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IRS Levy—Denver, Colorado
Understanding what a tax levy means for your business
If your Denver, Colorado-based business owes back taxes, the IRS can file a tax levy to legally seize your company’s property and assets to satisfy the debt. Once an IRS tax levy is issued, you must take quick action if you want to have a chance of resolving the issue without driving you out of business.
The IRS was contacting my contractors I work for and telling them to not pay and send the money to the IRS instead. This left me with no money to pay my employees and I was unable to get the IRS lady that was doing this on the phone or to return my call. I spoke with True Resolve Tax and asked what my options were after they came highly recommended. Within two days of hiring them they had been able to speak to the lady at the IRS, get her to agree to stop the levies with my contractors and even got enough of the money she had recently taken back to allow me to cover payroll for my employees. This was HUGE! If my employees couldn’t get paid I would have been out of business. I was very impressed with how quickly True Resolve went to work and got results.~ Gary B., Colorado
Tax levies are different from tax liens. A lien is a legal claim against your property to secure payment of your tax debt, while a levy actually takes the property to satisfy the tax debt. When taxpayers think of levy, bank levies are typically the most common thing that comes to mind.
A bank levy freezes the funds in your company’s bank account at the time the levy is processed by the bank. This could be your payroll, rent, supplies, or other expenses. A bank levy does not capture all the funds going into that account indefinitely. Once the funds are frozen, the bank holds the money in escrow essentially for a 21-day period before sending the funds to the IRS.
During this 21-day period, you have an opportunity to resolve your business account in another manner and have the bank funds returned to your account for company use. Once money has been sent to the IRS your chances of getting it back reduce significantly.
Accounts Receivables Levy
The IRS has the ability to issue levies to third parties that now owe or they have reason to think may owe your business money. Think of the impact that could have on not only your business cash flow, but also on relationships with your customers. How would it make you feel if you received a call from a customer saying they received notification that they are to send the IRS the money they owe you rather than sending it to you? In most cases, you had plans on what you were using that money for: payroll, supply purchases, office rent, payroll taxes.
These levies do not help your business get ahead of the tax debt. In fact, in most cases, they cause you to fall farther behind. But the IRS wants their money, and if you are not communicating and cooperating with them in order to make arrangements, then they are going to get their money in any legal manner they can.
The problem with a levy on accounts receivable is that it captures 100 percent of what it is you are owed at the time your customer receives the levy up to the extent that you owe back taxes. It is, in most cases, not ongoing and only a one-time levy, but the IRS can issue levies to the same customer repeatedly capturing your income from multiple sources month after month.
Seizure of Assets and Property
A levy can also include the seizure of your assets, including business investment accounts, credit lines and cash value of officer life insurance policies, as well as property, such as company equipment and cars.
The IRS will never levy you without notice. There are, in fact, several letters that will be mailed to your business address on record prior to a levy actually occurring. If you are reading these letters, the one prior to levies being issued tells you that levies will be issued within 30 days if you do not make other arrangements with the IRS.
Once the IRS issues a levy on your business, you can work with the organization to stop the levy. (link to How to Stop a Levy page) Here are some options to explore:
- Request an extension on your back taxes
- Set up an installment plan to pay your unpaid tax balance
- Negotiate to lower the debt by lessening penalties
- Establish a hardship with the IRS to show your inability to pay
- File for bankruptcy
True Resolve is on your side.
The IRS doesn’t care if your business survives or not. So when you’re facing a tax levy on your business, it is imperative to have experts that represent your best interests and assure you of your rights. True Resolve has a long history of working directly with the IRS on behalf of business clients. Our Denver-based team of Enrolled Agents is your company’s best asset for understanding and resolving your business tax levy.