Mar
I am doing a short presentation at my church regarding financial issues/problems..I am not a tax professional or anything enjoy it but since I volunteered to help I need to get answers (in layman's terms..not “tax” talk) for the following pre-submitted questions..
1. Can you still make payment arrangements if you’ve a tax levy/garnishment started? or is it too late?
2. Will bankruptcy stop a levy? or at least decrease the amount they take from the check?
3. Can you ask for a one time settlement or does the IRS have to offer it to you?
4. What is the difference between a levy and garnishment?
I think there are more questions..I am still going through them all…thanks for any help!!
P.S. Serious answers only please…these people need help..not criticism…
Answer:
The response above really has it confused.
If there is a levy on your bank account or wages it can be released if you can demonstrate that it is causing a hardship as defined using IRS expense standards (They are developed by the US Dept of Labor.)
An existing levy on your wages isn’t an installment agreement unless you roll over and let it be. A levy takes all your take home pay over an amount that is exempt by law. For a single person, this is as tiny as $179.81 per week or $779.18 per month. (Different filing statuses have different exemptions.) For an installment agreement, the standard payment is the difference between your income and your allowable expenses or, if you owe less than $25,000, the amount that’ll pay the liability in full within five years. This will almost always be less than the amount that will be paid as the result of a levy on wages.
Bankruptcy will stop a levy, at least temporarily. Debtors who file bankruptcy petitions are entitled to a stay of collection action from all creditors including IRS and its say counterparts. If a levy has been served it must be released. After being discharged, you can be fair game again. If you file a Chapter 13 petition in Bankruptcy Court, you will have to propose a payment plan for paying all your debts including taxes.
You can ask for a “one time settlement” called an offer in compromise but must offer an amount that at least equals what IRS feels it will eventually be able to collect from you. You can do the paperwork yourself but it is a minefield.
For practical purposes, in layman's terms there is no difference between a levy and a garnishment. Both take your money involuntarily because you didn't pay your bills.
Answer:
In layman's terms– on several of those questions or issues raised — you should find a lawyer (for free, volunteer) to aid you. My understanding is the following — (but you can personally check the source @ IRS.com) — just put your questions in … and they’ll answer.
1) If your pay has been garinshed by the IRS — that’s considered a payment agreement. (so there is no need to make an arrangement– your opportunity to negotiate or agree has passed).
2) If your home has been levyed — that is an insurance policy that the IRS/govt. will get their payment, when the home is sold or taken back by the bank.
3) You can only negotiate for a one-time settlement or payment using a attorney — normally (there are a lot of court forms to be filed in this situation), and the IRS does negotiate with private citizens.
4) A levy is a tax lien against personal assets (property with a value) and a garnishment, is a legal understanding with an employer that the government is paid from your paycheck before you get paid.
5) Bankruptcy can’t stop a levy. The levy will be usually honored by the judge to ensure that the government is paid, either by you, the seller or by the new owner of the property (but you can check w/an attorney on this one).
In my personal opinion, if you do not know these laws or regulations, before you make a presentation of anykind; or definitely you should find a local attorney (to do this speak pro-bono (free) for you — you need someone who deals in “bankruptcy or IRS liens to make sure your audience is told the truth. Good luck, 