It has been deemed that IRS agents cannot proceed with a levy that creates economic hardship. But this rule does not apply to levies against corporations, according to the the Tax Court.
After a corporation that ran a nursing home did not pay its quarterly employment taxes, the Service issued a notice of intent to levy against the firm’s accounts receivable, bank accounts and certain other funding sources.
The company challenged the levy on the grounds of economic hardship, claiming it could not economically survive the levy and continue to provide adequate care to patients, and that it could lose its license.
Only individual taxpayers qualify for the economic hardship exemption. The statute requires IRS to release levies that create economic hardship to taxpayers because of their financial condition. According to the Tax Court, an agency regulation limiting this relief to individuals is valid
Lindsay Manor Nursing Home, 148 TC No. 9