Once the IRS places a tax levy on your property, you need to pay in full or suffer the consequences of an IRS asset seizure. Asset seizure means that the IRS will retain ownership of your property, be it your vehicle, house, or other personal property, and will sell it at auction. Proceeds from the sale will go towards settling your tax debt.
You do have a thirty day window of opportunity after being sent a notice of a tax levy before the IRS can seize your property. If you cannot pay in full, this thirty day period is the time to find a solution to your tax debt problem before your assets are subject to seizure. There are a few options to satisfy your debt without asset seizure:
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Pay your debt in installments
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Negotiate a payment plan with the IRS if you are not able to pay your tax debt in full. A monthly payment made until you pay off your tax debt, sometimes for a settlement amount that is less than you originally owed, can help you avoid asset seizure.
Settle your tax debt for less
If you are able to prove to the IRS that paying your back taxes in full is financially impossible for you, it may be possible to negotiate a settlement of your tax debt for less than you owe.
Temporarily suspend collection efforts
The IRS is aware that some taxpayers are experiencing financial difficulty, and cannot possibly pay their tax debt. If you are unemployed or underemployed, you may be eligible to be placed on the IRS’s Currently Not Collectible list. Once placed on this list, the IRS will temporarily stop all attempts to collect your tax debt. It is required that you periodically re-qualify for the list.