Posted by Michael S. Anderson | Mar 01, 2013 | 0 Comments

chess-thumb-375x374-60916 chess-thumb-375x374-60916 BANKRUPTCY WILL STOP THE IRS LEVY

The IRS likes to garnish paychecks and levy bank accounts and other property. This is the primary way that it pushes people into payment plans that haven't already negotiated one or filed an offer in compromise. There are several ways to stop a levy or other collection action by the IRS (read this) but often the best way to stop it is to file a bankruptcy case.

A bankruptcy filing creates an automatic stay. This means that the moment the bankruptcy is filed; creditors…including the IRS have to stop collection efforts. If a paycheck is being garnished, it has to stop. The Bankruptcy Code trumps the tax code and removes any IRS discretion in this area of the law. Specifically, Section 362(a) of the Bankruptcy code requires that the stay occur.

Stopping IRS collection activity is just the beginning though of what the bankruptcy may do.

The taxpayer may be able to:

1. Stop future IRS lien filings 2. Discharge the obligation to pay tax debt 3. Stop the IRS from adding additional interest and penalty to the debt (Chapter 13 Bankruptcy) 4. Create a payment plan on the non-dischargeable debt tax debt that may be far less than an IRS Installment Agreement would be (Chapter 13 Bankruptcy) 5. Reduce or eliminate other debt, like credit card debt, debt related to repossession, personal loans etc.

If you are having a problem negotiating an offer in compromise with the IRS, or if your IRS plan payment is too high, or if you have tax debt and other debt problems, bankruptcy may be the answer…not just to stop IRS collection activity but also to find a fresh start.

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.


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If you have an IRS problem, call our office and ask to speak with the Attorney about it. We like to discuss the situation on the phone for free to ask you some questions, answer some of yours, and to determine whether it may make sense for us to help. We’ve helped several thousand clients with tax debt problems over the last two decades. We’ll tell you the truth about your options and help you find the best one.