An IRS tax levy results in the takeover of your bank accounts, property, and even your paycheck if it comes down to it. Unfortunately, the IRS assesses a tax levy without considering the financial implications that led to back taxes in the first place.
Explaining your finances to the IRS is the best way to stop a tax levy and start a fair payment plan, but you shouldn’t do it alone.
IRS plans require a briefcase worth of specialist paperwork that isn’t easy to sort through. And the stakes are high: if you can’t relieve the levy, you could be stuck in dire financial circumstances.
Who do you call when the IRS threatens to garnish your wages or levy your bank account? Here are a few of the people who can help.
Who to Call for IRS Representation
When you face a tax levy, time is of the essence. Waiting too long to start a resolution will prolong the time your finances are under stress. Struggling through the process on your own also eats up valuable time, and it lowers your chances of coming to a resolution that best suits you.
Two professionals can represent you in front of the IRS: an enrolled agent and a tax attorney. Here’s what each offers clients.
1. Enrolled Agent (EA)
If you use a tax service, you might already work with a certified public accountant (CPA). A CPA is someone who can practice at the state level, and they can only practice in the states where they hold a license. As a result, they can file your paperwork in almost every area.
However, a CPA can’t represent you at the federal level.
That’s why your first call shouldn’t be to a CPA, but an enrolled agent (EA) who specializes in income tax. EAs are federally-recognized tax specialists.
To qualify, an EA must first complete five years of work experience with the IRS to qualify. Alternative, an EA can take a three-part exam, including a section that deals with IRS representation as well as practices and procedures.
The IRS also requires that those who reach this elite status complete 72 hours of education every three years and adhere to ethical standards.
What Does an EA Do?
Enrolled agents can help you with the following tax issues:
- Tax evasion
- Tax fraud
- IRS investigations
- Failure to file
- Tax levies
- Tax liens
Because enrolled agents have intimate knowledge of both tax law and how the IRS operates, they help clients best leverage themselves for the best outcomes.
First, an EA completes and files your paperwork. The paperwork required on behalf of many programs is complicated and requires significant knowledge of both the law and IRS practice.
Second, an EA negotiates on your behalf. The IRS always wants to get as much money from the taxpayer as possible at once. The agency is reluctant to accept lower offers or plans that risk failure to repay.
The EA works with the IRS to find common ground that is fair to you and also in your interest.
All official and current EAs register with the IRS. If possible, work with enrolled agents who are also registered with the National Association of Enrolled Agents (NAEA).
2. IRS Tax Attorney
You can also work with a tax attorney who can also represent you in front of the IRS and the courtroom. Attorneys have in-depth knowledge of tax and business law and deal with complex legal issues usually reserved for the courtroom.
A tax attorney can represent you and negotiate on your behalf with input from a CPA or an EA.
Not every case is right for a tax attorney. In most cases, you’ll want an attorney if you:
- Want to start a business
- Run an international business
- Know you will leave behind a taxable estate
- Need to sue the IRS
- Are under criminal investigation
Attorneys best serve clients who have tax levies or liens along with allegations of tax fraud or another criminal investigation.
It is worth understanding that a tax attorney will know tax law, but few have the CPA or EA accreditation required to work with your finances. You’ll likely need to hire both an attorney and a CPA.
How to Choose Representation
How do you find the tax representation that’s right for you? Fortunately, EAs and attorneys are both accountable to the IRS and their state bar, respectively. To find one that’s a good fit for your case, start by asking a few questions:
- Where are you licensed?
- How long have you practiced?
- What is your tax specialty?
- Have you had cases like mine? What result did you provide?
- What solution do you propose for my case?
- How much will you charge to implement that solution?
You should also double check their professional standing with your state’s bar association or the IRS Office of Professional Responsibility. All members in good standing will be easy to find.
Don’t be afraid to ask them for client references. No professional is going to hand over a bad reference, but the references will give you a better idea of what it is like to work with them.
Finally, don’t allow anyone to represent you without first entering into an engagement agreement. Your agreement should expressly state what they intend to do and how much it will cost to do it.
Avoid paying a retainer fee of more than 50 percent of the total estimate fee.
Representation Matters in a Tax Levy
An IRS tax levy rarely considers the cost of living and your financial obligations. Its only goal is to secure the money you owe the IRS.
Your representation will be the difference between fighting for survival and working out an agreement that you can live with.
An enrolled agent has an intimate working knowledge of IRS processes and can both fill out the paperwork and represent you in front of the IRS. If you are in legal hot water, then a tax attorney can aid you both with the IRS and in the courtroom.
Are you staring down an IRS tax levy? You don’t have to do it alone. Click here to request a no-obligation consultation and learn how you can relieve your tax debt.