split between two people
They would seek to levy all assets, that includes wages, property,
bank accounts.
2)Is it possible they would take our house?
They could try to lien the house, They may already have placed a lien on the house. Foreclosure in this present market is unlikely
3)event that they would take our house, what happens then?
You will get letters . There is a whole process involved.
4)Do they come while you're at work and empty the house, and basically throw you out on the street?
No . This is not a Communistic society.
I would suggest that you get in contact with the taxpayer advocates office and discuss what can be done. The office was set up as a go between between the IRS and the taxpayer. It is part of IRS, but if you get a good advocate, they will steer you in the right direction.
There are lots of alternatives at your disposal.
1)open up communication
2) That letter sent to IRS where no one responded, did you retain a copy? Was it sent certified? All communication should be followup up with something in writing and sent certified.
3) a offer in compromise can be prepared. IRS most likely would be able to accept an offer in compromise to settle this debt. They can come to reasonable terms. If not, the advocate's office can provide assistance.
Let me know if I can be of further assistance.
I don't recommend calling the Taxpayer Advocate at this point as their primary function is to intervene when something can't be resolved. An Offer-in-Compromise would probably not be accepted either if she is currently working and has enough equity in the house to pay off the debt–even if she's unable to borrow from it. Your mother hasn't reached this point yet. Her best bet is to immediately call the number on the letter she received and discuss her options.
As VB noted, she can probably get an installment agreement. The assessed balance (tax plus whatever interest and penalties have posted to the account) would have to be less than $25,000 or a financial statement will be required to determine payment ability. This will also require that a tax lien be filed. The IRS will let her pay the assessed balance down below $25k to avoid the statement and lien filing, but she would have to be able to pay the $450-500 required per month. Otherwise, the IRS will determine her ability to pay via the financial statement.
As for the letter, it usually takes a while for the IRS to respond to correspondence–and simply writing a letter will not resolve anything.
VB's comments are correct as to what would be levied–bank accounts and/or wages (although the amount taken from wages is subject to a set formula, not a specific amount as he suggested).