An IRS tax levy permits seizure of property to satisfy a tax debt including garnishing wages, taking money in your bank account, taking & selling real property.
The IRS Issues Millions of Tax Notices Yearly
A IRS tax levy is a legal seizure of your property to satisfy a tax debt when you owe money to the IRS.
Levies are different from liens. A lien is a legal claim against property to secure payment of the tax debt.
A levy actually takes the property to satisfy the tax debt and the IRS most often levies your bank account for whatever amount of money you have in the account after several attempts to collect.
Where does Internal Revenue Service (IRS) authority to levy originate?
The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331.
Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied.
Property exempt from IRS
The Internal Revenue Service must take the following steps prior to a IRS tax levy being issued.
The IRS will usually take action only after these three requirements are met:
- The IRS assessed the tax and sent you a Notice and Demand for Payment (a tax bill);
- You neglected or refused to pay the tax; and
- The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing at least 30 days before the levy.
The IRS may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.
Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund.
When will an IRS tax levy be issued?
If you do not pay your taxes and the IRS determines that an IRS tax levy is the next appropriate action. The IRS may take any property or right to property you own or have an interest in.
For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).
TheCPATaxProblemSolver can get levy lifted within 24 hours so that you can breathe easier.
How long does it take to get a levy released by the IRS? If you show an economic hardship is caused by the bank levy you can get a levy released fairly quickly.
Bank Release. If you fail to reach an arrangement within the 30 days of notice from the IRS, the bank levy will take effect. The funds in your account will be frozen & set aside for 21 days.
UNDERSTANDING IRS LEVIES
If you are one of the millions of American taxpayers who find themselves in the IRS’s crosshairs, an IRS levy is stressful and disruptive at best, and financially catastrophic at worst.
The IRS is in the business of collecting money for the Federal Government and often finds itself in the position of needing to compel taxpayers to meet their tax obligations. Levies are one the tools they use for that compulsion.
The IRS prefers seizing liquid assets such as bank accounts, wages (through garnishment), and social security benefits. However, they will also seize and liquidate assets such as retirement accounts and cash value life insurance policies. The IRS will even seize and liquidate vehicles and real estate if the assets hold sufficient equity to justify the cost of the liquidation process.