IRS Levy and Lien Notices Explained: Resolve Them in California

Understanding IRS Levy and Lien Notices

Receiving an IRS levy or lien notice can be a distressing situation for anyone, especially for business owners and residents in the Los Angeles area, including Burbank, Glendale, and Toluca Lake. These notices indicate serious tax issues that require immediate attention. In this comprehensive guide, we will explain what these notices mean and how you can effectively resolve them to avoid further complications.

What is an IRS Levy?

An IRS levy is a legal seizure of your property to satisfy a tax debt. The IRS can take various forms of property, including:

• Wages: A portion of your paycheck can be garnished.
• Bank Accounts: Money can be withdrawn directly from your accounts.
• Personal Property: Vehicles, stocks, and even real estate can be seized if necessary.

Notice of Intent to Levy

Before the IRS levies your property, they are required to notify you through a Notice of Intent to Levy. This is typically served at least 30 days before the levy takes place, giving you time to respond and resolve your tax issues. As a resident of the San Fernando Valley, it's critical to monitor your mail for these notices, especially around tax season.

What is an IRS Lien?

An IRS lien, on the other hand, is a legal claim against your property when you fail to pay your tax debt. Unlike a levy, a lien does not take the property but ensures that the IRS is paid if you sell the property. The lien attaches to all of your assets, which can complicate selling or refinancing property in places like Studio City and Pasadena.

Notice of Federal Tax Lien

When a lien is filed, the IRS will send you a Notice of Federal Tax Lien. This will notify you that the IRS has made a claim against your business and personal property. The lien will affect your credit rating and may prevent you from getting loans or selling assets without settling your tax debt.

How to Resolve IRS Levy and Lien Notices

Step 1: Understanding Your Tax Situation

The first action you should take upon receiving either a levy or lien notice is to understand your tax liability. Here’s how you can do it:

• Review your tax records and verify the amount owed.
• Check for any potential errors in the tax calculations.
• Ensure that you haven’t paid the taxes due, which could invalidate the notice.

Step 2: Contact the IRS

Don't wait for the situation to escalate. Once you confirm that the tax debt is accurate, contact the IRS directly. You can reach them at 1-800-829-1040. When you contact them, make sure you have:

• Your tax identification number.
• Relevant documentation like previous tax returns.
• Any notice that you have received from the IRS.

It's best to handle these inquiries during non-peak hours to minimize wait times.

Step 3: Consider Payment Options

Depending on your financial situation, you have several options to resolve your tax debts:

• Full Payment: Paying the entire amount owed will quickly resolve the issue.
• Installment Agreement: This allows you to pay your debt over time. You can set up this agreement through the IRS’s Online Payment Agreement tool.
• Offer in Compromise: If you can’t pay the full amount, you might negotiate a lower settlement amount. This is typically reserved for individuals who can show that paying the full amount would cause significant financial hardship.

Step 4: Request a Collection Due Process Hearing

If you feel that the levy or lien was issued unlawfully or there are extenuating circumstances, you can request a Collection Due Process hearing with the IRS. This must be done within 30 days of receiving the notice. The hearing allows you to appeal the decision and present your case.

Step 5: Stay Informed and Compliant

After resolving your current tax issue, be mindful of future obligations. Keep the following in mind:

• File Tax Returns on Time: Ensure that your annual returns are filed by the deadline. For Burbank residents, that means filing California Form 540 for personal income taxes.
• Pay Timely: Make sure you are making timely payments to avoid falling behind again. This includes your California payroll taxes (DE-9) if you're a business owner.

Common Misconceptions About IRS Notices

Understanding what a levy and lien notice entails can save you from further issues down the line. Here are some common misconceptions:

• My Assets are Automatically Taken: Many people believe a notice leads to immediate action. In reality, the IRS must first provide you with a notice and opportunity to resolve your tax issues.
• I Can Ignore It: Ignoring the notice can lead to escalated actions by the IRS, including wage garnishment or property liens.

FAQs on IRS Levies and Liens

1. Can the IRS seize my retirement accounts?

Yes, the IRS can levy your retirement accounts, such as IRAs and 401(k)s. However, there are specific protections and exemption amounts that may apply. Consult a tax professional at Calculus Tax to understand your situation better.

2. How long does a tax lien stay on my credit report?

Tax liens can remain on your credit report for up to 7 years from the date of payment. However, once the lien is satisfied, it is essential to have it removed from your credit file to avoid complications in obtaining loans.

3. What if I cannot afford to pay my tax debt?

If you are unable to pay your tax debt, consider an Offer in Compromise, where you negotiate with the IRS for a lower payment based on your financial situation. You can also explore setting up an installment agreement to pay over time.

4. How do I know if my lien has been released?

Once you’ve paid your tax debt or entered into an agreement, you should receive a lien release from the IRS. Always check your credit report and consult with a CPA to ensure the lien is correctly released.

5. Should I hire a professional to resolve IRS notices?

Hiring a tax professional can significantly ease the burden of dealing with IRS notices. They can help you navigate the complexities of tax laws, negotiate on your behalf, and develop a plan tailored to your unique situation.

Conclusion

Dealing with IRS levy and lien notices can be overwhelming, but knowing the steps to take can significantly reduce your stress. Start by assessing your financial situation, contacting the IRS, and exploring your payment options. Consulting with an expert CPA like Calculus Tax can help ensure you handle your tax issues correctly, giving you peace of mind as a resident of Burbank or elsewhere in California.

For more information on tax issues that might affect your business or personal finances, check out our articles on Nexus and Sales Tax Obligations for Burbank Online Businesses and How to Build Business Credit as a New Burbank Business - 2026 Guide.

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"irs", "burbank", "tax lien", "tax levy", "california", "debt resolution", "financial advice"

Read Time

8 minutes

Understanding and resolving IRS levy and lien notices is vital for all California residents, especially in Burbank and its neighboring neighborhoods such as Toluca Lake, Glendale, and North Hollywood. Stay proactive with your taxes, and don’t hesitate to reach out for help when needed!