When the IRS gets you with a levy, bad things can happen – your wages are frozen and you are looking at living without a paycheck. The money you need to pay bills is suddenly swiped out of your bank account.
This presents an urgent dilemma requiring immediate relief.
So, what are the two quickest ways to get an IRS levy released with no questions asked?
Although for some a course of last resort, bankruptcy results in an immediate release of an IRS levy, no questions asked. The filing of bankruptcy results in what is known as a “stay” on collection actions by all creditors, including the IRS. There is no need for disclosures or negotiations with the IRS for relief from a levy – it is automatic by bankruptcy law.
2. Streamlined installment agreement.
If you owe the IRS $25,000 or less, you qualify for a repayment agreement with no financial disclosures. This speeds the levy release process and eliminates a drawn out negotiation process. When you enter into the installment agreement, the IRS will immediately release it’s levy against you. Sometimes, my clients pay down the amount they owe to $25,000 to qualify to get the quick levy release and avoid financial disclosures. The agreement requires repayment of your taxes within 60 months.
Another benefit to a streamlined installment agreement is that your monthly payment could be less than if you gave the IRS your income and living expenses and made a financial disclosure. This is because the most you will be committed to paying the IRS is approximately $425/month ($25,000/60 months). With no financial disclosures, the IRS makes a “streamlined” calculation of what you can pay. There is no application of the burdensome IRS collection allowances, and you can pay more than the minimum voluntarily to pay the IRS off sooner.
Although it is not as absolute as bankruptcy and a streamlined installment, the filing of an offer in compromise or innocent spouse claim can result in a levy release without more. The IRS is required by law to suspend collection when either a compromise or an innocent spouse claim is filed. Technically, this means the IRS is prevented from sending out future levies, not releasing one already sent, but an IRS employee often exercises good discretion to release an existing levy automatically once an OIC or innocent spouse claim is filed.
Getting an IRS levy released is serous business, and knowing the rules and understanding how to navigate through them is key to quick results.