What is the name of your state (only U.S. law)? Georgia
I received a letter from a company I work for as an Independent Contractor. They said the IRS has put a levy on my earnings so now I will only be able to keep $389 0f what I earn from them. Anything else I earn goes to the IRS. This seems exceptionally cruel. The taxes owed are from 1994 and 1997. They amount was $6K but with penalties and fees it is now $14K. I barely make enough money to earn a living now it will be near impossible.
Can the IRS only allow me to make less than $400 a year and take anything else I earn ?
A levy is the IRS's way of getting your attention. Chances are, you have been unable to resolve your tax problem to the IRS's satisfaction. It could be that you have ignored them or they are just plain being unreasonable. The levy could have been generated automatically by the IRS's Automated Collection System (ACS) or most likely, a Revenue Officer issued it.
This type levy only attaches to any outstanding invoices at the time the levy was served. Invoices received even hours later are not affected. However as a practical matter, your customer will be very cautious about paying you until the matter is resolved. The bottom line is - this levy must be lifted!
The levy document itself will indicate who issued the levy. You will need to contact the person identified on it. This will be a Revenue Officer or Automated Collections. When you call, they will ask you if you can full pay the account - most likely the answer will be no. Therefore, there are only three options: (1) the account can be declared currently not collectible (2) you can enter into an installment agreement, or (3) you can file an Offer in Compromise.
In each of these cases you will be required to complete a Collection Information Statement (Form 433-A or 433-F) or provide financial information over the phone. The purpose of this form is to identify seizable assets and income with which to pay the taxes. The way this form is completed or the answers you provide over the phone are critical. I recommend that you let an experienced professional do it for you.
If this levy is creating a hardship such as preventing you from buying food or paying your rent, mortgage, electric bill, etc., then you should tell the Revenue Officer or person at ACS that this is the case and ask for immediate relief. If they will not grant it, then you should follow the procedure to request an appeal of the levy.
