What happens if the IRS issues a levy to someone who does not owe taxes to the IRS, but the IRS does not receive anything from the levy? The levy sits dormant for several years. Everything is good, right? But then the third party pays the IRS. Can the person’s right to challenge the levy…
Category: IRS Collections
About IRS collections, including levies, liens, and garnishments.
Last Filed Rule Overruled? IRS Collections Uncertain
Taxpayers will often file tax returns that do not report all of their allowable deductions and credits, with the intent of going back and filing amended returns once they are able to determine the correct deductions and credits. Can the IRS base its collection analysis on the originally-filed but incorrect tax returns? The court recently…
Avoiding IRS Wage Levy by Change of Status
Can you avoid an IRS wage levy by having your employer change your status from that of an employee to a contractor? The court addressed this in Hudiak vs. United States, No. MJG-11-1271 (D. Md. 2018) by ordering the taxpayer to make installment payments to the IRS despite the change in employment status. The Facts &…
Can the IRS Take Property Purchased in a Business Name?
If you owe the IRS back taxes but want to buy real estate or some other type of property, can you form a legal entity and use it to acquire property and thereby put the property beyond the IRS’s reach? The court recently addressed this in United States v. Jones, No. 8:17-cv-2389-T-24 AEP (M.D. Fla.…
IRS Refuses to Enforce Lien, Leaving Taxpayer Without Recourse
If the IRS has a superior lien on real estate, it should enforce its lien and apply the sales proceeds to reduce the taxpayer’s unpaid taxes. But what if there is a junior lien that acquires the real estate first? Can the IRS work out a deal with the junior lien holder and divert a…
About the IRS Certificate of Discharge
The IRS’s lien for unpaid taxes attaches to all property owned by the individual. This can prevent the individual from selling or transferring their property or refinancing the property. There are several potential remedies that can help in this situation. One of these remedies is the IRS certificate of discharge. The IRS Certificate of Discharge…
Can the IRS Collect from a Single-Member LLC?
When trying to settle a tax debt with the IRS or manage the collection process, there are often questions as to whether the IRS can collect from a legal entity owned by the taxpayer. This often comes up in the context of a limited liability company that has one owner. You may be surprised to…
Congress Provides Significant Relief for Back Taxes
There are winners and losers when it comes to the recent tax changes proposed by Congress. As it turns out, those who owe back taxes to the IRS may be in the winner category. The proposed changes will significantly increase the amount of income that is beyond the IRS’s reach. If the legislation is passed…
Making the IRS Pay for Unlawful Collection Activities
Taxpayers often feel helpless when it comes to the IRS. We hear this from clients when there is some real or perceived injustice involving the IRS. While the IRS and IRS employees have a lot of power, they are subject to the law. The law provides taxpayers with several remedies when they are harmed by…
The IRS Levy, What You Need to Know
If you owe the IRS back taxes, you need to know about the IRS levy. This is the primary tool the IRS uses to collect unpaid taxes. About the IRS Levy The word “levy” is a legal term that refers to the process of taking property. Creditors are able to levy on property to satisfy…