Time to Challenge Wrongful IRS Levy Extended Under New Law

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The IRS has the power to seize or “levy” assets, banks accounts, wages and other assets and income of an individual or business to satisfy delinquent taxes. However, the IRS will sometimes levy the wrong assets or income; that is, it will seize assets or income belonging to someone other than the person or business that owes the tax. This happens.

When the IRS wrongfully seizes or levies the assets or income of a person or business that does not owe the tax, this person/business can file a claim for wrongful levy with the IRS and also can sue the IRS civilly to prevent the levy or to have the property returned. The IRS may even be responsible for the payment of attorneys’ fee and costs incurred to file these claims.

The IRS recently announced that individuals and businesses will now have additional time to file an administrative claim with the IRS and to also bring a civil action for wrongful levy or seizure of assets. The newly-enacted Tax Cuts and Jobs Act (TCJA) extended the time for filing an administrative claim and for bringing a suit for wrongful levy from 9 months to 2 years. Additionally, if an administrative claim for the return of property is made with the 2-year period, the 2-year period for bringing suit is then extended for 12 months from the date of filing the claim or for 6 months from the disallowance of the claim, whichever is shorter.

Any time an individual or business learns that his/its assets or income may have been seized or levied by the IRS to pay another’s taxes, tax counsel should immediately be consulted. Important time deadlines exist. While the deadlines for filing wrongful levy claims with the IRS, and for suing the IRS civilly, have been extended under the TCJA, deadlines for filing still exist, and if a timely wrongful levy claim is not filed with the IRS, or a civil action is not initiated when required, the individual or business may then lose his/its rights to prevent the levy and/or for the return of the levied property.

 

The IRS has the power to seize or “levy” assets, banks accounts, wages and other assets and income of an individual or business to satisfy delinquent taxes. However, the IRS will sometimes levy the wrong assets or income; that is, it will seize assets or income belonging to someone other than the person or business that owes the tax. This happens.

When the IRS wrongfully seizes or levies the assets or income of a person or business that does not owe the tax, this person/business can file a claim for wrongful levy with the IRS and also can sue the IRS civilly to prevent the levy or to have the property returned. The IRS may even be responsible for the payment of attorneys’ fee and costs incurred to file these claims.

The IRS recently announced that individuals and businesses will now have additional time to file an administrative claim with the IRS and to also bring a civil action for wrongful levy or seizure of assets. The newly-enacted Tax Cuts and Jobs Act (TCJA) extended the time for filing an administrative claim and for bringing a suit for wrongful levy from 9 months to 2 years. Additionally, if an administrative claim for the return of property is made with the 2-year period, the 2-year period for bringing suit is then extended for 12 months from the date of filing the claim or for 6 months from the disallowance of the claim, whichever is shorter.

Any time an individual or business learns that his/its assets or income may have been seized or levied by the IRS to pay another’s taxes, tax counsel should immediately be consulted. Important time deadlines exist. While the deadlines for filing wrongful levy claims with the IRS, and for suing the IRS civilly, have been extended under the TCJA, deadlines for filing still exist, and if a timely wrongful levy claim is not filed with the IRS, or a civil action is not initiated when required, the individual or business may then lose his/its rights to prevent the levy and/or for the return of the levied property.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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