IRS May Release a Levy or Wage Garnishment Where Taxapyer is Suffering an Economic Hardship

John P Fazzio III

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Tax Lawyer

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Posted over 1 year ago. 2 helpful votes

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The IRS Uses a "Economic Hardship" Criteria for Levy Release

A wage garnishment or levy may be released pursuant to I.R.C. Section 6343(a)(1)(D). This levy is creating an economic hardship for the taxpayer, who cannot pay his reasonable basic living expenses while this levy is in place. Treas. Reg. ? 301.6343-1(b)(4). IRS guidance provides that in making an economic hardship determination the IRS must consider relevant information such as a taxpayer's age, employment status and history, and number of dependents, as well as the cost of living in the taxpayer's geographic area. Treas. Reg. ? 301.5343-1(b)(4)(i)(A)-(C). Reasonable basic living expenses vary based on the taxpayer's unique circumstances.

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A Levy May Be Partially Released Based on a Showing of Taxpayer's Reasonable Monthly Expenses

One must fill out a CIS Form 433-A and list the basic living expenses such as Housing and Utilities, Food and Clothing, Car Payment, Operating Expense for Vehicle, Public Transportation, Health Insurance, Other Secured Debt, etc. Other factors such as health problems, living in an effected disaster area, loss of employment due to economy, etc. may assist in the calculus of whether a taxpayer qualifies for levy release and may arouse the sympathies of the IRS personnel involved.

Additional Resources

http://www.irs.gov/uac/What-if-a-levy-on-my-wages-is-causing-a-hardship%3F

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