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How to Get an IRS Levy Released

Getting an IRS levy released will make you love your tax attorney. A bank levy, accounts receivable levy and wage levy (garnishment) are very aggressive actions the IRS will take to collect a back tax liability.

How do I get an IRS Levy released?

There are many ways to get an IRS levy released. In general, you are going to need to either prove that the levy will cause you and your family an undue economic hardship or you are going to have to propose an alternative to the levy:

Option #1: Prove Undue Hardship to get an IRS Levy released.

To get an IRS levy released by proving hardship you will need to provide substantial and convincing proof that the IRS levy is causing an undue hardship. The main obstacle in this is that the IRS usually wants to see that it is causing an economic hardship right now, not that it will in the future.

This means that the IRS may wait to release the levy until you can provide past due notices, eviction notices, or utility shut-off notices. By the time you are receiving these kinds of notices, the IRS levy has likely done enough damage that recovery will be extremely difficult.

Because the IRS usually will not accept an argument that the levy will cause economic hardship in the future, this is generally not the preferred method of getting an IRS levy released.

If you own a business under IRS levy you may be able to get the IRS levy released by showing an undue hardship to your employees. Many times, the IRS will release enough money to at least ensure that you can pay your employees.

Option #2: Enter into Formal Resolution for Back Tax Liability to get an IRS Levy released

If you can propose a viable alternative to the IRS levy and show the IRS how you intend to resolve your balance due, they will usually release the levy. This can include entering into a payment plan, filing an Offer in Compromise, requesting currently not collectible status, or other resolution plans.

Before you can propose a resolution to the IRS, you are required to have all of your back tax returns filed. Therefore, preparation of any missing tax returns is your first step towards releasing an IRS levy.

The IRS will also require a full financial disclosure in order to consider any resolution strategy, in most cases. So the second step will be to complete a financial statement. This financial statement is used to prove to the IRS whether you qualify for a payment plan, offer in compromise, or currently not collectible status.

Option #3: Negotiate a Release of IRS levy

If you have a local IRS revenue collections officer you may be able to negotiate a release of IRS levy by providing what they’re requesting and establishing a plan for resolution of the outstanding back tax liability.

Most IRS collections agents working at collection call centers do not have the authority to release an IRS levy on a “promise” to meet a deadline in the future, but a field agent typically has more discretion to make informal deals like this.

Option #4: Formal Appeals and Taxpayer Advocate Requests to get IRS levy released

You can file a Collection Appeal Request to appeal the filing of a levy itself. These appeal hearings are supposed to be scheduled and heard within five days of filing, though that does not always happen.

You can also file a Form 911 Taxpayer Advocate Request to ask that the Taxpayer Advocate Office intervene on your behalf. The Taxpayer Advocate does not have the authority to release a levy themselves, they can only speak with Collections at your request.

While either of these options may ultimately prove successful, both usually take several weeks to reach a resolution. Typically it is much quicker just to work something out with the Collection Division.