IRS Notice LT75 – Notice of Levy and Notice of Your Right to a Hearing indicates that the Internal Revenue Service has issued a levy against payments due to you from federal agencies. You have the right to appeal this levy. Your federal tax is unpaid. The IRS always reminds taxpayers to pay the taxes owed. If they don’t receive payment from them, they will issue a notice of levy to collect their unpaid taxes.

REASONS FOR RECEIVING NOTICE LT75

Here are some reasons why taxpayers receive Notice LT75 from the IRS:

  • You are a federal contractor with an unpaid tax balance.
  • The IRS sent several notices to you requesting payment of the tax balance but the balance remains unpaid.
  • The IRS sent LT75 to inform you that a levy against federal payments due to you has been issued and to explain your right to appeal the levy.

IRS levy – A levy is a legal seizure of your property to satisfy a tax debt. A levy is an IRS enforced collection action. When the IRS levies you, the IRS seizes (takes) your income or property to pay a tax debt. There are three requirements for a levy, they are:

  • Notice and demand for payment
  • Notice of intent to levy, and
  • Notice of a right to a Collection Due Process (CDP) hearing

The Internal Revenue Service (IRS) issues most levies after it has made several attempts to collect the taxes from taxpayers with a series of notices. The IRS sends most levies to employers to garnish wages until the tax has been paid or you make other payment arrangements with the IRS to pay. The IRS also commonly levies bank accounts.  The IRS can also levy other income sources, such as Social Security payments. The best way to avoid a levy is to get into a payment agreement with the IRS if you owe back taxes.

NOTICE DEADLINE – 30 days. If you miss the deadline, you will lose the right to appeal the levy before the IRS Office of Appeals. Also, other levies may be issued (such as bank account levies) and/or a Notice of Federal Tax Lien maybe filed.

IRS APPEALS

As we have seen, taxpayers have the right to appeal a levy filed by the IRS. Every year, the Office of Appeals helps more than 100,000 United States taxpayers resolve their tax disputes without going to Tax Court. “Appeals” is an independent organization within the IRS whose mission is to help taxpayers and the government resolves tax disagreements. “Appeals” does not seek to take sides in a dispute; rather it offers an objective point of view on each individual case. It reviews each case after the applicable IRS compliance has made its decision and work to resolve disagreements in the case on a basis that is fair and impartial to both the government and the taxpayer.

If you have a tax problem and disagree with the IRS decision, you can generally appeal in two ways:

  • Internal – IRS Office of Appeals
  • External – Litigation in the federal court system

There are some decisions made by the IRS that taxpayers can appeal. Taxpayers can appeal the results of an audit conducted by the IRS. IRS denial of taxpayers’ penalty relief request is also a good example. However, relating this particular notice (LT75), taxpayers can appeal collection actions by the IRS. These collection actions include levy, federal tax lien, or the IRS denial of their request for an installment agreement or offer in compromise. Appeals can generally look at the facts, circumstances, IRS procedures, tax law, and other factors in making a final decision for the IRS. The IRS Office of Appeals operates independently from the IRS to reach an agreement between you and the IRS without having to go to court. Appeals officers (or settlement officers) are generally the most experienced IRS employees. They specialize in the area of tax law or administration involved in the dispute. Taxpayers are advised to remember that the decisions made by the IRS are not always final. You may have the right to appeal that decision – informally with an IRS manager and formally with IRS appeals.

Usually, if you can’t pay your taxes, the most important thing you can do to avoid an enforced collection action is get into an installment agreement with the IRS. This agreement will include some sort of payment plan that will help you pay your taxes bit by bit. The IRS also offers another option, you can request for an extension from the IRS to give you enough time to pay your taxes. Almost any reason you give the IRS is enough for them to grant your request. Taxpayers who are in financial hardship should consider special IRS programs that offer deferred payment (currently not collectible status) and settlement (Offer in compromise).You can get a certified tax expert to help you in resolving the issue when you owe taxes and can’t pay. Depending on the situation of taxpayers, the IRS offers one of these situations to them. A tax professional can help you evaluate which option will work best for you, and your tax professional also can help work with the IRS to set up the agreement.

Before you can get in any payment agreement with the IRS, you must file all your required tax returns. You’re also required to withhold enough taxes from your wages and/or make enough estimated tax payments on the current year so that you won’t file and owe in the future. If you are not sure whether you filed all your tax returns contact the IRS to research your account. If you have back tax returns, file them to get back in compliance. You may have to do a projected tax return for the current year to see whether you withheld enough and/or made enough estimated tax payments. If not, you may have to change your Form W-4 with your employer or make estimated tax payments.

Finally, whatever you do, don’t ignore the Notice LT75 when you receive it. Nothing good comes from ignoring it.