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Your retirement accounts are not protected from an IRS levy

No one wants to fall on hard financial times, but this type of situation affects a considerable number of individuals and can happen suddenly. You may find yourself having to contend with any number of financial difficulties that result in an inability to meet certain monetary obligations. In particular, you may not have the ability to pay your taxes.

In a last-ditch effort to avoid having to pay money to the Internal Revenue Service, you may not have filed your tax return at all, or you may have simply not made payments on any taxes that you owe. Unfortunately, ignoring such a problem will not make it go away. In fact, it could make matter worse as the IRS could seize money from your retirement account.

A levy against you

When the IRS believes they have reason to take your property in order to address unpaid taxes, they will issue a levy against you. This levy gives them the ability to take your assets. You may think that because retirement accounts receive protection from typical creditors that the IRS cannot access those funds, but that is not the case. The IRS is not a typical creditor as it is a government agency, and because you have an obligation to pay your taxes, the IRS can take measures they deem necessary.

Additionally, if the IRS does garnish money from your retirement account, you could end up facing penalties for that withdrawal. As a result, your financial situation may face further hardships when back taxes are involved. Of course, a levy typically does not take place immediately after the failure to pay tax obligations. More likely, the IRS will attempt to contact you to obtain the owed funds through other means first.

Avoiding a levy

Because the IRS will make other attempts to address your owed taxes, you have the opportunity to avoid a levy against your retirement accounts. In some cases, you may have the ability to create a payment plan or work out another alternative payment method if you cannot immediately pay the outstanding balance.

If the IRS has already brought a levy against you, you do not have to feel out of hope. You may have the ability to file for an appeal or take other actions to better your situation. Fortunately, an Oregon attorney experienced with tax law can help you determine your best options for addressing such predicaments.

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